Good evening, ladies and gentlemen. Welcome to China Literature's 2024 Annual Results Conference Call. A copy of the Annual Results Announcement can be found and downloaded from its Investor Relations website, https://ir.un.com. At this time, all lines have been placed on listen-only mode, and the floor will be open for questions following today's presentation. I would now like to hand the conference over to your host today, Ms. Maggie Zhou, Head of Capital Markets and Investor Relations at China Literature. Maggie, please go ahead.
Thank you, Operator. Ladies and gentlemen, welcome to our 2024 Annual Results Conference Call. Joining us today on the call are Mr. Xiaonan Hou, our CEO, and Mr. Jackie Xu, our VP of Finance. For today's call, Mr. Hou will discuss the company strategies and business highlights, and Mr. Xu will go through the financials. We will then open the call for questions. Before we begin, I would also like to remind you that management's comments during the call will include forward-looking statements that are based on our current expectations. All statements, other than statements of historical facts during the conference call, are forward-looking statements which are subject to a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of the company.
This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute, all measures of the company's financial performance prepared in accordance with the IFRS. Please do take a minute to read the risk factors and non-IFRS measure discussion in China Literature's 2024 Annual Results Earnings release. I will now turn the call over to our Chief Executive Officer, Mr. Xiaonan Hou.
Thank you, Maggie. Hello, everyone. Thank you for joining our earnings call today. Before we begin the discussion on the results, I would like to share with you some of my thoughts on company strategy and business operations. During the 2025 Spring Festival, the digital content industry witnessed two milestone events. One is the launch of the DeepSeek model, which had a significant impact on the global AI industry. The other is the release of the animated film, "Ne Zha 2," which became the highest-grossing film in Chinese box office history and the fifth highest globally, with a box office revenue of RMB 15 billion. Together, these events have created a new paradigm where technological innovation and cultural competence are intertwined, demonstrating how IP and AI are driving the evolution of the content industry. This directly aligns with China Literature's mission and is truly exciting.
The success of the "Ne Zha" series has shown us that high-quality content has unlimited potential, not only attracting a large audience but also creating substantial business opportunities. This success further validates the effectiveness of the quality-focused strategy we have always adhered to. Under this strategy, we successfully launched a series of popular content in 2024, further reinforcing our leading position in the industry. Leveraging the influence of our popular content, we are accelerating IP commercialization progress, extensively exploring merchandise development opportunities, building integrated online and offline experiences, and promoting the deep integration of content and consumption. Our merchandise business experienced rapid growth in 2024, with increasing industry recognition. During this year's Spring Festival, utilizing our online and offline omnichannel distribution advantages, we secured the domestic general distribution rights for Funk Crazy 's "Ne Zha 2" light merchandise products.
This not only showcases our strength in IP merchandising but also provides strong support for the commercial expansion of "Ne Zha 2" IP. Going forward, we will continue to adhere to the quality-focused strategy, create IP with enduring vitality, and expand the boundaries and value of our IP. We continue to explore the application of cutting-edge technologies to empower the content business. In February 2025, our Writer Assistant creation tool became the first in the industry to integrate the DeepSeek- R1 model, providing writers with even more intelligent assistance. Since integrating the DeepSeek, daily active users of our Writer Assistant tool have increased by over 30%, with the weekly usage rate of AI functions exceeding 50%, and the average number of writers using the intelligent Q&A function per day increasing tenfold.
As a company focusing on content creation, we firmly believe that content is not only a modern expression of cultural heritage but also a bridge connecting the past and the future. Technology, as a universal force for change, has injected immense vitality into the industry. The intergenerational transformation of cultural values continues to drive innovation and development in the industry. As an industry leader, China Literature will always be at the forefront, leading industry development and playing a pivotal role in this era. Let me share with you our specific business progress during 2024. Firstly, in terms of IP creation and IP visualization businesses, we have constantly focused on building a high-quality content ecosystem, producing a series of the most popular content. According to the Creative Industries Technology Research Institute of Renmin University of China, China Literature had three out of the top five most valuable cultural IPs in 2024.
