Game stocks rose. SPDB AXA Gaming Media ETF rose more than 2%, while Cathay Pacific Fund Gaming ETF, Huatai Berry Fund Game Animation ETF, and Huaxia Fund Gaming ETF followed suit.

SPDB AXA Fund Gaming Media ETF tracks the China Securities Shanghai-Hong Kong-Shenzhen Gaming and Cultural Media Index. The index selected 50 securities of listed companies with business in the fields of games, film and television, radio and television, marketing, publishing, education, and cultural performances from the mainland and Hong Kong markets as an index sample to reflect the overall performance of gaming and cultural media themes in the mainland and Hong Kong markets. Constituent stocks include Tencent Holdings, Kuaishou-W, Fenzhong Media, Kunlun Wanwei, Bilibili-W, Jinshan Software, 37 Entertainment, Century Huatong, Song Cheng performing arts.

China Securities Shanghai-Hong Kong-Shenzhen Gaming and Cultural Media Index weighting stocks

Cathay Pacific Fund Gaming ETF, Huatai Berry Fund Game Animation ETF, and Huaxia Fund Gaming ETF track the China Securities Animation Game Index. The index selects securities of listed companies whose main business involves animation, comics, games and other related segments of the entertainment industry as an index sample to reflect the overall performance of securities of listed companies in the animation game industry. The constituent stocks include Kunlun Wanwei, 37 Entertainment, Century Huatong, Kaiying Network, Shenzhou Taiyue, Giant Network, Optical Media, Perfect World, Pocket Technology, Gibbit, etc.

Weighted stocks of the China Securities Animation and Game Index

Game stocks have risen. According to news, OpenAI announced the launch of a new OpenAI flagship AI model, called GPT-4O, which says it is aimed at everyone, including free users, to listen, watch, and speak smoothly without delay.

GPT-4o is a step towards more natural human-computer interaction. It can accept a combination of text, audio, and images as input, and generate output in any combination of text, audio, and images. “Compared with existing models, GPT-4o is particularly excellent at understanding images and audio.”

According to OpenAI, GPT-4O's text and code capabilities are similar to GPT-4Turbo, but it has stronger real-time interaction capabilities for voice, text, and images, and can support interaction in 50 languages. Additionally, users can use the GPT-4O model through ChatGPT for free, and the cost of calling through the API will also be reduced by 50%.

The average voice response time of GPT-4O is 320 ms, and the shortest is 232 ms. This response speed is similar to that of humans, and the voice response ability with almost no real delay has also become the biggest highlight of the new model.

Looking at the fundamentals of the game industry, industry profits improved in 2023, and going overseas was an important increase in revenue. In 2023, the total revenue of A-share listed companies in the game industry reached 86.7 billion yuan, with a year-on-year increase of 3.2%, of which 15 companies had positive year-on-year growth; 24 companies had overseas business, bringing in total overseas business revenue of 29.5 billion yuan, an increase of 12.2%, which was higher than the overall growth rate. The total revenue ratio also increased further from 31.3% in 2022 to 34.1%. Among them, Century Huatong, Shenzhou Taiyue, Kunlun Wanwei, and Hikawa Networks increased significantly; the overall profit of the industry improved. 9 companies in the industry lost money this year. Losses were reversed, and 2 new companies were added to turn losses. A total of 5 companies lost money in 2023. Compared with 2022, most of the companies with the highest growth rate increased by more than 20% year on year.

In March 2024, China's overall game market revenue increased 7.18% year on year and decreased by 5.86% month on month. 1) Overall game market in China: actual sales revenue was 23.417 billion yuan, down 5.86% from the previous month, reversing the downward trend and rebounding 7.18%; 2) Mobile game market: actual sales revenue was 16.953 billion yuan, down 7.13% from the previous month, up 8.75% year on year. The main reason for the month-on-month decline is that in March, with the end of the Spring Festival holiday and the arrival of the rework season, the Spring Festival activities of various games gradually came to an end, and the popularity declined, causing the game market revenue to decline somewhat.

Since December 2023, domestic edition distribution has accelerated markedly. Domestic editions have been distributed at around 100 per month, and imported versions are distributed once every two months. Societe Generale Securities pointed out that since December 2023, versions have been issued continuously in excess of expectations. In addition, AI continues to empower games to reduce costs and increase efficiency, they are optimistic about the long-term value of the game industry.

Wanlian Securities believes that in 2024, game editions will continue to be increased, high-quality and popular new games from leading manufacturers will continue to be launched, overall expectations for the Chinese game market are improving, leading products in overseas markets are performing well, and overseas revenue from games developed by China is growing steadily. Overall, the game market is expected to show a growing trend. It is recommended to focus on leading companies with rich version reserves, strong R&D capabilities, and high-quality products.

Guotai Junan said that the current performance of the game industry has begun to gradually recover, and the policy environment is relatively appropriate, while industry valuations are low. There are two main lines of investment: companies with rich expectations of new products; and companies with high-quality overseas products or sufficient overseas experience.