Liu Sixuan, intern journalist at the Economic Observer

On August 12th, Tencent President Liu Chiping calculated during the second quarter performance conference call: "A batch of computing devices that we pre paid a deposit to order a few months ago are now being sold, and we can earn over 30% more than the original purchase price." However, he did not press the transaction button, but instead poured all of these computing devices into Tencent's self-developed large model.

Nowadays, these computing powers have entered the game production line, and the Delta Action team has integrated AI into multiple workflows. This is Tencent's choice as a gaming giant.

By reviewing the mid-term performance of eight gaming companies including Tencent, NetEase, Century Huatong, Perfect World, Sanqi Interactive Entertainment, Giant Network, Jibit, and Dianhun Network in 2026, Economic Observer reporters found that there are three solutions for game companies to use AI: some internalize computing power and use it for research and development to improve efficiency; Some use AI to transform gameplay and experience; Some directly invest in the upstream and downstream of AI to achieve financial monetization.

From the perspective of revenue fundamentals, Tencent's game revenue in the first half of the year was about 130.1 billion yuan, a year-on-year increase of 10%. Long lasting games and IPs such as "King of Glory" evolved from "Rock Kingdom: World" to maintain its basic foundation; NetEase's gaming main business profit has improved, but its half year net profit attributable to the parent company has been dragged down by nearly 6.3% due to the floating losses of its holdings in Pinduoduo stock; Giant Network's net profit increased by about 176% year-on-year, mainly due to the launch of "Supernatural Action Group" just over a year ago; Sanqi Interactive Entertainment's net profit attributable to its parent company increased by 26%, mainly driven not by its main business, but by over 1 billion yuan in unrealized gains from investments in companies such as Zhipu Huazhang; The growth focus of Century Huatong is still firmly established overseas, with Kingshot and Whiteout Survival, which have been online for three years, working together.

Traditional buying logic and skin swapping tactics are ineffective, and game developers are facing the challenge of limited user growth. According to data from the Game Working Committee of the China Audio Video and Digital Publishing Association, the actual sales revenue of the domestic game market in the first half of 2026 was 188.45 billion yuan. Although the revenue scale was high, the user base remained stagnant at 684 million, with a year-on-year increase of only 0.82%. Revenue growth increasingly relies on the depth of payment from existing users, forcing game giants to find a cure in completely different ways.

Three paths to enter AI

AI has become a consensus among various companies attempting to break through the ceiling, but the entry path has diverged:

Tencent chooses to keep its computing power internally and prioritize self research. Transferring and reselling computing power devices immediately resulted in a net profit of over 30%, but Tencent has no intention of selling computing power. Instead, the vast majority of the newly added computing power is used for self-developed large models. James Mitchell revealed that the Delta Action team has integrated AI into multiple workflows, including using data agents for performance analysis and using hybrid 3D models for asset generation; Tencent is still developing AI teammates and assisting in code review for "Peace Elite" using its self-developed large-scale model.

The consensus in the gaming industry today is to transform research and operation with AI. During the performance briefing for the 2026 half year, Lu Hongyan, Chairman of Jibit, stated that in the past, when Jibit judged talents, the weight of basic skills (programming, art, numerical, system construction) and creativity was about 7:3 or 8:2, with creativity accounting for only 20-30%. After AI capabilities enter the gaming industry, this weight is reversing, with creativity and aesthetics accounting for 70% -80% of talent evaluation, and the rest being learning how to collaborate with AI partners.

Another way is to directly integrate AI into the gameplay. Unlike Tencent's strategy of using AI alone to tell stories, NetEase's AI actions closely follow the intuitive and perceptible gaming experience of players.

As of August, "Egg Party" has integrated cutting-edge models such as DeepSeek V4 Pro, GLM-5.2, and Kimi K2.7 Code into the editor for UGC creation; The martial arts themed game "Reverse Water Cold" mobile game released a "New World" version in June, introducing thousands of AI NPCs to interact with players. At the Q2 earnings conference on August 20th, Ding Lei, CEO of NetEase, stated that NetEase will fully utilize AI as a capability amplifier to accelerate product development and enhance user experience in the gaming world.

