The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that against the backdrop of continued growth in mental consumption, demand for trendy games is sustainable for a long time. Building a popular IP requires four elements: timing, innovation, mentality, and accumulation. Compared with a single popular IP, more attention should be paid to the IP building ability of trendy entertainment companies. The competitive advantage of trendy game companies is whether they can establish a management system around IP building+channel construction+marketing transformation+community ecology. The barriers to competition are mainly reflected in the four links of IP construction, channel construction, marketing transformation, and community ecology. Globalization and groupings will be the main growth direction for the industry in the next phase.
Cathay Pacific Haitong's main views are as follows:
Is demand for trendy games sustainable?
Appreciation of art has permeated human development. Trendy games are commercialized products of contemporary art. They are consumer goods with IP as the core and have both cultural expression and collection attributes. Their value is mainly reflected in the three aspects of emotion, social networking, and investment. Emotional value forms the underlying foundation of trendy games consumption. Social communication expands the user base, and scarcity and collection transactions further enhance the sense of product value; against the backdrop of continuous growth in spiritual consumption, demand for trendy games is sustainable for a long time.
What does it take for IP to flourish and stay out of the ring?
Building a popular IP requires four elements: timing+innovation+mentality+precipitation. LABUBU moves from long-term incubation to the global market, reflecting the combination of IP accumulation, product innovation, and external timing. After the IP outbreak, companies still need to handle traffic through content access, product iteration, and fine management. The decline and recovery in Sanrio's performance shows that operations can affect the value release of mature IPs to a certain extent; however, operations cannot eliminate the nonlinearity of a single IP life cycle. Compared with a single popular IP, more attention should be paid to the IP building capabilities of trendy enterprises.
A reflection of the competitive advantage of trendy entertainment companies?
The competitive advantage of trendy game companies is whether they can establish a management system around IP building+channel construction+marketing transformation+community ecology. Competitive barriers in the industry are mainly reflected in four links: 1) IP building, identifying potential IP through expanding candidate resources, phased incubation and market verification, and achieving long-term operation and large-scale delivery through series iteration, category expansion, and flexible supply chains; 2) Channel construction, pre-verifying demand through asset-light channels, obtaining terminal data through direct management networks, and strengthening brand expression and sales transformation with experiential stores; 3) Marketing transformation, establishing recognition through differentiated role expression, and using digital platforms to receive traffic and improve repurchase and node sales through random, hidden, and limited mechanisms; 4) ecology It establishes user relationships through player activities and membership systems to support new product dissemination and cross-IP traffic reuse.
What is the growth path of a trendy game company?
Globalization and groupings will be the main growth direction for the industry in the next phase. Take Bubble Mart as an example, 1) Globalization: By upgrading its organizational structure and infrastructure, Bubble Mart strengthens overseas expansion capabilities, enhances cultural identity through cooperation with local artists, and optimizes store layout and consumer reach strategies to increase market penetration; its overseas business already has a foundation for rapid growth, and there is room for significant improvement in channel density and consumer coverage. 2) Grouping: Bubble Mart continues to expand new business formats around core IP. POPLAND enriches its IP image through immersive experiences, POPBAKERY extends IP to everyday consumption scenarios, and POPOP enhances brand tone and offline exposure through the jewelry business; while contributing incremental revenue, the new business format continues to strengthen IP influence and user stickiness, and forms collaboration with the main trendy retail industry.
Related companies
Trendy game companies have formed a differentiated business path: 1) Bubble Mart is centered on artist IP and full-link operation, and upgraded from Chaowan retailers to a global IP operation platform; 2) Bruker relies on authorized IP, standardized R&D and large-scale supply chains to expand the crowd, price range and overseas markets with cost-effective products; 3) Card Games builds a competitive collection ecosystem through card rarity design, rapid development, distribution networks, and events.
Investment advice: We recommend Bruker (00325), the leading character toy. Cost-effective products, user expansion, and overseas replication are expected to open up new volume.
Risk warning: IP life cycle and iteration fall short of expected risk; overseas market expansion falls short of expected risk; diversified business development and profit fall short of expected risk.