The advent of artificial intelligence (AI) is seen as nothing short of revolutionary, a sentiment echoed by prominent figures like Jack MaRecently, during a keynote speech, Ma proclaimed that we are entering a new era defined by AI—one that surpasses the Internet revolution's impactHe posited that the forthcoming twenty years would witness transformations in society driven by AI technology, and the scope of these changes would exceed our current imagination.

However, this raises pertinent questions for smaller companies caught in a landscape dominated by technological giants like Alibaba, ByteDance, Baidu, and TencentCan these firms still find a space to thrive in this 'All in AGI and AIGC' (Artificial General Intelligence and AI-Generated Content) era? The conundrum lies in whether smaller enterprises can innovate and compete effectively against such heavyweight competitors.

Amidst this competitive backdrop, Kunlun Wanwei emerges as a distinctive player

Despite its smaller size relative to market behemoths, the company has boldly claimed its ambition to commit to AGI and AIGC, positioning itself at the forefront of developments in AI, including large models, social media, short dramas, gaming, and music.

Founded in 2008, Kunlun Wanwei initially carved a niche in web game development and operationsBy 2012, it secured the position of the second-largest revenue-generating web game company in ChinaThis trajectory has led to a gradual transformation from a gaming company to a platform enterprise, aided by strategic acquisitions from 2016 to 2020 that expanded its business into mobile gaming, social entertainment, and investment sectorsNotably, many are familiar with its opera browser, showcasing the company’s adaptability.

In early 2023, Kunlun set a monumental goal to go “All in AGI and AIGC,” declaring it as its strategic direction for the coming decade

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Riding the AI wave, the company's stock saw an impressive gain of 160% last year, with a 26% surge so far this year—a total increase nearing 230% over the past two years.

At present, Kunlun Wanwei has established a comprehensive framework involving “computational power infrastructure—large model algorithms—AI applications,” yielding a multi-faceted AI business matrix that encompasses AI large models, search engines, gaming, music, and social applications

Let us break it down further:

Firstly, the company introduced its “Tiangong Model 4.0” on November 27, boasting complex reasoning capabilitiesDubbed Skywork o1, this model represents the first Chinese logic-reasoning model optimized for slow thinking processesUnlike conventional AI models, it incorporates inherent reflective capabilities that enhance reasoning across benchmark tests.

On November 20, Kunlun released the “Tiangong Model 4.0” 4o version, positioning it as a competitor to OpenAI’s modelsDuring the third quarter of 2023, the company also unveiled new features on its web platform, enhancing user experience by integrating advanced search modes and knowledge collections tailored to user needs.

Secondly, on August 19, Kunlun launched the SkyReels platform, which combines video and 3D models to create AI short dramas—significantly streamlining the production of high-quality AI videos.

Thirdly, the company introduced Linky, an AI social product targeting overseas markets

Utilizing AI technology analyzing user interests, Linky enhances social experiences, attracting substantial user participation and engagement—evident with its ranking among the top ten in downloads across 31 regions as of August 8.

Moreover, Kunlun has pushed into the AI music space by launching Melodio, the world’s first AI streaming music platform, and Mureka, a commercial AI music creation platform on August 14.

Lastly, Kunlun is delving into game development with its self-developed AI game "Club Koala," while another project, “Project G7,” is currently in developmentAs a relatively obscure company, witnessing its extensive AI strategy unfold has taken many by surprise.

Financially, Kunlun Wanwei's performance faced scrutiny as it announced its third quarter results for 2024 on October 29. It reported a revenue of 3.828 billion Yuan, a modest year-on-year growth of 4%, but also disclosed a significant loss of 627 million Yuan.

Despite this setback, the underlying cause of the losses primarily stemmed from escalated investments in AI research and development, alongside fluctuating equity incentive costs

In the first nine months of 2024, R&D expenditure skyrocketed to 1.144 billion Yuan, representing an 84.47% increase and indicating a robust commitment towards AI integration, exceeding the total R&D investment for 2023.

Notably, international operations have shown remarkable performance, with overseas revenue constituting 89.68% of total income—a jump of 5.62 percentage points, maintaining an impressive gross margin of 76.90%.

According to analysts, Kunlun’s AI initiatives are advancing rapidly, and as applications become more embedded within various sectors, the anticipated commercialization process could soon begin, marking a critical growth avenue for the company

The emergence of AI business as a new revenue engine is anticipated, provided that the intended commercialization strategies yield favorable results.

It’s worth noting that Kunlun’s CEO, Fang Han, highlighted the differences between Chinese and American approaches towards AI—where Chinese firms tend to prioritize profitability, while American companies are more focused on innovationWhile both paradigms present inherent benefits and drawbacks, he expressed confidence that "the most profitable AI products will likely come from Chinese enterprises first."

Nevertheless, with such a diversified AI strategy, alongside the historical pursuit of trends like the metaverse and carbon neutrality, some market observers voice skepticism, suggesting that Kunlun is merely following fads rather than establishing a definitive identity in the market.