Based on Enlightened data, among the top 30 most popular drama series in 2024, 16 were adapted from China Literature's IPs. Additionally, according to Goodoo data, 14 of the top 20 most popular domestic animation works in 2024 were adapted from China Literature's IPs. In terms of online reading, our reading platform added around 330,000 writers, 650,000 literary works, and over 42 billion Chinese characters in 2024. High-quality works increased significantly, with the number of newly signed literary works with over 50,000 average subscribers per chapter, up 50% year- over- year. Additionally, the number of new writers with annual income exceeding RMB 500,000 grew over 70% year- over- year. Our community has become more robust, with the number of users casting over 1,000 monthly tickets in 2024 increasing more than 60% year- over- year. As a result, our MPUs grew 4.6% year- over- year to 9.1 million in 2024.
In the live-action TV and film segment, we launched several phenomenal blockbuster hits throughout the year. We have one box office champion film, "Youlu," which grossed RMB 3.5 billion in box office revenue, and four drama series including "Legend of Shen Li," "Joy of Life 2," "The Tale of Rose," and "Guardians of the Deva," dominating the online viewership rankings of domestic drama series. These achievements demonstrate our consistent ability to create and replicate blockbuster IPs, reflecting our strong capabilities in content creation and IP development. In the animation segment, we released new series including "World's Best Martial Artist" and "Richest Man in Game," as well as sequels to "Battle Through the Heavens," "Stardust Mountain," and "Fox Spirit Matchmaker", which topped popularity rankings on video streaming platforms during their release windows.
Among them, the annual series "Battle Through the Heavens" topped Tencent Video's annual best-selling list and won the title of 2024 Tencent Video VIP Members' Favorite Animation. In the comics segment, we completed the acquisition of Tencent Animation and Comics in 2024. Domestic comic IPs such as "The Outcast" and "The Fox Spirit Matchmaker" further expanded our leading IP offerings and continued to perform strongly. On the Tencent Animation and Comics platform, "The Outcast" ranked first in terms of revenue among domestic comics, while "The Fox Spirit Matchmaker" also ranked first in terms of annual revenue growth. The synergies being created between China Literature and Tencent Animation and Comics continue to deepen. This deep integration of our respective strengths in content production capacity and IP industry value chain will further expand the potential and value of our top-tier IPs.
In the short drama segment, we launched over 100 titles during 2024, with the most popular title generating close to RMB 40 million in gross revenue. In addition, one of our new releases at the beginning of 2025 achieved a more impressive record of over RMB 50 million in gross revenue within seven days. This underscores the trend towards higher quality commercial dramas. The short drama market is growing rapidly, and we will continue to capitalize on our high-quality production capacity and capabilities to take advantage of the enormous opportunities the market presents. Leveraging the strong influence and user traffic generated by our high-quality content, as well as our improved innovative capabilities and deep market insight, we made significant progress in our IP merchandise business. In 2024, the total GMV for IP merchandise surpassed RMB 500 million, of which the collectible cards accounted for over RMB 200 million.
The main IPs including "The King's Avatar," "Joy of Life," "Lords of Mysteries," "The Outcast," and "The Fox Spirit Matchmaker" have all set new historical revenue records, showing widespread market influence. In addition, we have collaborated with over 150 authorized partners to develop merchandise products covering multiple verticals such as toys, 3C digital, and food and beverages etc. To expand our distribution channels, we set up over 10 self-operated livestream channels, as well as official online stores on Taobao and Tmall. We also opened eight offline stores covering leading anime comics and games shopping districts in key cities such as Beijing, Shanghai, and Hangzhou. In addition, through the distribution model, we have covered over 6,000 offline and over 3,000 online sales outlets, forming a comprehensive omnichannel sales network and laying a solid foundation for future business growth. The global merchandise market is enormous at over $300 billion.
