China Mobile Games' First-Half Loss Narrows by 86%; Chairman: No More Large-Scale Game Projects

Last night (the 25th), China Mobile Games released its 2026 interim report. The financial report shows that China Mobile Games posted revenue of 355 million yuan in the first half of the year and a net loss attributable to shareholders of 90.16 million yuan, narrowing by approximately 86% from the 639 million yuan net loss recorded in the same period last year.

Overseas markets were the main highlight of the first half of the year. After its launch in Hong Kong, Macau, Taiwan, and Singapore, *New Three Kingdoms: The Legend of Cao Cao* surged to No. 1 on the Apple Free Charts in Hong Kong and Macau,*Starting with an Island* reached No. 3 on the free charts in Hong Kong, Macau, and Taiwan; *Romance of the Three Kingdoms: Extreme Colors* launched in Japan; and *Fighter Against the Heavens: Unrivaled* continued its expansion into Southeast Asia. Overseas revenue for the first half of the year totaled 77.72 million yuan, accounting for 27.75% of total publishing revenue.

In China, the market is dominated by various “Legend” games. In mid-March of this year, China Mobile Games secured licensing rights for the two major IPs, *Hot Blood Legend* and *Legend World*, and plans to launch the lightweight MMO *Code Name: New Legend* in the second half of the year.

Developed in-house by Wenmai Interactive (the developer of *Legend of the World: Thunder Dominion*), the new title *Legend of the Dark Night* has undergone multiple rounds of testing, and its official launch has been postponed to the second half of the year.

Regarding the operation of the “Xianjian” IP, *Xianjian Qixia Zhuan IV: Remastered* received its publishing license in June and is scheduled for release in the first half of 2027;*Xianjian World* will launch internationally in the second half of the year, and several *Xianjian* animated series and live-action dramas are also in the pipeline. Additionally, in May, the company partnered with JiYi AI to launch GamePartner.AI, an AI game agent platform, and has entered the overseas casual IAA mini-games market; several titles have already been released on the Apple App Store and Google Play Store.

Although the loss has narrowed significantly, a closer look at the reasons behind this reduction reveals that last year’s “setback” was simply too severe.

The loss of 639 million yuan reported during the same period last year included one-time items such as a 189 million yuan write-off of prepayments, a 76.73 million yuan loss on the fair value of financial assets, and an 11.52 million yuan goodwill impairment; this year, these items have been virtually eliminated.The narrowing of the loss is largely attributable to “shedding the burden and moving forward unencumbered,” rather than significant improvements in the company’s core business.

China Mobile Games reported first-half revenue of 355 million yuan, down 53.5% year-over-year, with gross profit of 67.68 million yuan. Selling expenses fell from 373 million yuan to 30.52 million yuan (-91.8%), while R&D costs dropped to 22.96 million yuan (-75.5%).The cost reductions are tangible, but they are also directly related to the fact that new game releases are concentrated in the second half of the year.

It is worth noting that in mid-April of this year, China Mobile Games completed a private placement, issuing shares to Secure Precision Limited, Tanwan, and Century Huatong for approximately 29.5 million Hong Kong dollars, all of which is planned to be invested in the game publishing business. Meanwhile, Chairman Xiao Jian has continued to increase his stake since April, and industrial capital has also been stepping up its investments.

China Mobile Games has a number of titles in its pipeline for the second half of this year, including *Code Name: Zhetian*, *Code Name: Tianqiong*, *Wulin Xia Dou*, *Monster Loop: Reincarnation of the Beast God*, *Pocket Conquest*, and *Xianjian World*, which will be released domestically and internationally in succession.

During the earnings call, an investment firm asked management about its view on the in-house development business in light of the “significant losses from the in-house project *Xianjian World*.”

In response, Xiao Jian, Chairman of China Mobile Games, stated that, based on the lessons learned from *Xianjian World*, the company will no longer initiate large-scale game projects and will not adopt a model involving heavy investment and long development cycles.

“(In-house development) Centered on our wholly-owned subsidiary Wenmai Interactive, we have established a development model focused on the “Legend” genre of games that emphasizes agile development, rapid validation, and the creation of a series of products.”