Shenwan Hongyuan: AI + IP dual-drive, the explosion of the comic industry is just in time

According to the information from Zhitong Finance APP, Shenwan Hongyuan released a research report stating that based on the sharing from Douyin Engine in August, the revenue scale of animated dramas has increased 12 times in the past six months; the number of related enterprises is expanding exponentially and is expected to exceed hundreds of thousands; the market scale is expected to surpass 20 billion. In terms of technological breakthroughs, significant progress has been made in multi-modal large models regarding character consistency and action coherence. Currently, AI technology has been applied throughout the entire production chain of animated dramas, significantly compressing production cycles and costs. In terms of content expansion, there is an acceleration in adapting more high-quality novels, comics, and live-action short dramas into animated dramas, while actively exploring scarce themes to achieve content diversification and quality enhancement, attracting a broader user base. In terms of targets, it is recommended to pay attention to advantageous companies in the AI animated drama industry chain.

Shenwan Hongyuan's main viewpoints are as follows:

The animated drama market is set to explode in 25 years

Animated dramas are micro-short dramas in animated form, including meme-type micro-short dramas, comic-type micro-short dramas, and AIGC-type micro-short dramas. According to the sharing from Douyin Engine in August, the revenue scale of animated dramas has increased 12 times in the past six months; the number of related enterprises is expanding exponentially and is expected to exceed hundreds of thousands; the market scale is expected to surpass 20 billion.

Shenwan Hongyuan believes that the explosion of the animated drama market is mainly due to three reasons: 1) Incremental demand. Animated dramas combine the content characteristics of short dramas and traditional animations, meeting users' strong plot, high excitement points, and fragmented content needs, while offering richer themes. Currently, it primarily competes with live-action short dramas, targeting young males in high-tier cities, contrasting with live-action short dramas that mainly target middle-aged females. 2) Technological breakthroughs. Significant progress has been made in multi-modal large models regarding character consistency and action coherence. Currently, AI technology has been applied throughout the entire production chain of animated dramas, significantly compressing production cycles and costs. After the introduction of AI by Volcano Engine into animated drama production, production cycles have been shortened by 80%-90%, and production costs have been reduced by 70%-90%.

3) Platform support. For online literature and comic platforms with massive IPs, animated dramas can quickly and cost-effectively realize the video adaptation of numerous IPs, thus monetizing; for video platforms, animated dramas represent a new content form that can maintain user stickiness, utilizing the existing infrastructure channels, business models, and review management models of live-action short dramas. The animated drama market is currently in the growth phase 1.0, and after the technological dividend, it may return to content competition, with a larger long-term market in IP derivatives and overseas expansion.

The animated drama industry chain is continuously improving, forming a value chain of IP scripts—adaptation and production—traffic operation—platform

1) The current bottleneck in the animated drama industry mainly lies on the supply side, and the key to breaking through is in two major directions: ① Content expansion: Accelerate the adaptation of more high-quality novels, comics, and live-action short drama resources into animated dramas, while actively exploring scarce themes to achieve content diversification and quality enhancement, attracting a broader user base. ② Enterprise expansion: Attract diverse roles such as anime copyright holders, short drama copyright holders, professional anime production teams, technology suppliers, and distributors to jointly build a more prosperous animated drama industry ecosystem.

2) The rapid advancement of AI video large models and tools, along with the iteration of AI technology, solidifies the foundation for the development of AI animated dramas. Video models such as Kuaishou Keling, Google Veo, Runway Gen, and Sora2 have made rapid progress, and the decrease in calling prices is beneficial for reducing costs and increasing efficiency in the AI animated drama industry chain Target Aspects

Focus on Mango (300413.SZ), Bilibili-W (09626), China Literature Group (00772), and Shanghai Film (601595.SH), and recommend paying attention to leading companies in the AI comic drama industry chain.

1. IP Content: Zhongwen Online (300364.SZ), Zhangyue Technology (603533.SH), Jiecheng Co., Ltd. (300182.SZ); 2) Production: H&R (000892.SZ), BONA (001330.SZ), HUACE FILM & TV (300133.SZ); 3) Tools: Meitu Inc. (01357), Vision China (000681.SZ), Giant Network (002558.SZ); 4) Investment Flow: Yidian Tianxia (301171.SZ); 5) Platforms: Bilibili-W, Kuaishou-W (01024), Mango.

Risk Warning

AI technology is still in its early stages and carries implementation risks; content companies may not adapt timely to the changes of the AI era, putting them at a competitive disadvantage; industry risks arising from copyright issues