While we have only just begun the commercialization of IP, we are confident this will offer us significant growth prospects both online and offline. Our advantage lies in our ability to leverage IP to deliver emotions and unique experiences through our products and to reshape the cultural consumption preferences of younger generations. Finally, I would like to share with you our exploration in the field of new technologies. We are aware of the enormous opportunities that AI brings to the content industry and are actively embracing this transformation. We have taken a leading position in the development of the IP industry value chain and are leveraging AI to enhance this competitive advantage across various business scenarios. As I previously mentioned, our Writer Assistant tool integrates the DeepSeek- R1 model, allowing writers across the industry to experiment with it to develop best practices.
This will help online literary creation enter a more efficient and intelligent era. AI is also accelerating the globalization of our IP. In 2024, our overseas online reading platform, WebNovel, added more than 3,200 AI-translated works, accounting for 47% of all Chinese-translated works and about 40% of the top 100 best-selling lists. AI has enabled WebNovel to cover a wider range of languages, including Spanish, Portuguese, German, French, Indonesian, Japanese, and many others. In 2024, revenue from non-English works translated by AI increased by more than 350%. In addition, we are integrating AI into various formats such as audiobooks, video dramas, animation, and videos to further accelerate the development of our IP. We are also applying AI to improve content recommendation and user interaction to enhance the user experience.
We believe that IP and AI will together drive the content industry forward, creating a new ecosystem that stretches from content creation to user consumption. AI imparts IP, and IP provides scenarios for AI. The deep integration of the two will facilitate the transition towards multidimensional innovation and globalization, from which we are uniquely positioned to benefit. Looking ahead, we will embrace the latest technologies, continue the incubation of popular IPs, and build a leading IP industry value chain to ingrain ourselves in the memories of the next generation. This concludes my remarks, and I will now hand over to Jackie to present our financial performance. Thank you all for your attention.
Thank you, Mr. Hou. Hello everyone. In 2024, our total revenue increased 15.8% to RMB 8.1 billion. The growth rate here is calculated on a year-over-year basis, as well as our subsequent growth rates we mentioned.
Let's take a look at our online business first. Online business revenues increased 2.1% to RMB 4 billion, primarily driven by our consistent improvement in core product operations and production of high-quality content. Breaking down it further, revenues from our self-owned platform products increased 3.4% to RMB 3.5 billion, mainly due to our continuous efforts as just mentioned. Revenues from our self-operated channels on Tencent products decreased 28.2% to RMB 245 million, mainly due to a decrease in advertising revenues. This is a result of improving our distribution ROI and prioritizing content distribution through our core pay-to-wear products. Revenues from third-party platforms increased by 32% to RMB 254 million. This is mainly due to expanded collaboration with our third-party distribution partners. In terms of operating metrics, our total average MAUs decreased 19% to 166.6 million.
Breaking down it further, MAUs on self-owned platform products remained stable at 103.8 million compared with 104.8 million in 2023. MAUs on our self-operated channels on Tencent products decreased 37.7% to 62.8 million. This is primarily due to continuous optimization of operational efficiency, which involves distributing more content through our core pay-to-wear products instead of pay-to-wear channels on Tencent products. Average MPUs grew 4.6% to 9.1 million, mainly due to growth in membership users following the launch of additional membership content. Monthly output was RMB 32, slightly decreasing from RMB 32.5 in 2023. This is due to a mixed effect from lower output contributions by newly acquired membership users. Now turning to IP operations and other businesses. In 2024, revenues from IP operations and others increased 33.5% to RMB 4.1 billion. In this segment, revenues from IP operations increased 34.2% to RMB 4 billion.
The increase was driven by solid growth across our IP operation businesses, primarily from the release of more blockbuster drama series, films, and limited series, as well as expanded licensing of our IP adaptation to business partners. Additionally, new initiatives like short dramas and IP merchandise products grew significantly during the period. Revenues from the others category, mainly generated by sales of physical books, increased 10.5% to RMB 99 million. Now let's look at costs and expenses. In 2024, our cost of revenues increased 15.4% to RMB 4.2 billion, minimally the revenue growth. As a result, our gross profit increased 16.3% to RMB 3.9 billion, gross margin of 48.3% compared with 48.1% in 2023. Our selling and marketing expenses increased 31.5% to RMB 2.3 billion. This is mainly because we increased promotional and advertising expenses associated with films and drama series released in 2024.
