Southwest: AI applications in full bloom, games and movies continue to recover.

Southwest released a research report stating that the AI application ecosystem continues to thrive, with AI + games, animations, companionship, advertising, education, and healthcare continuously evolving and upgrading. In 2026, the bank is optimistic about three main areas: AI applications, games, and short dramas. In terms of games, the focus is on recommending Kingnet Network (002517.SZ), as the company's self-developed new games are expected to contribute to incremental growth, and the AI application layout is expected to continue to advance. In the film and television sector, as the policy supervision of the State Administration of Radio, Film, and Television gradually relaxes, Mango Excellent Media (300413.SZ) as a domestic high-quality drama production company is increasing its production investment to drive advertising revenue recovery through quality content. Southwest's main points are as follows: AI Application The AI application ecosystem continues to thrive, with AI + games, animations, companionship, advertising, education, and healthcare continuously evolving and upgrading. Major manufacturers are accelerating their layout pace, and technologies such as multimodal interaction and video generation are advancing rapidly. Products such as Ant Financial's Lingguang, Tencent's Mixiangu, Kuaishou's Kelin, Easy Click Worldwide Network TechnologyAdsGo.ai, and other products are accelerating the penetration of AI in content creation, games, video creation, marketing, and other scenarios. Key areas of focus include user growth, technological iteration, and commercial progress. Games In 2025, the game market showed steady growth, driven by high-quality content and intellectual property. The policy encouragement attitude is obvious, and the supply of approvals remains abundant. A total of 1,772 approvals were issued in the year, reaching a new high in recent years and injecting sustained vitality into the industry. Product highlights frequently emerge, and innovative gameplay has become an important driver. Innovation forms such as the "search, hit, retreat" mode (such as "Delta Force" and "Supernatural Action Group") and the integration of SLG gameplay have effectively expanded the user base. Key areas of focus include the pace of new product launches and user growth brought by innovative gameplay. Film and Television Short dramas and AI animations continue to be popular, while long videos are expected to recover. The year 2025 saw a surge in AI animations, with nearly 47,000 episodes released throughout the year. The support program for animations on various platforms, combined with deep AI involvement, led to a total of around 53.3 billion yuan in the Chinese free micro-drama market in 2025, a 113% year-on-year increase from 2024. The film market in 2025 witnessed a comprehensive recovery driven by improvements in both top-tier and mid-tier film supply. Phenomenal top-tier works like "Nezha" and a significant increase in mid-tier films with box office revenues ranging from 1 to 4 billion yuan have solidified the market foundation. Meanwhile, the television industry has seen a supply rebound under the influence of the new regulations of the State Administration of Radio, Film, and Television's "21 Measures," paving the way for a potential turning point in drama market recovery. Key areas of focus include the internationalization of micro-dramas and the development of the AI animation industry. Risk warning: 1) Risks associated with stricter industry policies; 2) Risks of new technological advancements falling short of expectations.