Wanlian Securities: The issuance volume of February version remained high, IP series works attracted market attention.

Wanlian Securities released a research report stating that on February 21, 2025, the National News and Publication Administration announced the domestic and imported game licenses for February, with a total of 110 domestic games and 3 imported games approved. The issuance of licenses in February was stable, covering both major and small to medium-sized developers, and the market supply rhythm was good. This time, the focus is on games that focus on IP derivatives and gameplay innovation, with major developers seeking differentiation while reducing research and development risks. Overall, the industry's product reserves continue to be released, the market environment is stabilizing, and the performance of new games is expected. It is recommended to pay attention to high-quality game developers with strong IP cultivation and innovation capabilities. Key points from Wanlian Securities include: - The number of licenses issued in February remained high, covering a variety of products and well-known developers. - Since the beginning of the year, a total of 233 domestic games have been approved, with 110 games approved in February, including Netease's "Spirit Beast Adventure", Lingxi Interactive's "Romance of the Three Kingdoms Fantasy Land 2: The Song of the Hawk", Liangwu Game's "Q Knight Great Melee", Thunder Game's "The Chaos Immortal Emperor", Four Three Nine Nine's "Heavenly Way Traveler", and Kingnet Network's "Three Kingdoms Special Forces", among others. From the beginning of the year, a total of 16 imported games have been approved, with 3 games approved in February, including Beijing Guoji's "Decision Three Kingdoms", Xiamen Haili's "Break-in Operation Team", and Mengxing Technology's "Plants vs. Zombies 3". In the February game license issuance, the IP series has attracted market attention: - "Q Knight Great Melee" backed by a phenomenal IP, with great potential. - "Q Knight" as a phenomenal IP from Liangwu Game, its series of works have been validated by the market, performing well. Previously, "Q Knight" achieved 4.7 million downloads within ten days of its 2017 release and quickly exceeded one billion in revenue; the ARPG new work "Q Knight Prequel" released at the end of 2023 also performed well, achieving 30 million in revenue in the first week of its release. This time, the agency believes that the game may introduce new competitive gameplay, expanding the possibilities of the "Q Knight" IP, and worth paying attention to. - "Romance of the Three Kingdoms Fantasy Land 2: The Song of the Hawk" inherits the art style and card gameplay of its predecessor, attracting attention. - The previous work "Romance of the Three Kingdoms Fantasy Land" achieved monthly revenue exceeding one billion in China and successfully expanded to the markets of China, Taiwan, Hong Kong, Macao, and Southeast Asia, with remarkable performance. This work continues the core gameplay of "card battle" from the previous work, and incorporates innovative gameplay such as job change and backtracking, attracting market attention. After its debut on TapTap on January 16, 2025, it topped the reservation list and currently has a rating of 7.2 on TapTap. Based on the long-term popularity of the Three Kingdoms theme and the user base of the previous work, this work has good market potential. Risks: Policy regulatory risks, license issuance rhythm falling short of expectations, new game delays in launch and performance falling short of expectations, new game revenue falling short of expectations, increased risks in overseas business, risk of impairment of goodwill.