As a percentage of revenues, our selling and marketing expenses increased to 27.8% in 2024, from 24.5% in 2023. Our G&A expenses decreased 1.5% to RMB 1.1 billion. As a percentage of revenues, our G&A expenses decreased to 14.1% in 2024, compared with 16.6% in 2023. Our net other losses were RMB 974 million in 2024, compared with net gains of RMB 11 million in 2023. This was mainly due to an impairment loss of goodwill of RMB 1.1 billion, attributable to New Classic Media. This impairment charge is non-cash in nature and therefore is not included in our non-IFRS financials. As a result of the above factor, our operating loss was RMB 336 million in 2024, compared to an operating profit of RMB 709 million in 2023. On an IFRS basis, operating profit was RMB 985 million, compared with RMB 1 billion in 2023.
Our net loss to shareholders was RMB 209 million in 2024, compared with RMB 805 million net profit to shareholders in 2023. On the IFS basis, our net profit to shareholders was RMB 1.14 billion, compared with RMB 1.13 billion in 2023. That concludes our financial review part. Let's move on to the Q&A session.
Thank you for the presentation. Now we will start the Q&A session. Please feel free to raise any questions. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Gigi Zhou with Guangfa Securities. Please go ahead.
[Foreign language]
I will translate myself. What are your plans for the IP commercialization strategy? Last year we noticed that the Yuewen has established it's social system for IP deravatives, could you elaborate the size product and channel strategy for IP deravatives. As well where at commercialization growth stat for this area in the future. Thank you.
[Foreign language]
Thank you for your question. I will address your question. In 2024, we have established a comprehensive omnichannel network for our IP merchandise, covering online live streaming channels, e-commerce stores, WeChat stores, mini programs, offline stores, a number of key account channels, and other sales outlets. Looking forward, we will also try to reach a wider user group through pop-up shops and the seed selling events. We will also collaborate with partners across the industry to reach even greater user groups.
In 2025, in addition to selling our original IP merchandise, we will also open our integrated omnichannel network to the entire industry, especially those boutique IP studios and teams that possess excellent product capabilities while facing channel limitations, to help them distribute their products. For instance, this February, after the Chinese New Year, we obtained the nationwide general distribution rights for Funk Crazy's Ne Zha 2 merchandise product, serving as an illustrative example of our collaborative approach. Currently, our merchandise team consists of dozens of professionals.
[Foreign language]
Looking ahead into this year, we will continue to comprehensively upgrade our team capabilities across the entire value chain, including product planning from the very beginning, concept art design, craftsmanship, supply chain management, manufacturing, warehousing logistics, customer service, distribution, marketing, and promotion and event operations.
Particularly, we expect our concept art and design capabilities will experience a material leap, and the number of projects will also multiply significantly. We will continue leveraging the dual strategies of licensing partnerships and self-development. Through self-development, we aim to strengthen the bond between users and IP, enhance user engagement and interaction, provide unique user experience by employing dedicated operational strategies. Meanwhile, through licensing, we will reach broader user groups across various consumer industries, covering different types of lifestyle consumer products, as well as fashion toy products, to further enhance our IP influence among different consumer groups and accelerate the IP commercialization process.
[Foreign language]
We plan to further expand our merchandise categories. On one hand, we will continue to deepen our presence in the fashion toy sector, including goods and collectible cars, launch more products, and develop new offerings by closely keeping up with trends.
On the other hand, with our IP being adapted into increasingly diverse content formats and reaching broader user bases, the scope of our merchandise categories will be widened, based on which we will explore new product formats, including metal products, plush toys, vinyl plush toys, and offline immersive experience centers, among others. Additionally, we are actively exploring more innovative offerings.
