AI will not dilute the value of the gaming industry, but instead shift the industry's value anchor from "the ability to produce content" to "the ability to consistently create high-quality products, attract traffic, and achieve commercial monetization," according to a recent research report from CITIC Securities.
As the gaming industry moves from an era of "capacity constraints" to an era of "scarcity reassessment," the largest companies stand to benefit the most. CITIC Securities predicts that the release of AI's value in the gaming industry chain will occur in two phases. In the short term, AI will be integrated into the R&D pipelines of leading developers, enhancing their ability to maintain evergreen titles, develop high-specification new products, and conduct global trial-and-error. In the medium to long term, as model capabilities improve, Token costs decline, and platform infrastructure matures, AI is expected to expand the content supply through AI UGC and create new experiences via AI Native, further enlarging the market size. The firm recommends focusing on industry leaders with comprehensive, industrialized production chains and companies with AI UGC platform opportunities, and suggests attention to businesses with established content platform foundations.
Key Perspectives from CITIC Securities:
Technology Evolution: Efficiency Gains First in Development, with Player-Side Applications Now Scaling Up.
On the developer side, AI is moving from single-point tool trials to systematic production. Large enterprises are transitioning to integrated production pipelines, while small and medium teams rely more on general-purpose models for research, coding, and prototyping. The barrier for individual creators is lowering to natural language processing. According to a survey by the Game Industry Committee, 86.4% of companies have applied AI in production, but 73.7% are still in the "AI-assisted exploration" phase, where humans decide what to do and AI helps execute it faster. On the player side, AI NPCs, AI teammates, and built-in UGC have already entered top-tier products. Among the top 100 mobile games by revenue in the first half of 2026, approximately 15% incorporated AI gameplay features, contributing 42.6% of the sample's total revenue. For example, AI NPC-related gameplay in Game for Peace has attracted 110 million cumulative users, with a peak daily active user (DAU) count of 17.7 million, demonstrating that AI is moving from R&D support to real player experiences.
Short-Term Potential: Non-Mobile Content Market Expansion, AI Enhances Leading Developers' Ability to Capture Demand.
In 2025, global PC gaming revenue increased by 12.0% year-on-year to approximately ¥305.2 billion, with China contributing 42% of the global PC revenue growth. During the same period, China's broad PC consumption reached about ¥113.4 billion, a year-on-year increase of 13.8%, and domestic client game revenue hit ¥78.16 billion, a 14.97% increase. CITIC Securities estimates that by 2028, domestic client game revenue could reach ¥109.4 billion under a conservative scenario, ¥117.2 billion under a neutral scenario, and ¥125.1 billion under an optimistic scenario, with the neutral scenario representing a 50% increase from 2025. The firm believes this growth potential primarily stems from an increased supply of high-specification domestic content and the re-energizing of existing PC demand. AI does not directly create demand but breaks the "quality-speed-labor" constraints, allowing a single organization to simultaneously maintain evergreen products, develop more new titles, and manage global projects. At this stage, AI's value is more evident in improved human efficiency and project management capacity, which is expected to gradually translate into lower per-project costs and higher profit margins.
Medium to Long-Term Potential: Mature UGC Flywheels Already Validated, but AI-Native UGC and AI Native Still Face Dual Model and Platform Hurdles.
Currently, the well-established UGC models are the Roblox-style full-stack platforms and in-game UGC systems like Eggy Party and Game for Peace. Their core commercial loops were not built from scratch by generative AI; AI primarily lowers the costs of creation, review, and matching within existing systems. In contrast, AI game creation platforms like TapTap Manufacture and Project Craft, as well as AI interactive content platforms like Aippy and Douyin Interactive Space, are still in the product validation and ecosystem building phase. AI Native games are mostly concentrated in language-driven scenarios like narrative adventures, investigation puzzles, and character conversations, with no major commercial blockbusters yet. CITIC Securities believes the core constraints are a combination of model capability and platform capability. On the model side, AI UGC faces a trade-off between quality and cost. Iterative dialogues can improve completeness but increase Token and cloud costs, whereas controlling costs risks producing homogeneous, low-completion prototypes. AI Native games require longer contexts and continuous reasoning to maintain consistency in storylines, characters, and world states, leading to higher costs, while cost control and context compression can cause issues like content forgetting or confusion. On the platform side, UGC requires not only creation tools but also components like cloud hosting, publishing review, recommendation distribution, IAA/IAP, creator settlement, and content governance. Many problems remain unsolved: average exposure for a large volume of homogeneous works can harm the community experience, cold-starting makes it hard for high-quality works to be discovered, and interest matching and quality judgment for AI games are more complex than for short videos or traditional games. Therefore, AI UGC and AI Native will still need to wait for lower Token costs, improved model capabilities, and mature platform infrastructure. According to Gamma Data, after AI matures, it could bring a ¥53.3 billion to ¥84.6 billion incremental market for the domestic gaming industry.
Landscape and Barriers: Industrialization Wins in the Short Term, Platformization Wins in the Long Term.
In the short term, the core of competition is not who first adopts AI tools, but who can stably embed AI into their R&D pipeline to consistently produce high-specification content that meets commercial release standards. Companies like Tencent and NetEase have already built leading advantages in core genres, long-term operations, R&D talent, gaming data, and global product capabilities. In the medium to long term, as Token costs decline and model capabilities improve, the current cost-quality constraints are expected to weaken. The focus of industry competition will then shift to breadth of layout and platform depth. Breadth of layout refers to a company's ability to seize opportunities across different technical routes, such as AI game creation, interactive content, AI NPCs and teammates, AI Native, and world models. Platform depth involves having a complete infrastructure for creation, operation, distribution, payment, revenue sharing, and governance, as well as mature platform operation experience to convert new supply into sustained user consumption and creator income. CITIC Securities concludes that AI will not simply flatten industry barriers but may instead concentrate value further among leading companies that possess both technological deployment, high-quality content capabilities, and a complete platform flywheel.
Risk Factors: Slower-than-expected growth in the PC and console market; underperformance of high-specification new products; slower-than-expected progress in AI tool efficiency gains, AI UGC platforms, and AI Native product commercialization; a slower-than-expected decline in inference costs; higher-than-expected cloud running and content governance costs; and risks related to copyright, data security, minor protection, and content compliance.
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