CICC: AI is reshaping the industrial chain value allocation in the medium to long term, waiting for a breakthrough in the video industry

The Zhitong Finance App learned that CICC released a research report saying that with the recent rapid iteration of the AI video model, investors are concerned about the efficiency improvement and innovation effects of AI on the film and television industry. In the long run, AI is expected to improve industry ROI and reshape value distribution in the long term from the three dimensions of improving content success rate, reducing production costs, and speeding up capital turnover. For a long time, the domestic film and television industry has shown the characteristics of high investment in leading content and weak profit certainty. The bank believes that the industry urgently needs to improve input and output efficiency through technological upgrades and innovate content formats.

CICC's main views are as follows:

AI empowers the entire film and television production chain, reducing costs and improving efficiency when carried out

Early stage: AI solved the industry's two major pain points of trial and error costs and communication costs. For example, AI scene concepts and dynamic previews shortened the preparation cycle for historical dramas from months to weeks, and visual previews before launch drastically reduced on-site rework. Mid-term: The estimate is estimated to be a 70% to 80% cost carrier for the production side. For example, a virtual shooting base will reduce scene construction costs by 85%, digital actors will reduce the cost of modeling the original picture by 80%, and the special effects production cycle will be shortened by up to 40%. Later stage: It has an obvious effect on improving the effectiveness of promotional materials and translation overseas. The bank believes that in the long run, AI is expected to improve industry ROI and reshape value distribution in the long term from the three dimensions of improving content success rate, reducing production costs, and speeding up capital turnover.

There are differences in the commercialization of AI native content circuits, and we are waiting for a breakthrough in the industry in the medium to long term

Relatively mature: 1) AI short dramas/comics. Byte relies on Seedance, Tomato IP, and Red Fruit skits to build a closed loop, and has advantages in IP resource reserves and traffic distribution. 2) The accumulation of IP digital assets, and the long video platform reuse existing characters and scenes to develop AI extras and derivative skits. 3) AI interactive storytelling, native variety shows, the marginal development cost of interactive content is low, and the business model is mature. Emerging developments: 1) Cinema-level AI quality content. Currently, there is no intermediated distribution channel in China, so it is difficult to achieve a direct closed loop of commercialization in the short term. Focus on the expansion of subsequent distribution channels. 2) Application directions such as star digital alienation contain the potential for artist IP to expand commercial boundaries, and also face certain external constraints. Feasible commercialization paths in this direction need to be explored, and boundaries are continuously clarified in more industry experiments and standardization. 3) Some AI native content platforms have begun to explore breakthroughs in traditional one-way streaming media consumption habits by combining multiple experiences such as viewing, listening, and playing. With the evolution of generative technology, corresponding AI native content interactive platforms may attract more and more attention from the industry.

Profit forecasting and valuation

The bank believes that improving the efficiency of AI in the film and television industry chain has moved from proof of concept to large-scale implementation. It is recommended to pay attention to Reading Group, Kuaishou, Bilibili, Mango Supermedia/Light Media, etc.

risk

The quality of technology iteration and generation falls short of expectations, compliance and copyright risks, audience acceptance increases more slowly than expected, commercial implementation and channel restrictions, and changes in the competitive landscape.