Since its listing on the Hong Kong stock market, Zulong Entertainment has been in a state of fluctuating revenue and continuous losses. From 2020 (when the operating level remained profitable, the book loss was mainly due to changes in the fair value of preferred shares brought about by the listing) to 2024, its cumulative net profit attributable to the parent company has exceeded 2.4 billion yuan. If we only look at the performance of its core business, the adjusted net profit cumulative loss from 2021 to 2024 is about 1.536 billion yuan.

But recently, Zulong released its 2025 financial report to the public, delivering a significant improvement.

According to the financial report, the company's annual revenue reached 1.304 billion yuan, a year-on-year increase of 14.3%. After adjustment, the net loss was 31.9 million yuan, a significant decrease of 88.2% year-on-year. It has maintained double-digit revenue growth for three consecutive years, and is only one breath away from breakeven overall.

01

The main source of revenue relies on two horses, and 'In the Name of Shining' has almost no decline

The support provided by the new game 'Riding the Wind' is limited

The substantial improvement in core indicators in Zulong's 2025 financial report is primarily due to "open source", which is related to the steady development of the gaming business (contributing over 1.176 billion yuan in revenue during the reporting period, accounting for over 90.7% of total revenue).

In terms of specific products, Zulong has currently launched 24 mobile games in over 170 countries and regions. Two key supporting games mentioned in the financial report are the core hit "In the Name of Shining" and the key new product "Dragon Clan: Gate of Kassel".

As Zulong's first female oriented game, "In the Name of Shining" was launched at the end of July 2022, ahead of China, Hong Kong, Macau, Taiwan, Singapore, and Malaysia. It earned around 70 million yuan in revenue that year with only a small market share;

In March 2023, the game will be launched in the domestic and Japanese markets, and in May of the same year, it will accelerate its global landing pace, earning a total of 315 million yuan (excluding domestic Android devices, the same below). The following year, its annual revenue will remain at the same level of about 300 million yuan;

The revenue for 2025 is 282 million yuan, although slightly declining, the magnitude is extremely small for a product in its third year of operation. In September of this year, the game was officially launched in South Korea and topped the free to play charts on iOS and Google on the first day. However, there was a lack of momentum afterwards, with a monthly revenue of only 4.5 million and currently fluctuating around 2.5 million. On the other hand, the Chinese server contributed 202 million yuan throughout the year, which is very impressive. This data is basically on par with the third highest grossing game in China, "Beyond the World" (220 million yuan), and slightly lower than the second ranked "Love of Light and Night" (340 million yuan).

In addition, it is worth mentioning that the annual average DAU of "In the Name of Shining" in the Chinese server for the past 25 years has exceeded the annual average DAU in 2023 and 2024, and the project profit has also significantly increased year-on-year.

The following game, "Dragon Clan: Kassel Gate," is an IP strategy card game of "Dragon Clan." It was publicly released in China in September 2024 and achieved a revenue of 65 million yuan on the iOS platform in the first month. However, its long-term strength is not as strong as "In the Name of Shining," and it is difficult for the monthly revenue of iOS on the Chinese server to reach 10 million yuan in 25 years.

But fortunately, the game began to explore new markets that year. In April 2025, it was launched in Hong Kong, Macau, and Taiwan, earning 24 million yuan in the first month. In August of the same year, it was launched in 30 regional markets in Asia and Oceania, earning 7.2 million yuan in the first month.

When it comes to 2026, the game's overseas expansion continues. On March 5th, it landed in the Korean market and its daily revenue increased from 100000 to 1 million yuan, reaching the top 21 of the Korean iOS game bestseller list. Currently, it is still in the top 40 and has accumulated 13.3 million yuan in 17 days since its launch.

It should be mentioned here that in the new generation of Zulong products, there is also a 3D cultivation placement game called "Ta Feng Xing" that will be launched in May 2025. Although it topped the iOS game free list in the pre download stage, it failed to maintain its popularity after the public beta, and its performance was not as expected. In the second half of the year, there were even project layoffs and only a few personnel were retained to maintain operations, which provided limited support for the financial report (the domestic iOS revenue in 2025 was 21 million yuan, and the monthly revenue in the later period was less than 100000 yuan).

Turning our attention back to the "Evergreen Tree" lineup, games such as "Dream Kill Immortal" (2016 MMO), "Dragon Clan Fantasy" (2019 MMO), "Under the Red Map" (2020 SLG), "Sword Love" (2016 MMO), "Three Kingdoms Heroes: The Mighty Tiger" (2024 SLG), "Six Dragons Battle" (2015 MMO), and "King of Kings 3D" (2018 MMO) continue to contribute revenue.

Among them, the long-term operation status of "Fantasy Zhu Xian" and "Dragon Clan Fantasy" is relatively better. The former's revenue scale and new users reached a new peak since 2022 last year. DianDian data shows that its iOS monthly revenue fluctuated between 2 million and 4 million last year. The latter, last year's global monthly revenue (excluding domestic Android devices) remained stable at 3.5 million to 5.5 million.

02

Stable R&D investment and significant reduction in sales costs

Further improvement in self issuance capability

In addition to open source, cost cutting is another main reason for Zulong's transition from darkness to brightness.

In 2025, Zulong Entertainment's cost side will show a distinct feature of "stable R&D investment and significant reduction in sales costs", and compared with the past four years, the effectiveness of expense control will be outstanding.

