As the normalization of versions continues to be verified, new products are launched one after another. Currently, the supply side of the game industry is stabilizing, and the industry as a whole has ushered in an upward cycle.
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that on May 20, the State Press and Publication Administration announced approval information for domestic games in May, and a total of 96 games were approved. Among them, 90 games received the mobile version number, and 6 games received the mobile-client version number. As the normalization of versions continues to be verified, new products are launched one after another. Currently, the supply side of the game industry is stabilizing, and the industry as a whole has ushered in an upward cycle. The number of new games launched in 2024Q1 increased slightly year-on-year. In the second quarter of 2024 and the summer program, many major new games, including Tencent's “DNF Mobile Game”, NetEase “16 Sounds of Yanyun”, and “Everlasting Mobile Game”, have begun testing/qualifying one after another, or accelerating the overall growth of the industry. Among them, “DNF Mobile Games” under Tencent will launch on May 21. Follow the subsequent launch performance.
The number of editions distributed remains high, and the supply side continues to improve
In terms of quantity, a total of 96 domestic games have been approved this time, which is basically the same as the 95 in April. Previously, the number of domestic game versions sold for four consecutive months (December, January, February, and March) exceeded 100. Although the number of editions released in the past two months has declined slightly, it is still significantly higher than last year's average. China Galaxy Securities believes that this is a positive signal that the regulatory authorities continue to release to the industry: the number of editions issued in the first five months of 2024 was 524, an increase of more than 20% compared to 432 in the same period last year. The steady and increasing distribution trend is expected to continue, which will drive the supply side of the industry to continue to improve.
New games from many companies have been approved, and the game category is rich
In terms of product ownership, no new games were approved by Tencent or NetEase this month. Other key companies: “Baigong Ling” by Kaiying Network, “Fight for Two Cities: Restructured” by Gigbit, “Four Seasons City and Domino” by 37 Mutual Entertainment, and “Showdown!” by Zhongqingbao! Games such as “Sword River”, “The Legend of Miragall”, “Pixel Warlord”, “Starlight Beauty”, “Running for Style” by Zulong Entertainment, and “Elvis Presley” by Migu Mutual Entertainment have been approved.
AIGC technology continues to advance, and the game industry is expected to benefit
AIGC technology continued to advance during the year. OpenAI and Google released their Wensheng video models one after another, and the basic world model Genie and the 3D modeling tool Dust3r were also released one after another, creating possibilities for AI throughout the game industry chain. China Galaxy Securities believes that at present, AIGC already has certain productivity value: with the continuous iterative advancement of technology, AIGC technologies such as Wensheng Video and AI3D modeling are expected to help game development, which is reflected in shortening the game production and development cycle and reducing game development costs, thereby driving the entire game industry forward.
Follow-up recommendations focus on two directions
1) Companies that account for relatively high revenue from overseas game business and are likely to be less affected by policies: Shenzhou Taiyue (300002.SZ); 2) Leading game companies with strong R&D strength, large R&D investment, abundant reserves, and sustainable development advantages: Tencent Holdings (00700), NetEase (09999), Gbit (603444.SH), Kaiying Network (002517.SZ), 37 Entertainment (002555.SZ), Perfect World (002624.SZ), etc.
Risk warning: the risk of tightening industry policy regulations, the risk of increased competition in domestic and foreign game markets, the risk of new game launches falling short of expectations, the risk of losing game users, and the risk that AIGC technology development falls short of expectations.