NetDragon (00777) recently signed an AI ecosystem cooperation and innovation framework agreement with ByteDance's Volcano Engine, aiming to build a deep collaborative barrier integrating technology, resources, and ecosystem to mass-produce a new generation of AIGC educational resources and create a global, co-created, and shared innovative education ecosystem. This collaboration will leverage the professional strengths of both NetDragon and Volcano Engine in their respective fields, propelling their long-term development strategies and strategic partnership. In recent years, NetDragon has been persistently transitioning towards an AIGC-driven business model, and this significant partnership has once again captured the focus of the capital markets, sufficiently piquing external interest to "explore" the intricacies of this cooperation.
Joining forces with Volcano Engine, the partnership aims to construct the core value chain for AI education. As AIGC technology accelerates its implementation in vertical industries, the contradiction between the "technology gap" and the "rigid demand for content" in the education sector has become particularly pronounced: most education companies lack top-tier AI computing power and large model development capabilities, while the global education system's demand for personalized, scalable, high-quality educational resources continues to climb. Against this backdrop, NetDragon and Volcano Engine, as two leading enterprises in AI education and AI computing power respectively, have jointly provided a powerful "answer" to this industry challenge.
NetDragon, a global leader in AI education, possesses vast educational scenario data, a mature product ecosystem, and a global school cooperation network spanning 126 countries, enabling the mass production of AIGC content through its self-developed AI production center. Volcano Engine, as ByteDance's cloud and AI service platform, leverages the Doubao large model refined across over 50 internal business scenarios at ByteDance, along with massive accumulated computing resources and technical engineering capabilities, to provide leading technological infrastructure for vertical sectors.
The collaboration encompasses four key dimensions: joint technological innovation, co-creation of ecosystem resources, empowerment of commercial applications, and leadership in brand and industry, establishing a long-term, in-depth partnership. This also signifies Volcano Engine's high recognition of NetDragon's leading position in the global digital education field, along with the scarce value of its massive educational scenario data, mature educational product ecosystem, and global school cooperation network. From a perspective of mutual empowerment, Volcano Engine's top-tier AI technology will be closely integrated with NetDragon's profound understanding of the education industry, assisting NetDragon in developing, training, and iterating large models tailored for the education vertical, applicable to teaching, assessment, management, creation, and other full-scenario applications, thereby setting an industry benchmark.
Concurrently, both parties will continuously increase investments in computing power, algorithms, and data to scalably develop high-quality AIGC educational resources such as courses, practical training projects, and digital assets, building an open new ecosystem for intelligent educational content. It is evident that NetDragon and Volcano Engine will form a complementary "synergy"; the deep integration of "educational scenario resources" and "AI technological capabilities" is not only essential for NetDragon's advancement of its AIGC strategic upgrade but also a key layout for Volcano Engine to expand its vertical industry application scenarios and unleash technological value.
Meanwhile, the future direction is becoming clearer: the outcomes of the NetDragon-Volcano Engine collaboration will be applied to commercial scenarios such as smart campuses, teacher training, and industrial talent cultivation, achieving a closed loop between technological value and commercial value. Due to the deep integration of "technology + scenario," the production efficiency and cost of AIGC educational content will be significantly optimized, unleashing economies of scale and providing more cost-effective and sustainable solutions for the global education system, thereby vastly expanding NetDragon's future development and imaginative potential.
NetDragon's AIGC strategy is comprehensive and poised for a valuation re-rating. At the current juncture, artificial intelligence has become the commanding height of global technological competition and a key driver for China to promote industrial upgrading, high-quality economic development, and the transformation towards new quality productive forces. Since last year, national-level support policies have been intensively introduced, and various regions in China have actively rolled out measures to encourage the AI industry, creating a favorable expansion environment for NetDragon's two main application tracks—"gaming and education"—as well as for AI+ industries.
