Orient: AI game engine begins to help the platform's growth. It is recommended to pay attention to manufacturers with key project reserves this year.

Orient's report states that there will be significant changes in regulation by 2025. The pilot implementation of game licenses at the local level is directly speeding up product modifications and approvals, and the speed of issuing licenses is increasing month by month. With the gradual application of AI in the gaming industry from B to C, the industry is expected to see continued growth in production capacity and traffic for top-tier games with AI support on the B side. On the C side, more and more high DAU games are utilizing natural language AI game engines to drive user co-creation, potentially achieving high growth in game content and DAU. Furthermore, the report suggests focusing on companies with key project reserves this year. Key points from Orient's report include: AI and policy are driving the continuous increase in gaming content supply In 2025, China's gaming sales revenue increased by 8% year-on-year, significantly outperforming the 3.7% growth in social retail. On the front of old games, AI-driven DAU and revenue for long-lasting games are continuously increasing; new games are unique in the Chinese market where policy determines supply, with the number of licenses directly influencing industry growth and company confidence. Changes in regulations in 2025 will see a significant increase in the speed of issuing licenses due to the pilot implementation of local license processing, which accelerates product modifications and approvals. AI game editors are starting to see growth, with platform-type companies showing long-term promise AI game editors, represented by Tencent's "Peace Elite" Oasis Dawn, have surpassed 33 million DAU, indicating that game AI engines are transitioning from empowering B-end to empowering C-end. Leading Chinese game companies such as Tencent and NetEase are gradually upgrading their game AI tools, integrating them into high DAU games. The empowerment of AI for natural language and drag-and-drop game development allows a large number of C-end players to get involved in game production, leading to a significant increase in UGC game content. However, the report believes that UGC is not the end but an intermediary state of accumulating game platform language data and traffic, and it is a crucial link before the automation of the gaming industry. Companies with high DAU platforms, especially those that can combine with self-developed AI engines, are expected to have a ticket to the future AIGC game platform. The price war for new games will reignite in 2026, with low ARPU evergreen old games less affected Despite rapid overall growth in the gaming industry, there are still differentiations between product categories - low ARPU products have stronger resistance to deflation, with categories like sports and elimination seeing growth in traffic and payment behaviors, while RPGs and other high ARPU categories are facing macro pressure. The revival of PC gaming continues to deepen, with the proportion of cross-platform top products steadily increasing As the development budget for Chinese mobile games increases year by year, funding for some top projects has exceeded traditional AAA console budgets. It can be foreseen that the proportion of multi-platform products will continue to increase, with a shift towards prioritizing PC for project approval.