Everbright Securities: The valuation of the game sector is expected to increase under the blessing of AIGC

Zhitong Finance APP learned that Everbright Securities released a research report stating that in major game exhibitions during the North American game summer vacation, major overseas manufacturers such as Microsoft and Capcom showed the latest demonstrations of their various products. The “AIGC+Game” products & technical reserves of major overseas game companies have been fully unveiled. The way and application potential of game products combined with AI is expected to be further recognized by the market and the public, and a torrent of industry trends is gradually taking shape. AIGC is applied to the game side in terms of progress in gameplay reform, cost reduction and efficiency increase, and user experience may exceed expectations. The valuation of the game sector is expected to increase, and the “buy” rating for the Internet media industry is maintained. In the industry, recommend: Tencent Holdings (00700), Netease-S (09999); pay attention to Yaoji Technology (002605.SZ), Yingying Network (002517.SZ), Fuchun Shares (300299.SZ) and Baotong Technology (300031.SZ).

The main views of Everbright Securities are as follows:

In the major game exhibitions in North America’s summer games, Microsoft, Capcom and other overseas major manufacturers showed the latest demonstrations of their various products. AIGC has been fully applied in various blockbuster games, developing transformative gameplay.

1) Microsoft: On June 11 local time, Microsoft held an Xbox game conference and a “Starry Sky” face-to-face meeting. Its Bethesda blockbuster product “Starry Sky” will be officially released on September 6th. The game “Starry Sky” contains 1,000 planets with complete ecosystems and different landforms for players to explore.

AI in Microsoft’s “Starry Sky” is deeply involved in the generation of planetary content, and it is expected to use AIGC to improve the underlying logic of the “open world” category. Previous open world games stacked and filled a large amount of content in the map at the same time, allowing players to continue to consume content during the game, achieving an “open” effect. However, the content relies on manual production, the cost of manual content production is high, and the content utilization efficiency is low.

“Starry Sky” is expected to gradually explore innovative game production models:

1) The system of “Starry Sky” builds planets when players visit, and AI automatically unfolds the artificially created parts when players explore, such as stitching a large area of ​​terrain;

2) According to the characteristics of the planet, the AI ​​automatically extracts appropriate content links, adjusts, and combines it into the automatically generated planet scene from the artificially produced scenes, tasks, encounters, etc.

AIGC’s deep integration with the underlying production of heavy games such as open world is expected to achieve:

1) Efficient use of artificially produced content with characteristic art styles through AIGC is expected to improve R&D efficiency, shorten the content production cycle, and the supply of high-frequency updates will stimulate demand more frequently, and increase the game time & retention of players.

2) It breaks the traditional linear design plot and process in advance, and automatically generates world view design, task branch routes, etc. according to player preferences, so that players can experience the exploration of the unknown every time they play, which is expected to improve the replayability of the game. This will increase player retention and product usage time.

3) AIGC brings a differentiated gaming experience. With the function of customizing appearance and clothing and other art resources, it is easier for players to form emotional projections to a more realistic and personalized game world, which is expected to increase their willingness to pay.

2) Capcom: On June 12, local time, Capcom held the 2023 online press conference to update the progress of its new product “Dragon’s Dogma 2”. In this game, players will embark on an adventure journey with more intelligent AI followers, which is expected to achieve a higher sense of reality, interaction and player immersion.

Overseas game giants have fully embraced the new era of productivity brought by AIGC.

Including Microsoft (open ai combined with game production), Ubisoft (dialogue writing tool Ghostwriter), Unity (AI auxiliary tool U3D Copilot), Blizzard (AIGC image generation tool Blizzard Diffusion), Nvidia (providing customized game AI model OEM services ) and other major overseas manufacturers have launched game production efficiency-enhancing products.

risk warning:Risks of AI technology R&D and product iteration falling short of expectations; risks of increased competition in the game industry; risks of commercialization progress falling short of expectations; domestic and foreign policy risks.