[Foreign language]
Therefore, we are confident that our IP merchandise business will see better development in 2025. In terms of commercial objectives, we will pay more attention to GMV and profit. Our merchandise business is still at an early stage. We are adopting an open attitude towards collaboration with various partners, and we have no specific preference regarding business models, say, self-development, licensing, or co-development. At the moment, our primary business objective is to increase the overall GMV of our merchandise sales as a whole and pursue profit growth.
[Foreign language]
Thank you.
Your next question comes from Xueqing Zhang with CICC. Please go ahead.
[Foreign language]
Thanks for taking my question. My question about New Classic Media. New Classic Media produce many high-quality TV drama/series, but it's profit performance was a bit lower than market institution. Just wonder what structure have inferences, looking a high 2025 and beyond, what's the strategy and what's the latest pipeline. Thank you.
[Foreign language]
[Foreign language]
Okay, Mr. Cao from New Classic Media will take this question. In 2024, the blockbuster titles we released did contribute decent profits, including the film "Youlu," "Joy of Life 2," "Legend of Shen Li," "The Tale of Rose," as well as "Guardians of the Da Huang," which was released at the end of last year. All received extremely high popularity and at the same time brought us decent financial contributions.
While at the same time, certain drama series projects in the second half of last year were delayed, so actually in the second half of last year we only released one drama series, which was Guardians of the [Foreign language] . In addition, the movies we released in the second half of last year also were below our expectation and as a result produced negative impacts on the overall profit performance of New Classic Media. Moreover, out of prudence, we made some impairment provision on certain projects, including certain scripts and the projects that failed to be developed due to changes in the market demand or the adjustments in some creative ideas.
Looking into the future, MCM has a pretty rich pipeline for this year and next year, including more than 10 drama series such as [Foreign language] "Jack Storm", [Foreign language] " Lady Liberty", [Foreign language] " The Moment of Criminal Police", [Foreign language] " The Richest Man in Game", [Foreign language] "The Devil Between Us", [Foreign language] "My Heroic Husband 2", [Foreign language] "Joy of Life 3" , [Foreign language] "A Panorama of Rivers and the Mountains", [Foreign language] "A Beautiful Destiny", [Foreign language] " Living This Moment", [Foreign language] "Princess", [Foreign language] as well as films such as "Chinese New Year Eve Dinner" [Foreign language] and "The Detectives" [Foreign language]. For this year, we expect to release six to seven drama series, including [Foreign language] "Jack Storm", [Foreign language] "Lady Liberty", [Foreign language] "The Richest Man in Game", [Foreign language] " The Devil Between Us", [Foreign language] and others as well as the film "Detectives" [Foreign language] . The MCM team is currently in a period of robust creativity and will further sharpen the focus on premium content creation in the future, striving for excellence in all aspects, including script development, pre-production, planning, filming, and post-production, with a commitment to providing audience with more high-quality drama series and films through the dedication to top quality content and continuous innovation to further solidify our leading position in the premium drama market.
At present, multiple projects in incubation and adaptation have already been pre-ordered by online video platforms. Thank you.
Your next question comes from Thomas Chong with Jefferies. Please go ahead.
[Foreign language].
Let me translate myself. My first question is, regarding the AIGC in content production. Do we know how much AI has already been used in our works? Will our AI tools be monetized in the future? In the long run, will this significantly enhance creativity? And the second question is about the short drama sector. We see the intense industry competition. What's our investment plan in this area, and how can we leverage IPs to create more popular short dramas, and how will we balance long-form videos and short dramas? Thanks.
[Foreign language]
Okay, thank you for your question. The Senior Vice President, Mr. Huang Yan, from China Literature, will address the first question regarding AIGC.
We have seen great development of the AI technology in the past one to two years, especially in the beginning of this year. We feel that AI technology and the content creation can be associated with each other very closely, and we will actively embrace the opportunities the AI technology brings to our content creation industry and explore how AI can empower our premium content business. Combining AI technology with the continuously created high-quality content from China Literature, we will explore the application of AI in various business scenarios, including literature content creation, image, video, audio, and user experience, such as helping readers to find books more effectively so that we can help improve the effectiveness and efficiency of IP development and open up the ceiling for IP value and to create even better and more immersive experience for users.
