Source: Securities Times

Recently, the gaming industry has continued to make big moves.

On May 20, the State Press and Publication Administration released approval information for domestic online games in May 2024. A total of 96 games have been approved. Since this year, the State Press and Publication Administration has distributed a total of 524 domestic game editions and 46 imported game editions.

On May 21, Tencent's newbie mobile game “Dungeons and Warriors: Origins” went live and quickly became the top seller on Weibo and iOS free lists. NetEase Games held the 2024 online press conference on May 20 to officially announce the public beta period for more than 40 products and “16 Sounds of Yan Yun”.

In terms of stock prices, on May 21, the performance of online game concept stocks was divided. The “1” word in Caesar Culture rose and stopped; China Qingbao, Baotong Technology, and Tomcat rose more than 4%; Xunyou Technology rose more than 3%; Beiwei Technology fell more than 6%. Recently, the gaming sector has been highly favored by capital. The game ETF (159869) has continued to receive net capital inflows for the past 5 trading days, with a cumulative total of over 200 million yuan.

In May, domestic game versions were released, and 96 games passed the review

On May 20, the State Press and Publication Administration released approval information for domestic online games in May 2024. A total of 96 games have been approved. Among them, 90 games received the mobile version number, and 6 games received the mobile-client version number.

Specifically, the new tours approved this time include Kaiying Network's “Baikongling”, “Fight for Two Cities: Reconstructed” by Gibbit, “Four Seasons City and Domino” by 37 Mutual Entertainment, and “Showdown!” by China Qingbao! “River of Swords”, “The Legend of Miragall”, “Pixel Warlord”, “Starlight Beauty”, “Walking the Wind” by Zulong Entertainment, “Elvis Prestige” by Migu Mutual Entertainment, etc. However, new games under its umbrella, such as Tencent and NetEase, are temporarily absent.

It is worth noting that this edition includes a number of well-known IP-adapted games, such as “Bad Man: Jiuyou Xuantian”, “Inhuman and Ace Employee”, “Shade the Sky: A Leaf of Dust”, an IP adaptation of the animated film “Kung Fu Panda: Dragon Warrior”, an anime game IP “My Name is MT: Pocket Guardian Battle”, etc.

A Chinese brokerage reporter noticed that since this year, the State Press and Publication Administration has distributed a total of 5 batches of domestic game editions and 1 batch of imported game editions. Among them, in terms of domestic games, the number of approved games from January to May this year was 115, 111, 107, 95, and 96, respectively. A total of 524 versions were distributed during the year, an increase of more than 20% compared with 432 in the same period last year; in terms of imported games, the State Press and Publication Administration published version information for 46 imported games in April of this year.

“Previously, the number of domestic game versions released for four consecutive months (December 2023, January, February, and March 2024) exceeded 100. Although the number of editions released in the past two months has declined slightly, it is still significantly higher than last year's average. As the normalization of versions continues to be verified, and new products are launched one after another, we believe that the supply side of the game industry is currently stabilizing, and the industry as a whole has ushered in an upward cycle.” Yue Zheng, a media analyst at China Galaxy Securities, commented.

Minsheng Securities believes that the summer season is nearing the gathering of blockbusters, and at the same time, some games have made some breakthroughs in gameplay and content, and are beginning to build new models in combination with AI. I am optimistic that under policy supervision and the normalization of version distribution, the game sector will recover as the new product cycle begins.

Tencent and NetEase release a variety of new games

On May 21, Tencent announced the official public beta of its agent “Dungeons and Warriors: Origins” (“DNF” mobile game for short). Less than an hour after opening the service, the official announcement was immediately issued stating that due to server fluctuations, some users were unable to log in and were shut down for updates. Related topics also quickly hit the social media hot lists. Furthermore, the “DNF” mobile game also topped the iOS free bestseller list today.

According to reports, “DNF” is one of Tencent's ace game IPs. Tencent began acting as an agent for the “DNF” national service in 2008. In the PC online game era, “DNF”, along with “CF” and “LOL,” is known as the “troika” of Tencent game products, and at one point, it achieved an average monthly turnover of close to 1 billion yuan. According to previously released data, the number of “DNF” mobile game subscribers exceeded 50 million.

Just last week, Tencent announced its results for the first quarter of 2024, and game business turnover resumed growth. Financial reports show that in the first quarter of this year, Tencent's total game turnover in the local market resumed year-on-year growth, with an increase of 3%. Due to revenue delays, game revenue in the local market fell 2% year on year to 34.5 billion yuan. Revenue for “Wang Zhe Rongyao” and “Peace Elite” both declined year-on-year in the first quarter, while sales of various games such as “Battle of the Golden Shovel”, “Cross the Line of Fire Mobile Game” and “Break Through the Dark Zone” reached record highs in the first quarter.

Tencent's total game revenue in the international market increased 34% year over year, and game revenue in the international market increased 3% year over year to 13.6 billion yuan, mainly benefiting from the recovery in popularity of Supercell games (especially “Brawl in the Wild”) and the increase in users and sales of “PUBG MOBILE”.

Another major game company, NetEase, held the 2024 NetEase Game 520 online press conference on May 20. More than 10 new games and more than 30 popular games/IP and platform products were released at the conference. “16 Sounds of Yan Yun”, which is highly anticipated by NetEase in the console game market, announced that it will launch the “Zhong Lu Test” on May 31 and officially open beta on July 26 this summer. At the same time, another famous work, “Eternity”, also announced the latest development progress and actual machine demonstration of the “Eternity” mobile game at the conference.

A recent J.P. Morgan Chase research report pointed out that since this year, NetEase's stock price has outperformed gaming peers Tencent and the China General Internet Index Fund because the performance of “Eagle” in the 2nd quarter of 2024 fell short of expectations, which made investors uncertain about the performance of the other two major new games. J.P. Morgan said that it is optimistic about the performance of the new games “Eternity” mobile game and “16 Voices of Yan Yun”, which should achieve good monetization and accelerate the growth of game revenue in the second half of 2024. J.P. Morgan Chase's latest research report gave NetEase an increase in its holdings, with a target price of HK$200.

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