Industry core view:
Last week, the media industry (Shenwan) fell 2.7%, ranking 23rd in the market, losing 300 in Shanghai and Shenzhen. Byte layout is the first metaverse concept naming company in China, and the wholly-owned holding entity behind it is Pico. We believe that Pico will still be used as the infrastructure of the meta universe, and the layout of relevant meta universe ecology will be carried out on this basis. For byte, under the established rules, metauniverse business may become another new revenue growth curve. However, as an important carrier of metauniverse, medium and heavy games still have a large gap compared with Tencent and NetEase. How to make up for it will become the focus of future development. The Shanghai Municipal Bureau of culture and tourism officially issued the Interim Provisions of Shanghai Municipality on the management of script killing content in secret rooms yesterday. This new regulation will also become the first local regulation on script killing in China, or provide an exemplary role for script killing supervision in other parts of the country. We believe that the advent of regulation does not mean that the market shrinks, but injects new vitality into the industry. Now it has become the industry of the Red Sea, and supervision is a booster for industrial upgrading and diversified development.
Key investment points:
Game: 1) sensor tower released the list of successful Chinese mobile games going to sea in December 2021. The total revenue of call of duty mobile games exceeded US $1.3 billion, and the revenue of new IP games of Lord of the rings increased by 49%. The overseas revenue of mobile terminal of MIHA Tour “original God” exceeded 96 million US dollars, ranking first in the revenue list of mobile tour to the sea. 2) The final selection result of “2021 taptap annual game award” was released, and tararia won the [best game award]. The two new player awards [favorite player award] and [best continuous operation Award] this year were won by rebirth cell and original God. (3) ZuLong and Tencent exposed the process of “Avatar” mobile game, which is shooting RPG mobile game. It is expected to be launched overseas in 2022. 4) Station B invests in Yanmo network, the founder of which is a former Yoozoo Interactive Co.Ltd(002174) executive and the current director of trisomy universe.
Internet applications: 1) byte layout, the first metaverse concept naming company in China., This is the first new company named after the concept of meta universe among China’s Internet manufacturers, and the wholly-owned holding body behind it is Pico. 2) The Interim Provisions of Shanghai Municipality on the content management of secret room scripts were officially issued and came into force on March 1 this year. The main changes are in two aspects. First, in terms of content audit standards, there are explicit requirements for the “story script and set story plot” of the script. In the provisions, the entry of “set story plot” is deleted from the content audit standards, and the provisions on “scene, clothing and props provided” are added; Secondly, the administrative department of culture and tourism will strengthen the daily supervision and inspection of secret rooms and cultural business units.
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 performance of Xinyou not as expected, increased risk of overseas business, repeated epidemic risk and goodwill impairment risk
