UBS has released a research report predicting that, as per UBS Evidence Lab data, total revenue from China's mobile games would decline by 4% YoY or increase by only 2% QoQ in 3Q25 as affected by a high base in 2024, weaker compared to the usual 3Q growth over 2Q, possibly due to fewer new game launches in the summer compared to the same period in 2023-24.

Despite the slowdown in industry growth, UBS noted that two major companies maintained their market outperformance. TENCENT (00700.HK)  +4.500 (+0.711%)    Short selling $1.55B; Ratio 20.289%   's total revenue grew by 9% QoQ, benefiting from the strong contribution of "Delta Force". The newly launched "Valorant" mobile game is expected to generate total revenue of RMB400-500 million in September.

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NTES-S (09999.HK)  +2.400 (+1.052%)    Short selling $226.85M; Ratio 21.665%   (NTES.US)      also delivered outstanding performance, with mobile segment growth of 5% QoQ as predicted by UBS. Meanwhile, KUAISHOU-W (01024.HK)  +1.500 (+2.042%)    Short selling $282.69M; Ratio 20.092%   launched Kling 2.5 Turbo on September 23, currently ranking first in text-to-video and image-to-video generation.

UBS remained optimistic about online entertainment, with the most favorable sub-sectors being selective gaming stocks with upside earnings potential or new product launch catalysts, including TENCENT (key buy target), NTES-S, and AI-leading company KUAISHOU-W.
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