CITIC Securities: The issuance of game licenses remains steady; focus on leading companies with strong research and development capabilities and global expansion strategies.

CITIC Securities released a research report stating that overall, the product reserves of leading manufacturers and small to medium-sized companies are continuously advancing, with long-term operations for IPs. The mid-term industry outlook is robust, and it is recommended to focus on leading companies with strong R&D and operational capabilities and global layouts. The continuous relaxation of online game license approvals is expected to lead to performance improvements from new product cycles in the gaming sector driven by AI and IP commercialization trends.

It is suggested to screen targets from three dimensions: 1) High-performing and high-dividend targets: Focus on high-quality gaming companies with stable fundamentals and dividend capabilities; 2) New technologies and new consumption trends: AI empowers game development and operational efficiency improvements, while 2C applications explore new interactive models, focusing on companies with technological accumulation and product innovation capabilities; 3) Quality content reserves under a relaxed regulatory environment: The stable release of game licenses helps promote the concentrated launch of new products, recommending companies with content reserves and product cycle advantages.

CITIC Securities’ main viewpoints are as follows:

The issuance of licenses maintains a stable rhythm, and the supply side continues to normalize.

The National Press and Publication Administration announced the approval information for online games in March. This batch issued licenses for 133 titles, including 130 domestic online games and 3 imported online games. A total of 467 game licenses were issued in Q1 26, including 453 domestic and 14 imported, with monthly issuances maintaining over 100, reflecting a normalized supply rhythm.

Leading manufacturers have rich product reserves, and Tencent’s “Little People Country” has attracted attention.

Key products in this batch of domestic online game licenses include: Tencent’s “Little People Country,” 37 Interactive Entertainment’s “Little Helmet Big Adventure,” Kaiying Network’s “Chuan Shi Qun Ying Chuan,” Xinghui Entertainment’s “Celebrating the Remaining Year: South Qing Tycoon,” Youka Network’s “Zhenhun Street: The King Returns,” Boke Technology’s “Lord, Please Come Out,” Lanfly Entertainment’s “Goose Farm,” and Zhongqingbao’s “My Brave: End City,” “Endless Defense War,” “Endless Evolution,” “Sky Patrol Fighter,” and “Endless Fun: Nine Heavens Spirit Ruins,” among others; Tencent’s “Little People Country” is a life simulation product, with current reservations exceeding 2.1 million. The imported online game licenses include: Xiamen Kuanyu’s “Battle Knight,” Shanghai Qingyu’s “Post-Disaster Company,” and Nanjing Chenqu’s “God Cry: Dispute.”

Supply stability is improving, optimizing structure with a balanced approach.

Structurally, mobile online games remain the absolute mainstay, with 72 “mobile” titles and 55 “mobile-casual puzzle” titles in this batch of domestic games, accounting for over 97%; only 2 client-based online games were approved, along with 1 VR product, indicating that the industry continues to explore multiple platforms and new formats (such as VR). Overall, the rhythm of license issuance is stable and the structure is clear, ensuring the continuity of product supply in the industry and strengthening the predictability of manufacturers’ schedules and revenue releases; on the other hand, the proportion of casual and light products is increasing, combined with leading manufacturers’ ongoing investments in mid-to-heavy and IP products, resulting in a diversified supply pattern in the industry. It is recommended to continuously focus on leading manufacturers with rich product reserves, global distribution, and exceptional long-term operational capabilities.

Risk factors: Product launches may not meet expectations; policy regulations may tighten; industry competition may intensify; customer acquisition costs may increase.

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