HuaYuan Securities: Domestic and foreign major companies are starting to layout AI+ game content, expected to raise the level of commercialization.

Huayuan Securities released a research report stating that this round of AI+ games has a more positive expectation of industry policy support and sector development. Of particular interest is the potential for some game genres, which had average experiences and poor commercialization levels in the era of mobile internet, to strengthen their experiences in the AI era. New models are expected to raise the level of commercialization and drive sector growth. Both domestic and foreign leading companies have started to layout AI+ game content. In terms of payment mechanisms, the subscription model is considered the best solution for payment based on computing power. It is recommended to focus on AI+ games targeting female/male audiences, AI+ game content layout, companies with potential in AI+ game content applications, and companies supplying AI cloud computing power. On the development side, attention should be paid to companies with scarce gaming development engines. Huayuan Securities' main points are as follows: What makes this round of AI+ games different? 1) More positive expectations for industry policy support leading to sector development; 2) The reason AI cost reduction is difficult to reflect in the content industry, is that the money saved by AI needs to be directed towards more refined and high-quality content; 3) AI is essentially a technological equalizer, and its penetration in the game industrial development chain is continuing, with increased efficiency likely to be seen across all companies; 4) Of particular interest is, some game genres with average experiences and poor commercialization levels in the era of mobile internet, are expected to enhance their experiences in the AI era. New models are expected to raise the level of commercialization and drive sector growth. Elon Musk establishes an AI game studio, and major Chinese companies have initiated "AI+ game content" layout On February 17th, Elon Musk announced the establishment of the AI game studio xAI. In addition, miHoYo is expected to create an AI interactive space survival game "Project Star"; Tencent has updated its in-house voice-commanded FPS AI team-member "F.A.C.U.L." in "Area F2" and added DeepSeek to Peace Elite; NetEase has introduced the game Copilot AI as a game teammate in the mobile game "Eternal Return" and has integrated the intelligent NPC "Shenqiushuo" driven by the official version of DeepSeek in "Justice". About the core application scenarios of AI+ game content 1) D&D (Dungeons & Dragons, TRPG) type games; 2) "Maiden" or "Male" oriented games; 3) Detective games; 4) Companion games or games with companion functions; 5) Simulation games; 6) Games with complex systems or high-frequency content updates. Judgment on the applicability of AI+ game content The company provides a ranking judgment on the applicability of AI+ game content based on balance and content suitability: 1) PVE (Player vs Environment) >> PVPVE (Player vs Player vs Environment) >> PVP (Player vs Player). 2) Emotional orientation >> Companion orientation >> Social orientation >> Content orientation. Thoughts on the payment methods for AI+ game content 1) Subscription system (point card system): The company believes this is the best solution for paying for computing power. Companies will continue to release high-quality content and maintain high-level operation in order to maintain long-term user subscriptions. 2) Content payment system: payment for hiring companion NPCs, payment for AI use, free AI content with payment for other non-AI items, etc. Risk warning: Risks related to changes in game and AI industry policies, risks of failure in new game development and operation, risks of intensified competition in the game industry.