The third way is to invest in AI companies.

During this financial reporting season, Sanqi Interactive Entertainment's investment in the AI field has resulted in a book return. In the first half of the year, its investment income reached 1.016 billion yuan, accounting for 45.22% of the total profit, mainly due to the high stock price of its joint venture Zhipu after its listing on the Hong Kong Stock Exchange in January 2026. In the past three years, Sanqi Interactive Entertainment has continued to invest in AI: in 2023, it invested 25 million yuan to acquire 0.27% equity of Zhipu, and in 2024, it invested 71.26 million yuan to acquire 0.3% equity of Kimi, and also holds 0.27% equity of Baichuan Intelligent. It has also laid out more than ten AI and hard technology enterprises such as QiangBrain Technology.

In the 2026 semi annual report, Sanqi Interactive Entertainment explained its investment logic as mainly focusing on business synergy and cutting-edge technology positioning. On the one hand, it focuses on "innovative entities that can form effective synergy with game research and operation business", and on the other hand, it focuses on "cutting-edge scientific and technological fields with high potential growth rate and wide growth space".

Old IPs are guarding the market, while new ones are seizing the market

In the fourth quarter of 2025, NetEase's game revenue growth rate dropped to 3.4% year-on-year. There were no major new games this season, and the turnover of old products fell, causing concerns in the market about growth momentum. The situation will reverse in the first half of 2026, with game and related value-added service revenue increasing by 8.3% year-on-year, and the gross profit margin of the game division rising to 75.4%. The game gross profit margin in the second quarter reached a historic high.

NetEase's incremental growth mainly comes from existing products: the first day active players of the June new version of the mobile game "Reverse Water Cold" exceeded 10 million, and the online record reached a two-year high. The registered users of "Egg Boy Party" exceeded 700 million, and the monthly active users remained stable at over 100 million; After its international release, "Yanyun Sixteen Sounds" once entered the top three of the global hot selling list on Steam, and returned to Xbox in June this year. On the new tourism side, although "Star Painting Friends Sunny Day" and "Forgotten Sea" have been released, their reputation and profitability still need to be observed.

During the conference call, Ding Lei responded to the issue of the disappointing reputation of the new game "Forgotten Sea": "We have received a lot of feedback from players, many of which are critical... it did not fully reduce the initial understanding cost for players

Tencent also focuses on incremental development around old IPs. James Mitchell stated that the average daily active account count for both Delta Action and Fearless Covenant reached a historic high in the second quarter. A more representative action is the redevelopment of old IPs. "Rock Kingdom: World" has transformed the classic web game IP that has been in operation for many years into a 3D open world. After its launch on March 26th, it added over 15 million new users within 13 hours and exceeded 30 million registrations in 9 days.

However, not all classic games can become the "panacea" for game developers. The revenue of Dianhun Network has long been focused on the "Dream Three Kingdoms" series of PC games that have been in operation for over 15 years. Among them, "Dream Three Kingdoms 2" has registered over 100 million users and was selected as an e-sports project for the Hangzhou Asian Games. In 2025, the revenue of the electronic soul network client game will be 245 million yuan, accounting for 63.63% of the total revenue; However, due to the continuous decline in recharge revenue of "Dream Three Kingdoms 2", the revenue of the client game decreased by 33.78% year-on-year, directly dragging the profit of Electric Soul Network from 30.57 million yuan in 2024 to a loss of 214 million yuan in 2025. In the first half of 2026, due to the inability of new products to take over, the losses of Dianhun Network will further expand to nearly 59 million yuan.

On the other side of the market, Giant Network, which has long relied on old IPs such as "Journey", has found a new coordinate - "Supernatural Action Group". This game, which will be launched in January 2025, demonstrates the absolute power of a dark horse: its initial performance is not outstanding, but it gradually strengthens with the differentiated gameplay of "Chinese style micro terror+multiplayer cooperation". In August of this year, the daily active users have exceeded 12 million, and as of the end of the first quarter, the cumulative registered users have exceeded 200 million and the cumulative turnover has exceeded 5 billion yuan.

