Industry core view:
Last week, the media industry (Shenwan) fell 5.36%, ranking 21st in the market, losing 300 in Shanghai and Shenzhen. Tencent video members announced price increases. According to Tencent’s financial report, as of the fourth quarter of 2021, the number of paid members of Tencent video was 124 million, a decrease of 5 million compared with the third quarter, and the growth rate changed from positive to negative. Over the same period, the advertising revenue of Tencent media decreased by 25% year-on-year to RMB 3.2 billion, mainly due to the decrease of advertising revenue of Tencent video and Tencent News. Membership and advertising are the main revenue sources of long video. With the continuous decline of advertising, increasing member income and reducing content cost have become one of the few choices for long video platforms. However, we believe that the current dilemma of the long video platform lies in the conflict between the regular and fixed fees of the membership system and the uncertainty of the content supply of the platform. Continuous membership fees can not guarantee the expected viewing experience for users. Continuous price increases may be counterproductive, resulting in the decline of the number of members, resulting in lower member income than expected, Therefore, the urgent problem to be solved by the current video platform is to change the charging mode and ensure the continuous high-quality output of content, rather than blindly raising the price.
Key investment points:
Games: 1) Gamma data released the game industry report from January to March 2022. China’s game revenue increased by 3% year-on-year, lower than the same period last year. In 2022q1, the actual sales revenue of China’s game market was 79.474 billion yuan, an increase of 10.08% month on month and 3.17% year-on-year, lower than the year-on-year growth rate in the same period of 2021; The actual sales revenue of China’s mobile game market was 60.432 billion yuan, with a month on month increase of 9.28% and a year-on-year increase of 2.72%, lower than the year-on-year growth rate in the same period in 2021. Among the top 50 mobile games of running water, the running water growth of fishing game “fishing battle” was obvious; The actual sales revenue of China’s independently developed games in overseas markets was US $4.554 billion, down 0.54% month on month. 2) Drake star partners released the 2022 Q1 global game market report. The Q1 game industry’s investment and M & A transactions reached US $98.7 billion, more than the total of last year. From the perspective of the overall investment trend, the investment heat of blockchain games and blockchain related is gradually rising. 3) Gamma data released the 20212022 mobile game IP market development report. The overall growth slowed down, and the growth rate of novel IP exceeded 40% for three consecutive years. The revenue of China’s IP adapted mobile game market was 129.77 billion yuan, but the growth rate fell below 5% for the first time; The growth rate of novel IP has exceeded 40% for three consecutive years, and the development potential of end game IP is still large. 4) Amy Hennig, former director of mysterious waters, will lead the team to develop a new Star Wars work. 5) Tencent’s “QQ hall” was officially shut down.
Internet: 1) Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) . On April 20, the country’s first meta universe Game Art Museum built by Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) was officially launched on the other side of meta universe art community. 2) Tencent video members announced price increases. On April 20, Tencent adjusted the prices of Tencent video VIP and super film and television VIP members.
Investment suggestion: comply with the strict regulatory environment of the policy, promote industrial reform, and grasp the innovation needs brought by the post epidemic era and Z era. 1) Game: the epidemic dividend has faded. It is suggested to pay attention to the individual stocks in the product line that are developed for the new generation of users, have well-known IP, have high expectations and good test feedback; At the same time, driven by the concept of “meta universe”, it is expected that the ecological construction of VR content will become the focus of the market in 2022; 2) Film and television cinemas: focus on leading cinemas and individual stocks; 3) Film and television series: diversified theatres and mini dramas will be the focus of the development of the video industry. It is suggested to pay attention to individual stocks with strong content IP commercialization ability; 4) Advertising marketing: focus on individual stocks of ladder media.
Risk factors: stricter regulatory policies, delayed launch and less than expected performance of Xinyou, increased risk of overseas business, repeated epidemic risk and goodwill impairment risk.
