GF Securities: To improve the popularity of games in the SLG category, it is recommended to focus on 37 Entertainment (002555.SZ), etc.

The Zhitong Finance App learned that GF Securities released a research report saying that SLG products have a long life cycle, stable payments, and successful SLG products can contribute to the company's stable performance. Judging from the boom, since 2024, multiple SLG products with integrated gameplay have performed well overseas. The scale of single products has grown further. According to Sensor Tower, among the products that first received 1 billion sales in 2024, “Last War” and “Whiteout Survival” are both SLG categories, reflecting SLG's dominant position in overseas markets. The bank recommended continuing to focus on companies with outstanding R&D capabilities and high-quality product reserves in the SLG field. It is recommended to pay attention to ST Huatong (002602.SZ), Tencent Holdings (00700), NetEase S (09999), 37 Entertainment (002555.SZ), and Kaiying Network (002517.SZ).

The main views of GF Securities are as follows:

Since 2024, the global mobile game market has shown an improvement in prosperity, and internal purchase revenue has rebounded

According to Sensor Tower, China's SLG overseas products have benefited from changes in the industry, and the prosperity has improved. In 2024, China's self-developed game market volume was 18.556 billion US dollars, an increase of 13.4% over the previous year. Strategy (including SLG) games accounted for 41.38% of the leading products. Based on this estimate, the strategy (including SLG) market size is about 7.7 billion US dollars/year. Assuming a stable market share of strategic products (including SLG), based on the turnover from January '24 to February '25, it can be estimated that the total monthly turnover of China's offshore strategy (including SLG) products is in the range of US$500-800 million. At the product level, Diandian Interactive's game “Whiteout Survival” had outstanding performance. Sensor Tower data showed that its annual turnover exceeded 1 billion US dollars for the first time in 24 years.

The integration of gameplay attracts users to download and reduces purchasing costs

Judging from the driving factors, the integration of various gameplay methods has boosted the acquisition of customers in heavy categories of games, reduced purchase costs, and improved product commercialization performance. SLG games are a game category where the main process is building+battle. In the early stages, they mainly build their own combat power, and later gain more revenue through alliances to attack local forces. The overall game process is long, and the entry threshold is high for new players, so it is difficult to buy. However, lightweight gameplay feedback is timely and can quickly convert user downloads, thereby improving purchasing efficiency. Therefore, acquiring users through lighter and more casual gameplay and retaining users through SLG's heavy payments has become an important way for SLG to expand customers.

“Kingshot” has a clear growth trend and high potential for payment

“Kingshot” enhances user acquisition efficiency through “tower defense” +SLG gameplay. Early tower defense gameplay is both fun and numerical growth, making it easy to introduce users, and is introduced into SLG gameplay with strong numerical design. Judging from the data, the early performance of the product was similar to “Whiteout Survival.” Furthermore, the bank believes that the numerical design of the two products is similar, so “Kingshot” has high commercialization potential. If the product growth trend continues, it is expected to become the next popular SLG for point interaction.

Risk warning: Game industry regulation strengthens risks, industry competition increases risks, and product launches fall short of expectations.