During intraday trading on November 2, the media sector staged a broad rally, with both gaming and film segments advancing in tandem.
At 11:03 AM, Haikan Co., Ltd. (ASX: 01981) shares hit the 20% daily limit at 23.16 yuan; Mango Excellent Media surged 12.51% to 25.09 yuan; Longban Media, Dianhun Network, and Dasheng Culture successively locked at the daily limit, while Bingchuan Network, Giant Network, Century Huatong, and 37 Interactive Entertainment all gained more than 6%. Among the 23 constituent stocks in the gaming sector, as many as five posted single-day gains exceeding 8%.
The Shanghai Composite Index rose 0.37% intraday to 3,612.33 points, and the ChiNext Index climbed 0.95% to 2,436.54 points, a sharp contrast to the previous trading day's 4.13% plunge. On the morning sector gainers list, gaming, liquor, and securities ranked at the top, all three being directions that had previously undergone deep corrections and stagnant chip accumulation.
The most direct external catalyst for this sector breakout stems from solid overseas short-drama landing data. According to CCTV Finance, approximately 10 domestic companies have successfully established overseas short-drama platforms, over a dozen overseas short-drama apps have launched dedicated AI anime drama channels, and total overseas AI anime drama active users have surpassed the 150 million mark, with Chinese firms occupying nine of the top ten overseas short-drama paid applications. This early validation of end-user demand in overseas markets constitutes the fundamental divide between this round of industry narrative and pure thematic speculation.
Meanwhile, the supply-side clearing process of eliminating inferior content and retaining quality is also accelerating. Mainstream platforms like Hongguo disposed of over 20,000 low-quality, homogenized short dramas in one go, and the Short Drama Copyright Center Version 3.0 strongly bound single-drama duration to revenue, with platform subsidy mechanisms officially shifting from a "volume-based model" to "single-drama quality and duration assessment." Brokerage research notes indicate that AI is driving interactive film-gaming from a traditional buyout-based niche market toward platform-based distribution, and AI film and television is also moving from the earlier cost-reduction validation stage into genuine demand validation.
A new variable at the technological iteration level comes from the evolution of underlying large models. The DeepSeek Harness team released "Super-agent Design Exploration" on the evening of October 31, proposing a new Agent architecture with stronger autonomy. Third-quarter earnings of listed gaming companies show extreme polarization. Century Huatong achieved net profit attributable to shareholders of 6.335 billion yuan in the first three quarters, up 45.37% year-on-year, already surpassing full-year 2025 levels, with operating cash flow reaching 7.624 billion yuan; Giant Network reported net profit attributable to shareholders of 2.886 billion yuan in the first three quarters, up 103.73% year-on-year. In contrast, 37 Interactive Entertainment's net profit attributable to shareholders fell 37.29% year-on-year in the first three quarters, and Mango Excellent Media dropped 79.01%. In the current valuation reconstruction phase, financial reports serve more of a "landmine-clearing and defensive" function, while market pricing power is temporarily dominated by industry narratives.
Upward momentum within the sector unfolds along three clear logic branches. On the gaming side, the logic is that AI substantially reduces R&D and user acquisition costs, combined with continuously rising overseas market share, as evidenced by the financial statements of Giant Network and Century Huatong; on the film, television, and publishing side, it reflects the value reassessment of content IP assets empowered by new AI production capacity, with targets like Longban Media and Guomai Culture rising strongly in tandem; on the platform side, operators like Haikan Co., Ltd. in IPTV and OTT directly connect to AI film and television content distribution entry points.
The index weighting composition further amplifies this sector resonance effect. The top ten weighted stocks in the CSI Media Index together account for as much as 50.27%, including Century Huatong, Giant Network, 37 Interactive Entertainment, and Mango Excellent Media. As weighted targets collectively push upward, the overall index-level gain is rapidly lifted.
Of course, market concerns about the ultimate realization of earnings remain concentrated on the revenue recognition link. The monetization conversion of 150 million overseas active users into actual revenue sharing and advertising income for domestic platforms has not yet been fully reflected in listed company financial statements. The Short Drama Copyright Center 3.0 mandatorily binding duration to revenue may even raise platform content procurement costs in the short term, and the first to be squeezed out of the market will be low-quality suppliers relying on episode-count arbitrage.
From an industry law perspective, there is a natural time lag between AI narratives and financial statements. AI tool cost reductions first manifest in gross margin and capacity improvements, then in revenue expansion, with profit realization coming last. Coupled with the media industry's content recognition cycle being generally longer than that of manufacturing enterprises—a work often takes two to three quarters from project initiation and production to revenue sharing confirmation—stock price movements typically far precede financial statement reactions, and the process of falsifying its logic therefore requires longer observation.
Synthesizing multi-dimensional market and industry evidence, the fundamental support for this round of media sector rally stems from accelerated AI application landing progress and reallocation of low-position chips, with third-quarter earnings providing only partial confirmation. Valuation and stock price repair can fully lead the emergence of book profits, but their ultimate upward space and height will still be determined by end-user payment conversion rates. The core observation points for subsequent verification of the rally's sustainability will focus on two areas. First, whether the actual payment conversion rate of AI anime dramas in fourth-quarter data can achieve a substantive breakthrough; second, whether the revenue performance of subsequent new titles from mainstream gaming companies can continue the quarter-on-quarter improvement trend of the third quarter. Before these two key indicators are verified, the sector's overall upward movement will still be primarily driven by AI application narratives.
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