Zhongyou Securities: Supply innovation and demand transition AI opens a new cycle in the game industry.

China Post Securities released a research report stating that the number of AI-labeled games on the Steam platform has exceeded 10,000 (8% of total), with an increase of 2,000 games in the past four months; the popularity of AI in game development has reached 86.4%. It is predicted that the global game AI market size will reach $512.6 billion by 2033, with a compound annual growth rate of 36.1%. With the improvement in the cost-effectiveness of models, AI technology is expected to further drive the transformation of the gaming world from pre-set content to dynamically generated content, eventually giving rise to AI-native game forms. AI technology is driving the gaming industry into a new cycle of innovation, and in the short term, attention should be paid to major companies that can integrate AI into existing products to reduce costs or increase revenue; while in the long term, focus should be on start-up teams with technological barriers and willingness to explore new gameplay. The main points of China Post Securities are as follows: AI double-wheel drive: stimulating content supply vitality and unleashing user demand potential Supply side: AI breaks the "impossible triangle" of game development, achieving cost reduction, efficiency improvement, and innovation acceleration. Traditional game development cycles are long and costly. The development cost of AAA games is nearly $600 million, with a cycle exceeding 5 years. AI breaks through in two ways: empowering the entire process, improving the efficiency of art by 30%-300% and testing efficiency by 50%, with 71% of studios believing that AI has optimized operational processes; and accelerating innovation, increasing supply speed and quality, raising the industry's ceiling. Currently, the number of AI-labeled games on the Steam platform has exceeded 10,000 (8% of total), with an increase of 2,000 games in the past four months; the popularity of AI in game development has reached 8...