Southwest: Agent iteration matures, bullish on AI film and television and AI marketing

Southwest released a research report stating that for 2026, the bank is mainly bullish on three directions: 1) AI film and television: With the release of seedance2.5, minimaxH3, and Kling 3.0 models, model performance has achieved major breakthroughs in CKH HOLDINGS image quality, and AI comic dramas and AI short dramas are gradually expanding into AI medium-to-long dramas and AI films. Related targets: AI medium-to-long dramas Mango Excellent Media (300413.SZ), AI films Bona Film Group (001330.SZ). 2) AI marketing: Pay attention to the catalyst from MOBVISTA (01860) AI Infra launch; 3) Games: In gaming, key recommendations are Kingnet Network (002517.SZ) and Giant Network Group (002558.SZ), other targets: NTES (09999), and the company's subsequent launch of self-developed new games is expected to contribute incremental growth. Southwest's main views are as follows: AI film and television: 1) AI short dramas. In 2026, China's micro short drama and AI drama/comic drama market size is expected to exceed RMB 121 billion (of which AI drama/comic dramas exceed RMB 40 billion), with a user scale of 851 million. In the first half of the year overseas, in-app purchases on both ends were about USD 1.27 billion. For the leading platform DramaWave, more than 90% of new episodes in July were AI-generated, with downloads increasing 39.82% month-on-month. Hongguo Free Short Dramas reached 357 million MAU, surpassing multiple long-video platforms. In September 2026, WeChat's short drama content center launched the free short drama mini-program "Lvpaopao Short Drama," aggregating short drama content within the WeChat ecosystem through a free viewing and advertising monetization model. 2) Medium-to-long dramas: Mango Excellent Media produced China's first fully AI-generated prime-time satellite TV long drama "Hou Xi You Ji," which premiered on August 31. On the night of its premiere, its real-time ratings peak was 0.3384%, with a market share of 1.7862%, taking first place in the same time slot among provincial satellite TV stations. AI production cost and cycle were greatly shortened: the production cycle was 4 months, costs were significantly reduced, and major savings were achieved in virtual shooting, set construction, DIGIHUMAN, special effects, and other links. 3) AI films: The first AI hyper-realistic theatrical film "Sanxingdui: Future Past" has officially been scheduled for October 23, 2026. "Unplanned: Guanghan Operation" passed project filing with the China Film Administration in April 2026, has already started shooting, and has entered the production stage. 4) Interactive dramas: On September 29, the National Radio and Television Administration publicly announced the filing information for the first interactive drama, "Dinosaur Fight: Huaxia Secret Realm," marking that interactive dramas have officially entered a stage of standardized development. AI marketing: Large AI models have deeply penetrated the marketing field. AIGC enables second-level batch production of copy, images, and videos, while marketing agents autonomously complete research, strategy, placement, and customer service interaction. In the first half of 2026, the AI marketing Agent track entered the stage of large-scale commercial monetization, and leading vendors' product architectures upgraded from "single-point tools" to "multi-Agent collaborative systems." MARKETINGFORCE launched the AI-Agentforce 3.0 agent middle platform, integrating 500+ agent applications and covering the full chain of marketing, sales, and service; QUNABOX GROUP released the "full-sensory physical AI agent" system, evolving offline terminals into edge-side agents with environmental perception and content generation capabilities. MOBVISTA should be watched for subsequent catalysts. AI infra has entered the sprint stage and is expected to launch in October. The proportion of GPUs used in the new architecture has increased significantly, and they are used for model training. The original CPU-based training architecture data foundation could not train complex user behavior data. The new architecture adds temporal features, which is conducive to training complex models and can greatly shorten the data accumulation time for IAP models. Office AI Agent: In 2026, China's desktop AI-native office agent industry entered a stage of explosive scale expansion. Leading major companies initially broke out by leveraging traffic and large model advantages. 1) Tencent ecosystem: A 2026Q2 report released by Analysys showed that in June, WorkBuddy's monthly visits reached 20.97 million, ranking first in the industry; 2) Alibaba ecosystem: On July 27, 2026, Alibaba fully integrated three productsQoderWork, MuleRun, and Wukongand launched a new Agent office product, "Qianwen Office." One full month after its launch, Qianwen Office's user count exceeded 30 million, with enterprise users accounting for more than half. 3) ByteDance ecosystem: The product teams integrating the AI Agent tool "Coze" and the AI Coding tool "Trae" were merged into the "Doubao" system, and the enterprise office collaboration tool "Feishu" was also merged into the "Doubao" team. Games: License approvals continued their growth trend. From January to July, a total of 1,110 domestic online game licenses and 36 imported licenses were issued, totaling 1,146; of these, 193 domestic licenses were issued in July alone, a single-month high since 2024. High-quality content and strong IP drive supported the steady development of the gaming industry. In the first half of 2026, China's actual game market sales revenue was RMB 188.450 billion, up 12.17% year-on-year, with a user scale of 684 million, up 0.82% year-on-year. In the first half of 2026, overseas sales revenue of self-developed games was USD 12.372 billion, up 30.22% year-on-year. Pay attention to the release of new game revenue and expectations for new game launches: For NTES, watch "Sea of Oblivion," "Infinity" (2027.1.15), and "Guiying Cangfeng"; for Tencent, watch "Roco Kingdom: World" and "Honor of Kings: Wanxiang Chess"; for Perfect World, "Yihuan" achieved RMB 1.4 billion in revenue in the first half, and subsequent performance release should be watched. [Investment Recommendations] For 2026, the bank is mainly bullish on three directions: 1) AI film and television: With the release of seedance2.5, minimaxH3, and Kling 3.0 models, model performance has achieved major breakthroughs in CKH HOLDINGS image quality, and AI comic dramas and AI short dramas are gradually expanding into AI medium-to-long dramas and AI films. Related targets: AI medium-to-long dramas Mango Excellent Media (300413.SZ), AI films Bona Film Group (001330.SZ). 2) AI marketing: Pay attention to the catalyst from MOBVISTA (01860) AI Infra launch; 3) Games: In gaming, key recommendations are Kingnet Network (002517.SZ) and Giant Network Group (002558.SZ), other targets: NTES (09999), and the company's subsequent launch of self-developed new games is expected to contribute incremental growth. [Risk Warnings] Risks include stricter industry policies, R&D related to multimodal large models falling short of expectations, new game performance falling short of expectations, box office performance falling short of expectations, and intensifying market competition.