[Foreign language]
Let me elaborate how we apply AI to different business scenarios. On the literary creation side, we pay much attention to helping writers better create literature content more, effectively. Writer assistant, our writing assistance product [Foreign language] , has promptly completed a private deployment of the DeepSeek- R1 large language model, inviting online literature writers across the industry to participate in trials and testing. This marks the first ever application of DeepSeek into the online literature field. Just as mentioned in the CEO prepared remarks, since its integration, daily active users of writer assistant have increased by over 30%, with the weekly usage rate of AI functions exceeding 50%, and the average number of writers using the intelligent QA function increasing by tenfold. In addition, we continue to iterate our AI models and the technology and explore new models and new approaches.
For instance, we just published a knowledge-based function integrated with DeepSeek, enhancing the understanding of literary works and generating more valuable use cases to assist content creation, such as suggestions for writing, plot development, and inspiration generation.
[Foreign language]
In terms of visualization, we have seen the advancements of multimodal, AI models such as text to image and text to video, from which we have seen, massive, potential and imagination that could bring us opportunities to accelerate the adaptations of China Literature's massive library. For example, in terms of images, our self-developed vertical AI models allow us to generate promotional and marketing material for our books, including new books. Additionally, we also utilize AI to design covers and illustrations for our serialized books, providing writers with multiple design options.
In terms of videos, we are exploring the integration of AI with videos, aiming to maintain consistency in characters and scenes to produce high-quality video content. Currently, we are conducting pilot tests for demo PV for multiple IP-adapted animation projects. In terms of some new content formats like motion comics, AI technology is also capable of efficiently producing motion comics based on existing comics or even novels. These are the directions we are actively experimenting with internally.
[Foreign language]
In terms of enhancing user experience, we believe AI models can play an important role as well. Currently, Qidian is conducting the testing of intelligent book searching functions based on DeepSeek- R1 models.
Leveraging the deep semantic understanding technology, we allow users to input sets of keywords according to their own requirements, such as "please recommend some underrated adventure novels" or "please recommend some novels with elements of urban business competition" to find books. Unlike our previous practice, users could only input the name of the title or the name of a specific author to find books. By introducing the AI functions, we will be able to optimize the user experience when they search for books and enhance the accuracy of our content recommendations.
[Foreign language]
In the audio domain, AI models' text-to-speech TTS technology can convert text into more fluent oral language, imitate various accents, and even convey emotions to a certain extent. Furthermore, users are also allowed to customize the narrator's voice according to their own personal preference.
[Foreign language]
Other application of AI is AI translation that is used in our overseas expansion. We believe the AI model's capability really benefits us deeply. In 2024, we launched more than 3,200 AI translated works on our platform with very good quality. The AI translated works newly added in 2024 accounted for 47% of all Chinese translated works on our platform, and the revenue generated from AI translated works represented over 30% of the total revenue on our overseas reading platform. AI translation has enabled China Literature to extend our novels to even a wider range of languages in addition to English, driving the revenue from non-English works translated by AI in 2024, rising by more than 350%.
[Foreign language]
Finally, regarding your question on our charges of AI tools. Our current focus is on using AI multi-language models and the advance technology to empower the creation of high-quality content and the enhancement of user experience, which will help improve the user experience on our platform and wipe the improvement in financial performance. Currently we don't have specific charging plan for our AI tools. Thank you.
[Foreign language]
Mr. Hou will address your question regarding short drama. We have seen that short drama is now upgrading to even higher quality, and we also focus on producing high-quality short dramas. Currently, the competition in the high-quality short drama segment is not intense as the development of a high-quality short drama requires the integration of many resources and advantages, while there are not many companies capable of this.
China Literature is one of them. We will leverage our advantages and work with excellent literature writers, screenwriters, content creators, and industry partners to jointly create the short drama ecosystem through multiple approaches such as self-development and co-development. For instance, one of our new blockbuster releases at the beginning of this year achieved over RMB 50 million in gross revenue within seven days, and this project was jointly created by us together with the writer of the original novel, verifying the key role played by our excellent content creator resources in the trend towards high-quality short drama production.
