Shanxi: AI application + IP ecological double-wheel drive, the media industry's fundamentals are expected to continue to improve.

Shanxi releases research report stating that looking forward to 2026, the emergence of high-quality AI applications domestically and internationally may continue to enhance the growth and valuation of the media industry. At the same time, the gaming and film industries are expected to benefit from the opening of a new gaming cycle, improvement in the supply of quality content, IP, and industry innovation empowered by AI. Key recommendations include investing in Kunlun Tech (300418.SZ) focusing on large models and AI development to open up new growth curves, Shanghai Film (601595.SH) continuing to expand IP business layout, and Hangzhou Electronic Soul Network Technology (603258.SH) benefiting from the opening of the new gaming cycle. Main points from Shanxi are as follows: Media performance growth, AI and gaming driving index up In 2025, the media index accumulated a 27.17% increase for the full year, ranking 9th among the 31 primary sub-industries according to Shenwan. Within the media sub-sector, gaming and TVB saw increases of 60.50% and 20.80% respectively, leading the growth. In Q1-Q3 2025, the media industry achieved revenue of 3872.78 billion yuan, a year-on-year increase of +5.75%; achieving a net profit attributable to shareholders of 321.09 billion yuan, a year-on-year increase of +37.88%. Within the sub-sectors, the film and gaming industries showed outstanding profit performance, with growth rates of +108.5% and +88.6% respectively. Large models continue to iterate and upgrade, AI applications expected to accelerate implementation With the significant improvement in generative multimodal AI capabilities, data such as text, images, audio, and video can be processed directly by AI models, thus further expanding the application scenarios of this technology. According to Grandview Research, the global AI market is expected to exceed 1.8 trillion USD by 2030, with a CAGR of 37.3%. Generative Engine Optimization (GEO) is a forward-looking digital marketing strategy that improves the readability, credibility, and usability of brand content in AI search platforms. According to Mezzanine Marketing Academy predictions, the global GEO market size is expected to exceed 100 billion USD by 2030, with the Chinese market size reaching 24 billion USD. Steady progress in the film industry in 2025, focusing on the 2026 Chinese New Year box office, AI+ film applications In 2025, the annual box office showed a steady progress, mainly due to the emergence of blockbuster films during several important peak seasons, which collectively helped lift the market throughout the year. Looking ahead to 2026, the film market is expected to see an increase in content supply and improvement in industry structure. "Cartoon dramas" as a new form of content, with AI helping to significantly increase production efficiency and clear growth paths, while platform incentive policies help industry development, it is expected that the domestic cartoon drama market will enter a period of high-speed growth starting from 2026. Continued growth trend in the domestic gaming market, new product cycle opening driving performance growth In 2025, the revenue of the Chinese gaming market was 350.789 billion yuan, a year-on-year increase of 7.68%, with CMGE revenue increasing by 7.92% year-on-year, and web game revenue increasing by 14.97% year-on-year. The revenue from overseas markets in 2025 was 20.455 billion USD, a year-on-year increase of 10.23%. Additionally, in the medium to long term, AI empowered gaming industry brings about gameplay innovation and improved production efficiency. In 2026, the gaming market is expected to benefit from the steady opening of the new gaming product cycle, combined with the continuous improvement in competition for overseas products, which is expected to drive steady growth in gaming industry revenue. Risk factors: policy risks, macroeconomic downturn risks, product launches below expectations, intensified competition, etc.