In 2025, with losses exceeding 1.4 billion yuan, can China Mobile Games' large-scale cost-cutting measures stop the bleeding?

Recently, China Mobile Games and Entertainment Group Limited (00302.HK) released its 2025 annual performance report. The annual report shows that in 2025, China Mobile’s total revenue was 1.39 billion yuan, a year-on-year decrease of about 28%; during the same period, adjusted net loss was 1.47B yuan, narrowing from a loss of 2.11 billion yuan in 2024, but still in a significant loss state.

In this regard, China Mobile attributes the large losses mainly to the underperformance of its self-developed game “Sword World” after its launch. It is reported that “Sword World” is a self-developed game that took over three years to develop. The company invested heavily in development and marketing expenses, but despite multiple rounds of testing and tuning, revenue still fell short of expectations, resulting in substantial financial losses.

Further analysis by reporters found that although China Mobile clearly stated at the beginning of the annual report that “Sword World’s” failure impacted the company, the direct reason for the decline in revenue scale appears to be a significant drop in revenue from game publishing business—from 1.66B yuan in 2024 to 1.16B yuan in 2025. The company explained: “The revenue from new games launched in 2025, ‘Three Thousand Illusions’ and ‘Daily Life in Chat Group,’ did not meet expectations; also, the successful game ‘The Legend of the Condor Heroes: Iron Blood and Righteousness,’ which was previously launched, ceased operations in 2024 due to the expiration of IP licensing.”

Facing ongoing operational losses, China Mobile seems to have initiated a “cutting off an arm to survive” approach to cost reduction and efficiency improvement. According to the annual report, the company’s full-time employees sharply decreased from 710 at the end of 2024 to 260 at the end of 2025, a reduction of over 60%. R&D expenses also dropped significantly from 244 million yuan to 136 million yuan, with measures such as office space clearance and outsourcing cost reductions being implemented simultaneously. Industry insiders pointed out that in the current fast-paced iteration of the gaming industry, China Mobile’s long-term development potential remains to be validated by the market.

However, the annual report also highlights some bright spots. For example, the company’s overseas revenue reached 358 million yuan in 2025, a year-on-year increase of 31.6%. Nonetheless, the overseas business volume remains relatively small, and after large-scale layoffs and cost-cutting measures, whether it can maintain the previous rapid growth remains to be further tested over time.

According to the company’s official website, China Mobile is a leading global IP game operator, centered around IP, continuously creating quality content and interactive experiences for fans based on its proprietary IP “The Legend of Sword and Fairy,” aiming to build a world-class IP. The company listed on NASDAQ in 2012, completed privatization in 2015, and was listed on the Hong Kong Stock Exchange in 2019. (Intern Zhang Jiwen also contributed to this article)