Zheshang: The interactive film and game market is expanding rapidly, and AI is opening new boundaries for content and interaction.

Zheshang released a research report stating that AI is driving interactive film and game production to complete the transformation from "live-action shooting AI-native," with AI upgrading from a "cost-reduction tool" to the "core of content and gameplay." Four signals are gradually landing: category demand validation (the "Shengshi Tianxia" series surpassed 5 million units in all-channel sales), large-scale commercial validation of AI-native products (the EA version of "Bu Wen Fanchen" is expected to launch, with total revenue for the first three weeks of sale potentially in the range of RMB 7 million to 8 million), regulatory compliance implementation (interactive dramas included in the filing system for the first time), platforms collectively entering the market, and the emergence of AI platform tools (such as Tencent TDream). The industry is in a period of rapid expansion. It is recommended to build positions across the interactive film and game industry chain along the three lines of "platformcontentIP," prioritizing targets with products or platforms already launched. Zheshang's main views are as follows: Market view The market generally believes AI is still at an early stage in the gaming industry: AI is more of a cost-reduction and efficiency-enhancement tool for art outsourcing and testing, and there is a lack of unified, comparable breakdown metrics for related revenue and profit contribution, making it difficult to deliver performance in the short term; interactive film and games are regarded as a niche category, where hit products are accidental ("Wan Dan! 2" failed to replicate the success of the first installment), and the market underestimates AI's impact on the production methods and costs of the interactive film and game category. View changes The bank previously believed that 26H1 performance could not endorse AI revenue conversion; currently, games lean more toward a Non-AI narrative, and share prices have not reflected AI logic. With the rapid expansion of the interactive film and game market and the launch of AI-native products, the bank believes AI is driving interactive film and games from "live-action shooting" toward "AI-native," and changes in cost structure and upward margin trends will be realized first. The bank's view The bank believes the market underestimates the significance of AI to the gaming industry: 1) Drastic cost structure changesAI pipelines compress the production cost of two hours of interactive film and game content from RMB 510 million to about RMB 100,000, with costs shifting from fixed to variable costs billed by usage volume, and value migrating to model and platform providers; 2) Qualitative change in interaction formsmoving from fixed options with limited branches to AI-NPC long-term memory, dynamic branches, and real-time generation, with AI changing from a "cost-reduction option" to the "core of content and gameplay"; 3) Demand sideemotional value demand exceeds competitive thrill, platforms are competing for user time and creator supply in "interactive content," and interactive film and games are the form with the heaviest content and highest average revenue per user. Drivers 1) Launch of professional technology platforms: Tencent TDream one-stop creation platform in beta, ByteDance Seedance 2.5, Google Genie 3 world model (720p/24fps real-time interaction) advancing; 2) Large-scale commercial validation: AI-native product "Bu Wen Fanchen" launched on Steam EA on September 23, 2026; the EA version of "Bu Wen Fanchen" is estimated to have sold about 292,000 copies within three weeks, with total revenue for the first three weeks of sale potentially in the range of RMB 7 million to 8 million, completing its first large-scale commercial validation but not yet crossing the hit-product threshold; 3) AI-native products entering a period of intensive product launches: Decai Decoration's first AI-native interactive film and game "File Zero: Arrival" launched in September 2026; ByteDance Nuverse's "Bu Wen Fanchen" released a PV (large-model-driven NPC free communication and long-term memory); 4) Platform-side entry status: for example, Tencent's comic drama platform Huolong Manju launched an interactive mini-game channel "Wan Yi Wan," Douyin Interactive Space Plaza, etc. Key focus 1) Content production (with AI-native product reserves): Wuxi Boton Technology (self-developed AI engine, focus on the launch of new interactive film and game products), GuiZhou YongJi Printing (comprehensive AIGC content transformation, which the bank believes can cut into the ultra-light mini-game market), Decai Decoration (first AI-native interactive film and game "File Zero: Arrival"); 2) Content production (with production capability): Mango Excellent Media (interactive film and game "Forensic Investigation Team" already launched on Steam), Perfect World (Zhengqi Manman series), Shanghai Film ("Die Ying Cheng Shuang"), CHINA RUYI, NTES (Quantic Dream), Giant Network Group, COL Global Co., Ltd., IReader Technology, Ciwen Media Co.,Ltd., H&R Century Union Corporation; 3) IP and equity participation: CHINA LIT, Beijing Baination Pictures, Zhejiang Huace Film & TV; 4) Models/platforms: TENCENT (TDream interactive film and game creation platform); 5) Tools: Zhejiang Century Huatong Group, G-bits Network Technology, 37 Interactive Entertainment Network Technology Group, Kingnet Network; 6) Primary-market investment in AI games (VAST, etc.): Perfect World, 37 Interactive Entertainment Network Technology Group, Giant Network Group, BlueFocus Intelligent Communications Group, etc. Risk warnings: Changes in game approval numbers and regulatory policies; new product launch performance below expectations; AI input-output efficiency lower than expected; rising computing power costs; copyright and compliance risks of generated content; platform policy risks; acceptance risk of AI-native replacing live-action shooting.