09999 Overview

Release of Seedance 2.0: ByteDance launched its AI video generation model Seedance 2.0 in February, showcasing advanced capabilities in full-modal input/output and narrative consistency, quickly gaining global attention.

Impact on Content Platforms: CICC reports that while AIGC tools like Seedance 2.0 may enhance efficiency and lower content creation barriers, they are unlikely to significantly disrupt mainstream online content platforms due to differing consumption scenarios.

Market Dynamics: The rise of AIGC tools could stabilize oversupplied markets like short videos while potentially increasing demand in undersupplied areas such as long videos and music, possibly leading to the emergence of new platforms.

Stock Market Reactions: Various companies in the tech and entertainment sectors, including Tencent and Kuaishou, are experiencing fluctuations in stock prices and short selling activity, reflecting investor sentiment amid the shift towards AI-driven products.

Apple's Commission Rate Reduction: Apple has lowered the commission rate for the China App Store from 30% to 25% for in-app purchases and paid app transactions, which is expected to positively impact the entertainment sector with a low single-digit effect on major companies' earnings this year.

Impact on Tencent: Tencent's smartphone game revenue is projected to grow by 11.7% YoY to RMB256 billion, with 30% of this revenue coming from iOS, benefiting from the reduced commission rate.

NTES-S Revenue Forecast: NTES-S is expected to see an 8.5% YoY increase in game revenue to RMB97 billion, with a minimal impact of less than 3% on earnings this year due to the commission rate change.

Kuaishou and Online Music Platforms: Kuaishou's live streaming revenue is projected to remain flat, with a less than 2% positive impact on earnings from the commission reduction, while online music platforms like TME-SW and NetEase Music are anticipated to see a 1% to 2% increase in earnings in 2026.

Apple's Commission Rate Reduction: Apple announced a reduction in the App Store commission rate in China, guided by domestic regulatory authorities, aiming to foster a positive industry cycle for both platforms and developers.

Impact on Mobile Internet Ecosystem: This policy change is expected to have long-term benefits for the mobile internet application ecosystem in China, promoting prosperity and collaboration among developers.

Google Play Commission Changes: Google is adjusting its commission rules for Google Play services, allowing third-party payment channels with a reduced commission rate, effective from June 30 in the US and other regions.

Impact on Gaming Profits: The reduction in commission rates is expected to boost profits for overseas gaming products in the short term and shift pricing power from content channels to content creators in the medium to long term.

Market Reactions: Citi anticipates that companies like TENCENT and NTES-S will benefit from the revenue sharing reform in Google Play, although ratings and forecasts for various companies remain unchanged until the new rules are officially implemented.

Stock Performance: Current stock performance for NTES-S and XD INC shows declines, with significant short selling activity reported, indicating market caution ahead of the commission rule changes.

Investment Withdrawal: NTES-S has decided to cease investment in Nagoshi Studio starting from May, as confirmed by a spokesperson, although details of the exit terms remain undisclosed.

Financial Implications: The decision to withdraw funding was influenced by the need for an additional investment of approximately JPY7 billion (around HKD347 million) to complete the studio's new project, "Gang of Dragon."

Stock Migration Announcement: NTES-S received a notice from the Hong Kong Stock Exchange indicating that over 55% of its trading volume for FY25 occurred on its markets, leading to a permanent migration of trading to Hong Kong.

Grace Period for Compliance: NTES-S has a 12-month grace period to comply with Hong Kong Listing Rules, ending on February 27, 2027, after which it will have a dual-primary listing status.

Stock Performance: The stock price of NTES-S increased by 1.9% to HKD180.7, with a trading volume of 5.4941 million shares, amounting to HKD997 million.

Short Selling Data: As of March 3, 2026, NTES-S had short selling of $142.91 million, with a ratio of 18.741%.