For any company built around gaming, the product lifecycle is an unavoidable challenge. As older titles enter maturity or decline, revenue streams fluctuate, and whether new releases can step in at the right moment determines if the business can return to a growth trajectory. For TANWAN (09890), the first half of 2026 marked a pivotal juncture in this transition between old and new products. During this period, the company recorded a net profit of approximately RMB 210 million for the six months ended June 30, 2026, compared with RMB 650 million in the same period of 2025.
According to the company, the decline in profit was driven by two main factors: a reduction in gains from the appreciation of financial assets tied to listed stocks it holds, and a drop in revenue as several existing domestic games entered the later stages of their lifecycles, leading to lower transaction volumes. In other words, the profit pressure this time does not simply stem from operational inefficiency but rather from a combination of a higher base effect in investment income and the natural, phased challenges of game product iteration. Notably, since July, new titles such as Time Hunter: Awakening and Yulgang: Awakening have entered the market, while Yulgang: Return has already achieved impressive results in multiple regions. At the same time, the company has been increasing its commitments to AI industry investments and AI-driven short dramas. Therefore, as of the mid-2026 point, the real focus for TANWAN may not be just the half-year report itself, but whether new games, overseas markets, and AI initiatives can collectively help the company navigate past the trough of its product cycle.
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Looking at the core changes in the 2026 interim results, the transition of the main gaming business into a new product cycle is the most important theme for understanding this performance. For game publishers, a decline in revenue from older titles does not inherently signal a flawed business model. What truly determines earnings elasticity is whether new products can take over in a timely manner. If new titles are still in development or pre-launch stages, the decline from older games will directly weigh on both revenue and profit. However, once new products enter scaled operations, the business can quickly regain growth momentum. As such, TANWAN's performance in the first half of 2026 largely occurred within this window of product transition.
According to information gathered, in terms of timing, most of the new products the company is currently prioritizing are slated for release in the second half of 2026 and beyond. This means these titles did not generate enough incremental revenue in the first half to fully offset the decline from older games. In essence, the company's H1 2026 financial results reflect more of the tail-end state of the previous product cycle rather than the complete performance of its latest round of product launches. For this reason, analyzing TANWAN's interim results solely through the lens of a year-on-year net profit decline could lead to overly pessimistic conclusions. What truly warrants continued observation is the market performance of new games post-July and whether they can deliver sustained contributions over the coming quarters.
So far, Time Hunter: Awakening, the first to hit the market, has already shown positive signals. Based on the classic "Time Hunter" IP, this action ARPG mobile game soared to the top of the iOS free chart shortly after its July launch. For TANWAN, the significance of this achievement goes beyond the ranking itself; it demonstrates that classic IPs, when re-packaged into new products, still retain strong user appeal. For a game company with years of IP operation experience, the core value of mature IPs lies in reducing the recognition costs of new market entries. The debut performance of Time Hunter: Awakening provides solid validation for the company's strategy of iterating on classic IPs going forward.
Meanwhile, Yulgang: Awakening, a wuxia MMO built on the "Yulgang" IP, has officially entered public testing. Even more noteworthy is the strong commercial performance of the same IP overseas. As gathered, the company's release of Yulgang: Return topped the App Store free chart in South Korea, achieved the top free ranking across Google Play, App Store, and LDPlayer in Thailand, and secured the #1 free spot and #2 top-grossing position in Taiwan. This indicates that TANWAN is actively extending the value of its mature IPs from the domestic market to the international stage, which is a key pathway toward reducing reliance on any single market or product.
Overseas publishing is now becoming a critical component of TANWAN's new product strategy. The company is promoting a unified global gaming ecosystem through the Game Lovin brand, emphasizing "global publishing plus local cultural adaptation," while also leveraging overseas KOL cultivation and community partnerships to enhance market penetration. True globalization for a game company is not simply translating domestic titles into different languages; it requires re-tailoring operations to match regional user preferences, cultural nuances, and channel characteristics. If TANWAN can successfully replicate its domestic expertise in IP operation and publishing overseas, its international business could emerge as a major source of incremental revenue from new games.
Looking further ahead, the company's game pipeline remains robust. Centered on Jin Yong's wuxia IPs, TANWAN has secured classics such as "The Heaven Sword and Dragon Saber," "The Smiling, Proud Wanderer," and the "Condor Trilogy." Titles like Smiling Proud Wanderer: Heroes and New Legend of the Condor Hero: Huashan Sword Debate are slated for release. Additionally, the company holds licensed titles like Blue Moon Dragon Slayer and Dream Warrior in reserve. This suggests the core issue is no longer a shortage of product inventory but rather how to convert that inventory into sustained revenue through product quality, release pacing, and operational execution.
