China Entertainment: Infinite content, finite attention in the age of AI

The entertainment industry is entering a new era: content supply is becoming almost infinite, generation cost and turnaround have significantly reduced, and audiences are getting more used to AI generated content as quality improves. In contrast, users' attention remains finite. We believe this could fundamentally impact the China Media and Entertainment industry and shift the industry value chain and profit pool over the next few years. Content production and editing could become more commoditized with AI, while long-lasting IP franchises and creative idea generation become more valuable vs. long-tail content. Content distribution platforms (such as short/mid-form video) benefit from amplified content supply but need to balance real human vibes and AIGC influx. With average production cost/time savings of 80%-90%+, we expect new formats such as interactive cinema/games, infinite dramas and virtual companions to emerge. Online gaming remains the most resilient vertical, with AI disprop