Previously, NetDragon adopted "fully embracing AI" as its core strategy, comprehensively covering education, entertainment, and culture across multiple tracks. At the beginning of this year, it sounded the horn for accelerated execution under the "AI immediately" banner: In education, the AI production center, with a core architecture of fragmented nodes and expert systems, has established a stable and replicable AIGC educational content production capacity, planning future expansion of commercial scenarios domestically and deep integration with the Open-Q ecosystem overseas; in entertainment, it aims to fully AI-fy the entire process of interactive content for flagship IPs, with mid-to-long term focus on developing AI-native games to further unlock revenue growth potential; in culture, enterprises invested in by NetDragon, such as Shuaiku Network, and its anime IPs are actively embracing the strategic empowerment brought by AIGC; NetDragon also plans to explore investment opportunities in new formats like AIGC comic series and AI/VR online performances.
The collaboration with Volcano Engine will further empower these business segments, expanding the capability boundaries of the NetDragon corporate group through the technological enhancement of AI computing power and AIGC vertical models. To better build a moat for its multi-format AIGC endeavors, NetDragon recently also became an ecosystem partner of the globally top-tier digital engine company Epic Games, with its Digital Education Town approved as the nation's second officially authorized Unreal Engine training center. In the future, NetDragon will leverage Volcano Engine's AI technology and Unreal Engine's advantages in 3D visuals and performance to continuously enhance the experiential feel and practicality of AIGC educational content, promoting the upgrade of the global education ecosystem towards being "more effective, more efficient, and more experiential."
Beyond its main businesses, NetDragon is continuously strengthening its ecosystem competitiveness through diversified layouts: Its Hong Kong subsidiary, Cherrypicks, signed a cooperation agreement with Zhongke Wenge, becoming its exclusive overseas platform and commercialization partner outside the mainland market. The two have already co-developed several AI large model products, helping the company seize the first-mover advantage in the global expansion of AI large models. Its US subsidiary, Mynd.ai, has progressively integrated cutting-edge educational AI applications like Merlyn Mind and Augment Me, laying a solid foundation for the rapid expansion of the AI+SaaS business model. NetDragon has also invested in the leading AI glasses brand ROKID, from which substantial investment returns are anticipated.
It is foreseeable that this cooperation will reshape NetDragon's value logic across multiple dimensions, bringing about both performance improvement and valuation uplift. On the performance front, NetDragon's growth certainty is continuously strengthening: Firstly, AIGC technology will significantly enhance its educational content production efficiency and reduce generation costs, driving continuous improvement in gross margin; secondly, leveraging the traffic from the ByteDance ecosystem behind Volcano Engine, NetDragon's AIGC educational content could achieve commercialization through various channels, generating incremental revenue exceeding expectations; thirdly, utilizing the global channels of its subsidiary Mynd.ai, revenue from AI education solutions is expected to achieve breakthroughs.
On the valuation front, this cooperation, through the fusion of "technology + scenario," sets an industry benchmark for AI education, shifting the capital market's previous singular valuation focus on "R&D investment" towards a greater tendency to assign valuation premiums to companies possessing scenario implementation capabilities and commercial monetization efficiency. Seizing this opportunity, NetDragon's valuation logic is expected to transition from a traditional "gaming + education company" to an "AI ecosystem company with scarce educational scenarios," thereby driving a re-rating of the value of its various business segments, especially the education division.
As the valuation logic shifts towards the "AI + education" track, NetDragon is likely to attract more attention from funds within the Hong Kong stock technology sector. Coupled with the increased risk appetite stemming from the endorsement of the ByteDance ecosystem, the company's share price possesses significant potential for valuation upside. In summary, the collaboration between NetDragon and Volcano Engine represents a key practice in transforming AIGC technology from general capability to vertical scenario value. Through the triple binding of "technological foundation + scenario resources + ecosystem traffic," NetDragon will construct a sustainable AIGC ecological closed loop. In the future, as the cooperative initiatives progress and materialize, NetDragon's ecosystem value will be continuously validated, positioning it with high potential to become a core value anchor within the Hong Kong stock AI sector and ushering in structural opportunities driven by "technology implementation + commercial monetization."
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