[Foreign language]
China Literature has the mature and comprehensive capabilities across the industry chain, from the upstream content creation, including IP incubation and script creation, to the downstream content distribution, as well as media operation and user acquisition that supports the short drama ecosystem.
Therefore, we hold a pretty optimistic view on the development of our short drama business. Looking into the future, on top of a rich reserve of premium IP scripts and creators, we will continue to refine our high-quality production capacity and make use of the cutting-edge technologies such as AI to accelerate our short drama business and launch more high-quality projects with higher hit rates so as to create even greater commercial value.
[Foreign language]
I believe both long long drama and short drama are pretty important components of China Literature's content ecosystem, and we are intensively studying the two business segments, each with its own strategic positioning, business objectives, and team structures. Long drama is the amplifier for the long-term influence of IP, and as Mr. Tao mentioned, we were focused on producing serialized IP adapted long drama projects with premium quality to expand the long-term IP value. Short drama is capable of realizing the visualization of IP quickly, thanks to its relatively short production cycle and low cost, helping unlock the monetization opportunities for more of our IP. We believe long drama and short drama can complement each other and achieve synergistic development, jointly serving the execution of our IP strategy. Thank you.
[Foreign language]
Your next question comes from Maggie Ye with CLSA. Please go ahead.
[Foreign language].
China Literature has been an early adopter in exploring generative AI, and it has announced very early on to fully embrace the technology as early as 2023, with corresponding organizational adjustments. Over the past few years, we do observe certain applications such as online literature translation and relationships.
Wondering if management could provide an update on the scale of our current AI investments, such as AI teams, research staff, and computer resources, etc. Additionally, over the next one to two years, what is management's expectation on incremental revenue growth coming from our AI investment, as well as cost optimization? Thank you.
[Foreign language]
Okay, Mr. Huang will address your question regarding AI. I think a lot of people are really interested in the integration of AI technology with China Literature's content capabilities. Actually, China Literature's management pays much attention to integrate AI into the execution of our IP business. Our investments in AI primarily center on the establishment of the R&D team, the product team, and the machine computing power.
First of all, the R&D team we actively recruit outstanding AI talent who has passion for content in the industry. Including those application-oriented AI specialists and content-oriented AI professionals. Currently, our team consists of dozens of AI professionals and will be enlarged when necessary in the future. At the same time, we consistently provide internal technical training and insight training for almost all the teams internally, ensuring that we remain at the cutting edge of the industry standards and recognition.
[Foreign language]
We've also invested in AI infrastructure, including high-performance CPU computational hardware and cloud computing services. We have been collaborating with almost all cloud computing providers in the industry, enabling rapid iteration, large-scale data set processing, and real-time responsiveness to user demands.
Additionally, the emergence of the DeepSeek model during this year's Chinese New Year holiday has significantly reduced the computational cost per operation and contributed to lower hardware costs. We believe the technology in the future will continue to grow very quickly and are expected to drive down the unit cost for computational power consistently, and our investments in the computing power will also benefit from this.
[Foreign language]
Regarding the impact and the expectations of AI, we think our top priority is how to utilize AI to help the content creators better create even higher quality content. Utilizing AI to help with the content creation is the key focus of us.
On top of that, we think AI could improve the efficiency of content creation, reduce the unit cost of resource investment, and lower the unit production cost. Meanwhile, AI technology can also be integrated into our overseas business, and we've seen our overseas expansion has been accelerated by the application of AI. As AI technology continues to progress, we anticipate breaking through the capacity bottlenecks in IP development, consequently unlocking further profit growth opportunities for us.
Thank you.
Thank you. Due to time constraints, we have now concluded today's call. On behalf of the entire China Literature Management Team, I would like to thank you for your participation on today's earnings call. If you have further questions about China Literature, please feel free to contact us. Thank you and goodbye.