UBS: China Online Entertainment Monthly — New Game Catalysts and Strong 2026 Start on Kling Monetization
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UBS notes that recovering mobile game billings and a strong first quarter release pipeline provide solid sector catalysts. During the fourth quarter of 2025, China's mobile game billings grew 4% year-over-year and 5% quarter-over-quarter, reversing a prior 2% annual decline. Tencent led with 8% year-over-year billings growth, driven by Delta Force and Golden Spatula, while NetEase experienced an 8% decline. Bilibili's billings stabilized sequentially.
Looking ahead to early 2026, new game launches should act as significant revenue drivers. Tencent's Nizhan Future performed successfully post-launch, and Honor of Kings World is slated for a spring release. Bilibili's anticipated launch of Three Kingdoms: Strategy likely occurs by late Q1 or Q2, which should also bolster its advertising revenue.
In the online video segment, Kuaishou's Kling AI demonstrated exceptional monetization traction. Achieving $240 million in annual recurring revenue by December 2025, daily revenue surged roughly 30% month-over-month in January 2026. Consequently, UBS drastically upgraded its 2026 revenue forecast for Kling to RMB 2.3 billion, reflecting 128% year-over-year growth. Meanwhile, iQiyi's fourth-quarter results broadly aligned with expectations, benefiting from improved expense control and yielding an adjusted net profit of RMB 97 million. UBS maintains a clear preference for selected gaming names over AI leaders and long-form video platforms.