2026Q1 Game Sector: Opportunities from AI Empowerment and High Dividends

According to data from the China Audio-Video and Digital Publishing Association, the actual sales revenue of China’s domestic game market reached

in 2025, a year-on-year increase of 7.68%; the user scale reached , a year-on-year increase of 1.35%, both hitting record highs [1]. This data indicates that after adjustments in previous years, the Chinese game market has returned to a stable growth track.

In terms of quarterly performance, the 2025 game market showed the characteristics of “leading in the first half of the year, pulling back in the third quarter”: Q1 2025 revenue reached RMB 85.704 billion (YoY +17.99%), driven by Spring Festival promotion activities and the release of new games [2]; Q3 revenue was RMB 88.026 billion (YoY -4.08%), affected by a high base from the previous year but rebounded due to hit games in the summer season.

Since the start of 2026, the game sector has performed actively. Statistics show that among 26 A-share game companies,

saw their stock prices rise by more than , and saw increases of over [6]. In the sector’s gain rankings, Kunlun Tech (+55.44%), Tom Cat (+28.54%), and 37 Interactive Entertainment (+26.1%) stood out, and the market value of Century Huatong exceeded RMB 150 billion.

The total number of game approvals issued in 2025 reached

, a increase compared to 1,416 in 2024, hitting a new high since the 2018 game approval regulations [3]. Among them, there were 1,729 mobile games (accounting for over 97%) and 159 PC client games (YoY +17.78%). The normalization of game approval issuance has greatly improved the business environment for game developers, and reserved sufficient resources for the intensive launch of new products in 2026.

Policy support continues to increase. Shanghai’s “Ten Measures for the Game Industry” plans to allocate RMB 50 million in special support funds annually, systematically building an industrial ecosystem covering R&D, overseas expansion, esports, IP incubation and other links [5]. Guangzhou’s “18 Measures” clearly aims to become one of the world’s most influential esports cities by 2030, while Shenzhen has launched a three-year action plan targeting the “Top City for Chinese Game Overseas Expansion”.

Xiamen Gigabit Network Technology Co., Ltd. was established in April 2004 and listed on the main board of the Shanghai Stock Exchange in January 2017, adhering to the development strategy of “Premiumization, Differentiation, Globalization” [9]. The company’s core products include the PC and mobile versions of Wen Dao, Yinian Xiaoyao, Wen Jian Changsheng, etc., and its self-operated platform Thunder Game has successfully operated multiple games.

Financial data shows that the company’s stock price closed at RMB 472.05 on January 14, 2026, with a TTM price-to-earnings (P/E) ratio of 22.65x, a TTM dividend yield of 3.41%, earnings per share of RMB 20.84, net asset value per share of RMB 74.69, a price-to-book (P/B) ratio of 6.32x, and a total market value of RMB 34.007 billion. Since its listing in 2017, Gigabit has accumulated cash dividends of

, which is its net financing amount from the market [10], providing real returns to long-term investors.

37 Interactive Entertainment’s main business is the R&D, distribution and operation of mobile games and web games. In recent years, the company has actively laid out in the AI field and built an extensive investment portfolio [11]. Financial data shows that the company’s stock price closed at RMB 29.57 on January 14, 2026, with a P/E ratio of 19.57x, a dividend yield of 3.60%, a gross profit margin of 76.8%, a return on equity (ROE) of 23.9%, a P/B ratio of 4.54x, a total market value of RMB 61.15 billion, and a 1-year increase of 88.092%.

37 Interactive Entertainment’s AI layout is highly forward-looking. Its independently developed “Xiaoqi Large Model” has been registered with the Cyberspace Administration of China for generative AI services, and is widely used in the entire business chain including market insight, product project initiation, art design, code assistance, advertising delivery, operation analysis, and intelligent customer service [12]. Its investment portfolio includes high-quality technology enterprises such as Zhipu AI (listed on Hong Kong Stock Exchange), BrainCo (the first unicorn in China’s brain-computer interface field), E-Chips, and Fangqing Technology.

In overseas markets, World Tour performed excellently in Hong Kong and Taiwan, ranking 6th-7th on the best-selling lists. The company was shortlisted for the 2025 China Game Overseas Evergreen List with products such as Gossip Harbor and Seaside Escape [13].

According to data from the Steam platform, the number of publicly available games using generative AI increased from 7,818 in July to

in December 2025, accounting for approximately 8% of Steam’s total library and 20% of the games planned to be launched in 2025 [8][15]. AI is permeating from auxiliary tools to core creative fields.

The effect of cost reduction and efficiency improvement is significant: Tencent’s statistics show that with AI empowerment, the character animation production cycle of Lightspeed Studios is shortened by

, and the verification time for some character skill prototypes is compressed from 2 weeks to 3 days [16]; some companies have improved the production efficiency of 2D character illustrations, scene concept art, music and sound effects, promotional videos and other content by [8].

