China Galaxy Securities: Cross-Platform New Products Drive Growth of the Gaming Market, Big Companies Seize the AI Traffic Entrance.

China Galaxy Securities released a research report stating that the current AI industry continues to catalyze, and the commercialization of AI applications has broad development space. The AI red envelope war may become a milestone event for large models and AI assistants to transition from technological research and development to consumer applications. Recommended to focus on: large model manufacturers TENCENT (00700) and BABA-W (09988). The cultivation of user habits is also conducive to the development of AI vertical applications. It is recommended to pay attention to AI applications and related sub-sectors in the industrial chain that AI empowerment continues to deepen: 1) KUAISHOU-W (01024), which leads in domestic AI video tool product strength; 2) AI applications related to the industrial chain. The main points of view of China Galaxy Securities are as follows: Film and Television The head film has a prominent suction effect, with "Lost in Russia 3" leading the Spring Festival box office. According to Lighthouse Professional Edition, the national box office in February 2026 was 7.793 billion yuan (including service fees), a year-on-year decrease of 51.58%, and an increase of 296.59% from the previous month. In terms of specific performance, "Lost in Russia 3" achieved a monthly box office of 3.64 billion, accounting for 46.7% of the monthly box office and ranking first in the month. As of March 1, 2026, it is estimated that 30 new films will be released in March. Games Older products are complemented by new product-driven increments, and the resilience of the client and overseas market is highlighted. In January 2026, the actual sales revenue of the domestic game market was 3.269 billion yuan, a year-on-year increase of 4.47% and a month-on-month increase of 2.77%. Looking at the subdivision markets: In January 2026, the actual sales revenue of the domestic mobile game market was 22.621 billion yuan, a year-on-year decrease of 1.52% and a month-on-month increase of 1.8%. The actual sales revenue of the domestic client game market was 8.236 billion yuan, a significant year-on-year increase of 14.97%. In February 2026, the number of domestic game licenses issued was 146, a year-on-year increase of 32.7%. On the demand side, the use of old products and popular new products together support market growth; on the supply side, the issuance of game licenses remains stable, helping shape a high-quality development pattern for the game market. In terms of new games, Perfect World's "Yihuan" is scheduled to be released on April 23, with a current tap-to-order volume of 5.33 million. Pay attention to the progress of the game's launch and its performance after launch. Marketing Total spending continues to increase, with significant structural differentiation. According to CTR Media Intelligence data: In 2025, the overall advertising market expenditure increased by 5.4% year-on-year, with a 5.9% year-on-year increase in December, and a slight decrease of 1.4% month-on-month. Looking at the changes in advertising spending by industry category, in 2025, the postal communications, personal care products, entertainment and leisure, IT products, and office self-service industries increased their advertising spending by 89.1%, 72.6%, 20.7%, and 28.6% respectively; food, pharmaceuticals, alcoholic drinks, and cosmetics/bathroom products showed declines, with year-on-year decreases of 13.9%, 4.0%, 12.5%, and 4.6%, respectively. AI Model capabilities are accelerating, and major manufacturers are seizing traffic entry points. In terms of models, domestic companies Seedance 2.0, KNOWLEDGE ATLASGLM-5, and MiniMax are layouting around multimodal video generation, engineering task completion, and penetration into life scenarios; Google and Anthropic from overseas are synchronously upgrading functions such as model reasoning ability and agent planning in multiple dimensions. During the Spring Festival, many major factories planned red envelope activities to seize C-end users: Douba, with the creation of visual content for the Spring Festival Gala, brought AI to the stage of the largest traffic scene in the country; Qianwen used the "please invite plan" to promote the popularization of AI shopping performance and enhance brand awareness; Yuanbao significantly increased user activity and AI creation frequency through lottery and social gameplay. The bank believes that the essence of this "AI red envelope war" is the competition among major manufacturers for C-end traffic entry points, as well as a large-scale cultivation of user habits. Risk Warning: Risks of AI technology development progress lagging behind expectations; content regulation risks; industry competition risks; risks of related technological applications not meeting expectations.