Thus, when projecting from the 2026 interim results into the second half, TANWAN's logic becomes clear: the first half concentrated the pressure of aging games entering their late lifecycle, while the second half enters a phase of intensive new product releases. The debut performance of Time Hunter: Awakening, the public testing of Yulgang: Awakening, and the overseas success of Yulgang: Return all provide observable windows into the company's path to recovery. Whether TANWAN can truly emerge from this adjustment ultimately depends on whether these products can convert early user buzz into sustained revenue and further establish a stable, sequential product cycle.
From 'AI + Gaming' to AI Short Dramas: TANWAN Searches for a Second Growth Curve
If new games determine whether TANWAN's traditional business can regain growth, then AI and short-drama ventures decide whether the company can break free from a business model overly dependent on game lifecycles. Based on its latest moves in 2026, TANWAN's AI strategy has evolved from "application-level experimentation" into a phase of "industrial investment, internal adoption, and content commercialization." One major step is the company's strategic investment in VAST, known as Beijing Sanqi Wanwu Technology Co., Ltd. The company states this will broaden its reach into AI 3D content generation and industrial visualization, providing fresh momentum for its "AI + gaming" transformation.
In parallel, the company has completed the issuance of RMB 468 million in zero-coupon convertible bonds, with proceeds earmarked specifically for AI industry investments and technology ecosystem development. From a capital allocation standpoint, the signal is unmistakable: AI is no longer just a conceptual label for TANWAN but is becoming a core pillar of its future business layout. Furthermore, according to gathered information, the company is not confining AI to external investments alone; it has begun embedding AI into daily operations. The company's self-developed omnipotent agent assistant, "TANWAN Xiaoxia," has gone live, built on large language models and multimodal technology. Through an independent AI runtime environment, data security isolation mechanisms, and an enterprise-level AI knowledge base, the company has configured role-specific AI Agents for employees. At the same time, TANWAN launched an internal skills platform, "TW Agent Hub," providing employees with token allowances to encourage the creation and sharing of AI Skills, alongside an AI efficiency hackathon to drive internal adoption.
These actions may not immediately generate large-scale revenue, but their deeper significance lies in reshaping the company's production model. If AI can be consistently integrated into R&D, operations, marketing, customer service, and content creation, the eventual outcomes for a game company could include higher development efficiency, reduced asset production costs, and improved user acquisition effectiveness. Additionally, TANWAN has begun extending AI capabilities into short dramas. In 2026, the company entered the AI comic and short-drama space, using AI to efficiently generate video content and leveraging its proprietary AI-driven ad delivery system for precise distribution. This approach not only covers AI short-drama production but also extends to AI short-drama promotion and publishing, forming a "self-developed plus self-published" business model. The company has explicitly stated plans to integrate AI short-drama content with game business materials, using content to empower games in return.
This strategy deserves attention because it effectively connects TANWAN's accumulated capabilities in content production, user acquisition, ad placement, and IP operation from the gaming sector with new content formats in the AI era. A core challenge in the traditional gaming business is the rising cost of user acquisition, and AI short dramas offer an alternative path. By lowering content production barriers through AI, the company can continuously generate large volumes of content around game IPs, characters, and worldviews, then distribute it using its existing ad delivery expertise. If some of that content generates traffic, it can serve not only the short dramas themselves but also funnel users back into games. In this way, short dramas are no longer just a parallel new business; they could become a new traffic gateway for game IPs. For TANWAN, with its vast library of classic IPs and game reserves, the potential value of this model is significant.
Looking further, AI short dramas and games could form a new commercial loop: games provide IP and character assets, AI reduces content production costs, short dramas acquire users and expand IP influence, and the company's existing delivery system converts content traffic into commercial value. If this loop proves viable, AI's value extends beyond mere cost savings; it could help the company create entirely new traffic and revenue sources. For TANWAN, currently in a product-cycle adjustment phase, this is especially crucial, signaling a shift from relying solely on game revenue growth toward a comprehensive operating model of "IP + games + content + AI."
Therefore, a more reasonable interpretation of TANWAN's 2026 interim results is to view them as a transition point between the company's old product cycle and a new growth cycle. In the first half of 2026, the decline of older games was an established reality. Moving into the second half, whether new games can truly take over becomes the primary variable for earnings recovery, while the ability of AI and short dramas to progress from investment and exploration into actual commercialization will determine whether the company's second growth curve can be firmly established. The metrics to track going forward should shift from merely focusing on interim profit figures to observing the sustainability of new game revenue, the pace of overseas market expansion, and the concrete progress of AI content commercialization. In other words, while the first half of 2026 was a period of pressure for TANWAN, what ultimately determines the company's valuation upside in the next phase may well be the new set of variables that are already emerging: "new games, globalization, AI, and short dramas."