The explosion of a single product directly drove Giant Network's revenue to increase by 182.08% year-on-year in the first half of 2026, with a net profit attributable to the parent company of 2.144 billion yuan, a year-on-year increase of 175.96%. Its non deductible net profit of 2.236 billion yuan is higher than the net profit attributable to the parent company, which means that this round of high growth almost does not include investment income and other factors.

In the new games released in the first half of 2026, Perfect World's "Alien" encountered financial problems: as of August, the revenue has exceeded 2 billion yuan, but according to the accounting standards for enterprises, the intensive marketing and promotion expenses in the early stage of the new game's public beta must be recognized in the current period at once, resulting in a year-on-year increase of 213% in Perfect World's sales expenses in the first half of the year; However, player recharge receipts must be deferred and recognized as revenue during the player's lifecycle.

On one hand, the expenses are fully recorded in the current period, and on the other hand, the income is credited in installments, making the "abnormal environment" flow more prosperous and the current report more unprofitable. Combined with the absence of such mismatches in the same period last year and the natural decline in revenue of several old games in operation, Perfect World turned from profit to loss in the first half of the year. The performance contribution of 'Yihuan' is expected to be gradually released from the third quarter onwards.

The fate of going out to sea

The "Report on China's Game Industry from January to June 2026" released by the Game Working Committee of the China Audio Video and Digital Publishing Association on July 30 shows that the actual sales revenue of the domestic game market in the first half of the year was 188.45 billion yuan, a year-on-year increase of 12.17%; The overseas revenue of self-developed games reached 12.372 billion US dollars, a year-on-year increase of 30.22%, with overseas growth rate exceeding twice that of China. The game industry tracking research report released by Everbright Securities in June pointed out that in the context of entering stock competition in the domestic market, going global has become a necessary strategy for game companies.

Century Huatong is one of the most typical beneficiaries of going abroad. In the first half of 2026, its operating revenue was 22.117 billion yuan, a year-on-year increase of 28.53%. Among them, export revenue accounted for 64.69% of the total revenue, with a year-on-year growth rate of 59.71%. Whiteout Survival, which has been online for three years, and Kingshot, which will be released in 2025, form a dual revenue engine.

Compared with Century Huatong, Tencent's overseas gaming business showed some weakness in the first half of the year: international gaming revenue was 37.4 billion yuan, a year-on-year increase of about 6%; Among them, the international gaming revenue in the second quarter was 18.6 billion yuan, an increase of only 4% calculated at a fixed exchange rate. The slowdown in numbers is related to the high base. Last year's second quarter coincided with the strengthening of games under Supercell (a Finnish gaming company controlled by Tencent) and the launch of the new game "Dune: Awakening".

At the Q2 earnings conference call, James Mitchell specifically mentioned his maze puzzle game "Arrows Puzzle Escape", which was the most downloaded mobile game globally in Q2; The in-game advertising revenue is not included in the international gaming division. If it is adjusted with other in app advertising revenue, Tencent's international gaming revenue growth rate will be about 4 percentage points higher year-on-year.

Going global has long been a weakness for NetEase. As early as the third quarter of 2018, Ding Lei revealed during a conference call that overseas revenue exceeded 10% of the game's net revenue for the first time. However, NetEase did not have Tencent's huge capital map or Century Huatong's multi category matrix, and its overseas revenue did not show significant improvement in the following years.

In 2024, in order to supplement its channels and distribution capabilities, NetEase will restart cooperation with Microsoft and Blizzard, and establish an overseas distribution brand, Experiential Global. In the first half of 2026, the results of remedial classes will begin to show on charts and reports: "Yanyun Sixteen Sounds" has a stable positive review rate of over 87% on Steam, has repeatedly ranked in the top three of the Steam global bestseller list, and landed on Xbox in June; In mid August, "Marvel Strife" topped the US bestseller list with over 4.4 million official community members.

In early August, Wang Ji, Chairman of Century Huatong, stated at ChinaJoy (China International Digital Interactive Entertainment Exhibition) that globalization will be the largest source of growth for China's gaming industry in the future; The way Chinese manufacturers go global is shifting from products to systematic capabilities. This window rewards companies with systems, patience, and localization capabilities, while punishing companies that want to make quick money.

(Author Liu Sixuan)