Summary of Key Points
In the first half of 2026, Yuewen Group's revenue increased by 10.7% to 3.53 billion yuan. However, the driving force for growth has shifted from online reading to copyright operations (including films and television dramas, short-form dramas, and AI-based comic series). Revenue from copyright operations rose by 40.3% year-on-year to 1.69 billion yuan, accounting for nearly 48% of total revenue, almost matching that of its online business. The revenue from short-form dramas and AI-based comic series alone exceeded 430 million yuan, which is three times the amount of last year. Nevertheless, profits did not improve accordingly: net profit attributable to the parent company plummeted by 84% (due to one-time tax expenses and a high base from the previous year), and core profit after deducting non-recurring items also decreased slightly. The gross margin on copyright operations has declined. While AI is a driver of growth for Yuewen, it has also become a tool for competitors to attract users, as the number of online reading users continues to decline. Therefore, Yuewen needs to stabilize its core business while enhancing the profitability of its copyright operations.
1. Revenue Structure Shift: Copyright Operations Rising alongside Online Reading
Yuewen's revenue structure is undergoing a reversal:
- Online Business (mainly paid reading) is declining: Revenue from this segment was 1.84 billion yuan, down 7.3% year-on-year, indicating weak growth in traditional paid reading.
- Copyright Operations Become the New Pillar: Revenue from copyright operations reached 1.69 billion yuan, accounting for 47.9%, nearly equal to that of the online business. Short-form dramas and AI-based comic series are the main drivers of this growth, with revenue exceeding 430 million yuan (compared to just about 140 million yuan in the same period last year).
- The Role of AI-Based Comic Series: AI has lowered the barriers to IP adaptation; previously, only top-tier IPs could be adapted for film and television. Now, mid-range and less well-known IPs can also be monetized through AI-based comic series (for example, "Three Thousand Shelters" received over 3 billion views and even brought the original work back onto bestseller lists). However, if the number of users reading online declines, it will affect downstream monetization.
2. AI Generates New Revenue, but Profits Have Not Keeping Up
Although AI has helped Yuewen earn more money, it has not led to higher profits:
- Poor Profit Figures: Net profit attributable to the parent company was 135 million yuan, down 84% year-on-year (mainly due to a 300 million yuan tax payment and a 598 million yuan gain from sales last year). Core profit after deducting non-recurring items (adjusted EBITDA) also decreased by 0.7%, with the profit margin falling from 12.1% to 10.9%.
- Cost Issues: The production cost per AI-based comic series is low, but as more projects are created, the total investment has increased. The gross margin on copyright operations dropped from 51.7% to 48.9%, indicating that scale expansion has not resulted in economies of scale.
- Doubts about the Quality of Revenue: The 430 million yuan comes from both short-form dramas and AI-based comic series, and some users have switched from paid reading to watching comic series (the number of paid users decreased by 10.9% in the first half of the year). Not all of this additional revenue is new; although AI translation accounts for 40% of overseas platform revenue, specific profit figures are not disclosed. The creation tools are still in their early stages, and there is no concrete data showing cost savings.
3. AI as a Double-Edged Sword: Helping Yuewen Earn Money, but Also Competing with It
AI is not a unique advantage for Yuewen; it has also intensified competition:
- AI Benefits Yuewen: It reduces the costs of adapting comic series and translating them overseas, allowing more IPs to be monetized (for example, revenue from WebNovel platforms in foreign languages increased by 160%).
- AI Harms Yuewen: Competitors use AI to produce large quantities of free online content and short-form dramas, attracting Yuewen's users. The number of monthly active users online decreased by 5.1%, and the number of paid users decreased by 10.9% (the number of monthly active users through Tencent channels even dropped by 20.5%).
- Chain Reaction of User Decline: A decrease in users not only reduces reading revenue but also undermines the foundation for IP selection—authors providing content and readers clicking/paying are critical for verifying the value of IPs. With fewer users, the supply of high-quality IPs becomes unstable, affecting downstream businesses.
4. Two Critical Elements for Transformation
The success of Yuewen's transformation depends on two key factors:
- Core Business Stability: If the number of monthly active users and paid users continues to decline, the source of IP revenue will dry up. This is a fundamental difference between Yuewen and other platforms. Chinese Online and Zhangyue rely on external traffic to generate short-form dramas, while Yuewen relies on its own reading platform. Without a stable user base, its advantage in traffic generation will be lost.
- Profitability of Copyright Operations: Three indicators are crucial: (1) whether the cost growth rate of copyright operations is lower than revenue growth; (2) the independent profitability of AI-based comic series and the cost recovery period for each project; (3) the stability of cash flow, as copyright operations require significant upfront investment.
5. Comparing with Competitors: Yuewen's Path is "Slow but Longer," with Greater Risks
Yuewen's transformation approach differs from that of Chinese Online and Zhangyue:
- Competitors' Faster but Riskier Approach: Chinese Online and Zhangyue use short-form dramas as a temporary solution to fill the gap in revenue, with short-form dramas accounting for over 50% of their business. However, their high sales expense ratios (57%-64%) lead to significant losses.
- Yuewen's Smaller but More Sustainable Path: Yuewen aims to transform the entire IP chain (novels → films and television dramas → comic series → derivatives), potentially generating higher revenue. Although AI can streamline the production process, it cannot eliminate the reliance on hit products. For example, after acquiring New Li Media in 2018, Yuewen had to record a 1.8 billion yuan impairment of goodwill in 2025, indicating that having IPs and teams does not guarantee consistent success. Yuewen needs to establish a stable selection and production mechanism to turn occasional hits into repeatable successes; otherwise, more projects will increase the risk of losses.
Conclusion
Yuewen has used AI to open new avenues for IP monetization, but its transformation is not yet complete. The future depends on whether online reading users can stop declining, whether the copyright business can become profitable, and whether cash flow remains healthy. Only when all these criteria are met will the growth driven by AI be sustainable. Otherwise, AI may merely create an illusion of success.