Since its establishment, Zulong has always adhered to the core strategy of integrating research and operation, emphasizing that R&D genes are the company's advantage. Under this concept, with the support of capital after going public in 2020, Zulong decided to use its research and development advantages to expand and attack on the product side, while further consolidating its "research and development base".

Afterwards, Zulong made project bets on almost all popular tracks, SLG、 The research and development costs for open world, shooting, women's direction, and more have skyrocketed to over 700 million yuan from 2021 to 2022 (540 million yuan in 2020),

However, the results were not satisfactory. The "Under the Red Road" released at the end of 2020 quickly gained popularity thanks to Tencent's distribution, but it could not escape the fate of "high opening and low decline", let alone becoming the new generation SLG king;

In April 2022, the open world adventure mobile game "Heart of Noah", also issued by Tencent, will be launched. This game will benchmark "Genshin Impact", but the business logic will apply legendary products, and the overall performance will be poor, and the operation will stop in October 2023;

Among the major betting games, the experience of shooting MMO "Avatar: Return to Pandora" was the most "turbulent". It was first revealed at Tencent Games' annual press conference in June 2022 and went through multiple rounds of testing. In November 2023, the publisher suddenly changed from Tencent to Zulong's independent release. In early 2024, Zulong announced the termination of its online plan due to strategic adjustments.

The failed attempts in this series of popular tracks have allowed Zulong to deeply experience the pressure brought by skyrocketing R&D costs and negative product feedback. As a result, R&D related costs began to rapidly decline in 2023. At the same time, Zulong also gained new cash flow products in the relatively niche women's track - the 3D dress up game "In the Name of Shining".

From then on, Zulong began to adjust its product strategy of expanding into the hot track, and instead focused on cost controllable and accumulated advantageous categories such as MMORPGs, female oriented games, strategy cards, placement RPGs, and SLGs. The research and development costs from 2024 to 2025 were heavily suppressed at around 530 million yuan.

On the other hand, Zulong no longer focuses on the large opening and closing buying strategy, but instead optimizes its targeted advertising strategy, focusing on precise promotion of core products such as "Shining Name" and "Dragon Clan: Kassel Gate", reducing inefficient advertising, and resulting in a 19% year-on-year decrease in marketing costs to 458 million yuan.

In addition, it is worth noting that in the past two years, compared to relying heavily on publishers like Tencent, Zulong's self publishing ability has significantly improved (its self publishing revenue will be about 1.18 billion yuan in 2025, 3.4 times that of 2022). This is both open source and cost saving.

03

The foundation is strong enough to withstand future turmoil

The MMO market in reserve products is weak, with resources tilted towards women and cards

In short, Zulong is breaking away from years of losses, and in the process, he has adjusted the rapid expansion development strategy that is not suitable for him, strengthened the distribution ability, and found a new product strategy.

So, when it comes to the specific development plan for the future, the first thing to be clear is that although Zulong's market value has fallen severely, its safety cushion is actually very solid. Currently, the total amount of cash, fixed deposits, and wealth management investments exceeds 2 billion yuan, which cannot withstand necessary "turmoil".

In terms of reserve products, the key resources are all tilted towards women and cards, and going global is also placed in an important position. Due to the fierce competition in the MMO arena and the difficulty of producing explosive products, it has chosen to cut losses in a timely manner for some MMO projects with large investments.

Based on the detailed financial report, Zulong is expected to release six products globally from 2026 to 2028.

The focus or key to turning losses around in 2026 is the "Dragon Clan: Kassel Gate" and "Project G" mentioned earlier. The former will not only launch in the Korean market this year, but also enter other regional markets in Japan and around the world. The latter is a strategy card game adapted from the world's top Western fantasy IP, which is rumored to be the "master of mysteries" in the market.

Project K, originally scheduled for release in 2026, has been officially confirmed to be postponed until 2027. This game is an all platform original IP female oriented game based on Unreal Engine 5, and is considered Zulong's most important strategic product.

Due to the success of "In the Name of Shining", Zulong has successfully transformed from relying on MMO single leg walking to having women as the second support on the track. The studio behind the game, VVANNA, was officially upgraded to the VVANNA business unit at the beginning of this year. Zulong stated that the transformation to a higher-level BU structure is to further optimize the division of responsibilities and resource allocation, in order to strengthen the production capacity of women on the track. "Project K" is VVANNA's next heavyweight product.

In addition, an original IP action shooter game "Project Code: ONE" is expected to be released in 2027, and SLG products with original IP and licensed RPG products are planned for 2028. The second installment of Dragon Fantasy, codenamed Odin, which was originally expected to be released in 2026, as well as the turn based MMO blockbuster, codenamed Xiaoyao, have both disappeared from the financial reports.

Finally, it should be emphasized that for the crazy AI field, although Zulong did not directly participate, internally, he used AI tools to assist in development, further improving research and development efficiency. For example, implementing intelligent NPC and AIGC functions in products such as "In the Name of Shining"; Deeply applying Metahuman, MassAI and other technologies of Unreal Engine 5 in research projects.

In terms of external ecology, we have invested in Yuanyi Entertainment, which was founded after the departure of the original R&D leader of the company. The company is currently developing an AI driven open world hero shooting game.

In summary, if Zulong follows the existing route, barring any unforeseen circumstances, it is highly likely that he will achieve a "turnaround from loss to profit" this year!