CICC has released a research report predicting that the first-quarter 2026 performance of key media and internet companies may show divergence across different sub-sectors. The online gaming industry continues to demonstrate high growth momentum, with attention focused on the sustained operation of recently launched games and the release schedule of major upcoming titles. The marketing and advertising sector is benefiting from incremental budget allocations driven by AI applications. Box office revenue for the overall film market declined by approximately 50% year-over-year in the first quarter, largely due to the high base set during the 2025 Spring Festival holiday, placing performance pressure on several film and television companies. The book publishing and cable broadcasting industries remain relatively stable.
For 2026, CICC recommends focusing on the following areas: deepening AI applications to enhance efficiency and commercialization; the expansion of Chinese cultural content overseas, tapping into the potential of web novels, short dramas, and games; and the upgrading of IP demand along with a reassessment of industrial value.
Key views from CICC are as follows: The preview covers 27 major A-share companies with a total market capitalization of RMB 817.5 billion, accounting for 50.3% of the total market cap of the media sector (Shenwan classification). In digital media, Mango TV has seen relatively fewer key drama series and variety shows airing; attention should be paid to upcoming spring promotion events and advertiser budget trends. The online gaming sector maintains strong growth, with domestic and overseas revenue increasing by 11% and 31% year-over-year in January-February, respectively. Revenue and profit contributions from games launched in 2025 continue to support year-over-year growth. Some companies may face quarter-over-quarter profit pressure due to upfront marketing expenses. Focus will be on the performance of top recently launched games and new releases such as Perfect World's "异环" and 37 Interactive Entertainment's "Last Asylum."
In marketing and advertising, AI application deployments and the Winter Olympics have provided some budget increments. Focus Media is expected to see investment profit gains in the first quarter from its transaction with Shuhe. In the film and cinema sector, according to EntGroup, China's total box office revenue including service fees fell 48.8% year-over-year to RMB 11.9 billion in the first quarter of 2026, with admissions down 48.0% to 270 million and average ticket prices declining 6.3% to RMB 43.9. CICC believes the significant year-over-year drop in Spring Festival box office revenue was widely anticipated, and attention should shift to the potential recovery during the May Day and summer holiday periods.
For book publishing, regulatory standardization of tutoring materials is expected to cause some revenue fluctuations. In the cable broadcasting sector, competition in the IPTV and OTT platform markets remained relatively stable in January-February, based on data from the Ministry of Industry and Information Technology and GouZheng Data, suggesting steady first-quarter performance for related companies.
Valuation and recommendations take into account marginal trends in fundamentals and sector valuation levels. CICC has adjusted profit forecasts and valuations for some companies. A-share recommendations include Focus Media, Century Huatong, and 37 Interactive Entertainment. Hong Kong and U.S.-listed recommendations include China Literature, Kuaishou, NetEase, and Maoyan Entertainment. Risks include macroeconomic and political fluctuations, tighter regulations, and underperformance of content or products.
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