Breakthroughs have also been made in innovative experiences: NetEase introduced intelligent NPCs based on large language models in games such as Justice Online Mobile and Yan Yun Shi Liu Sheng; Tencent launched the full-link AI tool “VISVISE” to develop AI teammates; the industry’s first “multi-user and AI agent mixed confrontation” mechanism in Giant Network’s Space Werewolf has attracted millions of cumulative players as of mid-2025.

In the field of brain-computer interfaces, on December 13, 2025, Shanghai Brain Tiger Technology released China’s first fully implantable, fully wireless full-function brain-computer interface product [17]. 37 Interactive Entertainment has invested in BrainCo and South China Brain Control, and developed Star Life Paradise, an auxiliary training game for children with autism; Century Huatong co-founded the Legendary Innovation Research Center with Zhejiang University in 2020, focusing on emerging fields such as brain-computer integration.

AI is reshaping the valuation logic of game companies. Traditional valuation mainly focuses on revenue and profit margins, while now it begins to pay attention to new dimensions such as marginal cost reduction, content capacity expansion, and user duration increase brought by AI. In the future, there will be new imagination space for the integration of UGC (User-Generated Content) and AIGC (AI-Generated Content) [7].

In the era of low interest rates, the high-dividend strategy of the game sector has a unique logic: the industry’s business model determines good operating cash flow, relatively limited capital expenditure, and both Gigabit and 37 Interactive Entertainment maintain continuous dividend records. The dividend yields of 3.41% and 3.60% are attractive in the technology sector, providing defensive attributes for investors.

The two companies show obvious differentiation in investment logic: Gigabit is known for stable operations and high dividends, suitable for value investors who prefer long-term growth; 37 Interactive Entertainment has entered the harvest period through its technology investment layout, with continuous release of equity appreciation and ecological synergy value, suitable for growth investors who prefer AI concepts and flexible returns.

On January 14, 2026, 37 Interactive Entertainment was publicly criticized by the Shenzhen Stock Exchange for violating information disclosure regulations in an assessment project [14], and its subsequent impact needs to be paid attention to. In contrast, Gigabit has a more stable record in compliance operations, and this difference may affect the allocation decisions of institutional investors.

: Factors such as changes in game approval policies, further tightening of content review standards, strengthened protection measures for minors, and increased requirements for data security and privacy protection need to be continuously monitored.

: Continuous traffic diversion by new formats such as short videos, competitive pressure brought by increased head concentration, and intensified product homogenization are common challenges faced by the industry.

: The subsequent impact of 37 Interactive Entertainment’s compliance incident needs attention; Gigabit faces the risk of the life cycle of its core products and the possibility that new games may not meet expectations when launched; the specific quantitative data on the contribution of AI business of the two companies is yet to be verified.

: The implementation of AI technology may not meet expectations, there is a product adaptation risk brought by technological iteration, and the commercialization process of new technologies such as brain-computer interfaces is uncertain.

: The industry’s supply and demand structure continues to optimize, the winter vacation and Spring Festival peak season is approaching, and the valuation cost performance is prominent (the game sector as a whole is expected to reach a 20x P/E valuation in 2026) [7].

: The improvement of multimodal capabilities promotes AI to penetrate from auxiliary work to core creative fields, with significant cost reduction and efficiency improvement effects, providing competitive advantages for enterprises with first-mover technological advantages.

: The overseas market of Chinese games continues to grow, and the internationalization strategies of enterprises such as 37 Interactive Entertainment are continuously advancing, and the proportion of overseas revenue is expected to increase.

: Local governments are actively promoting the development of the game industry, policy support continues to increase, and the business environment is continuously improving.

The game sector performed strongly in Q1 2026, supported by solid fundamentals and valuation catalysis brought by AI technological breakthroughs. As high-dividend targets in the sector, Gigabit and 37 Interactive Entertainment have different investment logics and risk-return characteristics respectively.

: The market size hit a new high in 2025 (RMB 350.789 billion), game approval issuance was normalized (1,771 approvals), policy support increased, and the industry’s recovery trend was established. AI empowerment is accelerating, penetrating from auxiliary tools to core creative fields, significantly improving efficiency and opening up imagination space.

: Gigabit (dividend yield 3.41%, P/E ratio 22.65x) is known for stable operations and high dividends, with cumulative dividends of RMB 6 billion demonstrating its emphasis on shareholder returns; 37 Interactive Entertainment (dividend yield 3.60%, P/E ratio 19.57x) builds differentiated competitiveness through its AI large model layout and technology investment portfolio, and its ROE of 23.9% shows high profitability.

: It is suitable for growth investors to pay attention to the valuation reshaping opportunities brought by AI applications, for value investors to focus on high dividends and stable cash dividends, and for trend investors to seize product cycle and sector rotation opportunities. Core allocation can focus on Gigabit (stable type) and 37 Interactive Entertainment (flexible type), and satellite allocation can focus on Century Huatong, Giant Network, Kaiying Network, etc.

: Late January 2026 (verification of Spring Festival game performance), March 27, 2026 (Gigabit releases 2025 annual report), April 16, 2026 (37 Interactive Entertainment releases 2025 annual report), and the launch performance of multiple blockbuster new games in Q1 2026.