Pacific Securities has released a research report stating that since 2025, video models both domestically and internationally have accelerated their performance breakthroughs, now achieving L3-level short video content creation capabilities. This progress is pushing the global film and television industry into a period of widespread AI adoption. Currently, AI penetration in the film and television sector remains in the single digits. With further iterations of models and video tools, industry penetration is expected to experience explosive growth.

AI video tools, serving as the medium, highlight the core value within the industrial chain. Simultaneously, IP companies are poised to benefit significantly from this wave, leading to a revaluation of their content assets. The main viewpoints from Pacific Securities are as follows:

**Models Accelerate Iteration, L3 Short-Video Capability Meets Some Production Needs** Regarding models, overseas video models have taken the lead in breakthroughs in advanced capabilities like physics simulation and fidelity. While domestic models continue to catch up with leading international counterparts, they are focusing on controllability, multimodal interaction, and localized scenarios to create differentiated competition. Specifically, current video models can achieve a native resolution nearing 2K, with single-generation durations reaching up to 25 seconds. They also support synchronized audio-visual output, enhancing control over generated visuals and narratives, allowing for more precise simulation of real-world physics and character movements/expressions. The release of lightweight models and efforts to improve quality while stabilizing prices are indirectly reducing costs.

In terms of content generation, mainstream models now support L3-level short video creation, with some capabilities meeting L4-level feature-length content requirements. This already fulfills certain production needs of the film and television industry to an extent.

**Film Industry Enters AI Adoption Phase, Significant Room for Penetration Growth** Leveraging the rapid iteration of video models, AI video tools are progressively empowering film and television production: 1) **Anime Series:** AI application in the content production phase reaches 50%-80%, driving explosive growth in anime series supply. AI-generated series now account for over 70% of the total. 2) **Live-Action Short Dramas:** Evolution from "AI + live shooting" to fully AI-produced content. AI-simulated human dramas are scaling rapidly, with top works like "Execution Platform" surpassing 100 million views within 6 days of release. 3) **Movies and TV Series:** AI is still primarily used for auxiliary production. AI-animated films have taken the lead in practical application, while AI in live-action films remains in its early stages.

The report suggests that AI significantly reduces costs in the filming stage of production materials. It also enhances efficiency by compressing content production cycles and enriching content themes and formats. In terms of potential, the global video production market is valued at approximately $316.3 billion. The current global AI video market is about $4.5 billion, representing a penetration rate of only 1.4%, indicating it is still at a low level.

**Video Tools are Core, IP Segment Stands to Benefit Most** AI video tools are the vehicle that translates model capabilities into practical productivity. Their development relies on both underlying model technology and accumulated expertise in professional video content creation, leading to a collaborative ecosystem involving video model developers, IP/film companies, and third-party tool providers. In the future, AI video tool companies with technological advantages are better positioned to leverage their creative capabilities and platform ecosystems to produce high-quality video content.

Concurrently, IP companies, possessing vast libraries of content adaptable for video, are expected to fully benefit from the maturation of AI video tools.

**Risk Warning** Risks include slower-than-expected development of AI technology, tightening content regulations, and intensifying industry competition.