Yuewen demands fresh narratives, not AI fantasies.

Author | Wang Tiemei Editor | Wen Changlong

In 2023, newly appointed Yuewen CEO Hou Xiaonan was brimming with optimism and bet heavily on AI to "reshape the entire IP industry chain," aiming to validate his leadership through technological narratives. However, by early 2025, Hou's internal letter to the group shifted focus to high-quality content, IP commercialization, and globalization, with AI failing to emerge as a key priority.

These changes are likely not coincidental. The sudden shift in direction within just a year suggests that critical, albeit unseen, nodes may have occurred behind the scenes.

Recently, "Dream Island," an AI companion app nurtured by Yuewen's women's frequency online literature platform Xiaoxiang Bookstore, was summoned by the Shanghai Municipal Internet Information Office due to vulgar and borderline content generated by AI, which posed harm to minors' physical and mental health.

According to a report by CNR.cn, despite "Dream Island" offering a minor mode, in practice, its AI characters' pornographic content exceeded standards, explicitly presenting pornographic and borderline content to minor users, and even engaging in interactions involving "dismemberment and curiosity."

"Dream Island" is not the only AI product of Yuewen to spark controversy. On a broader scale, this public outcry may merely be a concentrated manifestation of the outside world's perception of Yuewen's AI strategic adjustment, hinting at a potential disconnect between technological vision and product implementation.

01 The "Pathological" AI Companion Track

"Dream Island" falls under social interactive AI software in the AI domain, recognized as the current TOP1 in terms of monthly active users and user retention.

Unlike other similar products, Dream Island is backed by Yuewen. Initially incubated by Yuewen's Xiaoxiang Bookstore, it commenced internal testing in August 2023 and rapidly expanded, officially operating independently under "Shanghai Dream Island AI Technology Co., Ltd." at the start of this year. It announced a $10 million financing from strategic investors such as Yuewen Group and Shangtang Guoxiang Fund.

Since its August 2023 testing launch, "Dream Island" has attracted nearly five million registered users, 80% of whom are young women. As a company integrating the entire industry chain capabilities of creation, copyright management, film and television, animation, games, etc., Yuewen boasts a vast corpus. Consequently, Dream Island offers diverse interaction methods, prioritizing guiding users in creative interactions in addition to providing AI text and voice chat.

The CNR.cn report mentioned that Dream Island contained pornographic and violent content aimed at minors, leading to a summons from relevant authorities. This incident undoubtedly brought significant public opinion pressure and brand risk to both Dream Island and the Yuewen Group behind it.

In fact, this is not the first time such apps have been named. As emotional companion products, it's challenging to avoid borderline scenes and dialogues to ensure users obtain immersive and intimate experiences. Many seasoned users of AI companion products have stated that achieving a naturally immersive companion effect necessitates intimate dialogue, and the more restricted and sensitive words, the more it detracts from the experience.

An AI product manager revealed privately that to make users "obsessed" and induce spending, certain ambiguous and even borderline interactive designs have almost become standard. Companion AI products have always grappled with the tension between "experience" and "compliance," a prevalent industry issue. However, the issue of minors should be a red line. The reality is that minors are a crucial user group for such products. Ultimately, it's not that the platform can't address this, it's just that it doesn't want to, or is unwilling to genuinely commit to doing so.

Post-summons, Dream Island chose to rectify. The app's new version will present an age confirmation option during login. Users choosing to be over 18 will be forced to undergo real-name authentication. Those choosing to be under 18 must enable the youth mode to continue using the software.

Currently, Questmobile monitoring data indicates that, except for Maoxiang, which maintains growth in monthly active users, retention, and usage duration, other AI companion products generally entered a downward trajectory towards the end of 2024. Taking Dream Island as an example, its monthly active users declined by 13.8% in December last year, and usage duration dropped by over 45%, with the gap with Maoxiang widening. In early June 2024, Maopaoya announced that the entire team would be merged into "Step AI," leaving only a small number of employees for operation and maintenance.

It's evident that the current commercialization model of AI companion products is still in its infancy, and balancing product experience, user willingness to pay, and product compliance remains challenging. For Yuewen, these hurdles are equally unavoidable.

02 The Pros and Cons of AI-Assisted Writing

In addition to the AI companion product Dream Island, "Writer Assistant," another Yuewen product accessing the DeepSeek-R1 large model, also seems to be facing controversy.

Yuewen's idea of applying AI to online literature emerged a few years ago. In June 2023, Yuewen established the Intelligence and Platform R&D Business Department, forming one of the four major business departments alongside Content Ecology, Film and Television Business, and Enterprise Development. The "Intelligence and Platform R&D Business Department" stood out as it was introduced for the first time.

Shortly thereafter, Yuewen launched the industry's first online literature large model "Yuewen Miaobi" and the application "Writer Assistant Miaobi Version." In February of this year, Yuewen announced that its writer-assisted creation product, Writer Assistant, had integrated the independently deployed DeepSeek-R1, expressing its willingness to encourage online literature writers across the industry to jointly explore AI-empowered creation.

In Yuewen's vision and promotion, this AI writing assistant has been significantly upgraded in three aspects: intelligent Q&A, inspiration acquisition, and description polishing, providing online literature writers with more intelligent creative assistance. Hou Xiaonan, CEO and President of Yuewen Group, described this new creative mode as "an upgrade from manual driving to assisted driving for human liberation."

But for creators, AI is more like a double-edged sword. Both readers and authors seem concerned about the abundance of AI-generated content. As AI swiftly infiltrated the creative industry, the online literature world began to spontaneously resist "AI products." After Fanqie fell into AI controversy, many online literature editors in the industry publicly stated that once suspected AI creation is detected, the manuscript will be rejected at best, and the author's information will be blacklisted at worst, with no further collaboration.

Jinjiang Literature City clearly stated that "AI writing assistance is still a novelty, with insufficient academic discussion and imperfect legal provisions, so it is temporarily regulated as a similar event to original violations."

Many online literature authors also directly stated that various AI-assisted writing software not only failed to achieve "human liberation" but made the situation for lower-tier authors even more difficult. In the view of some authors, it's better to refuse AI-assisted writing from the outset than to spend considerable time "proving one's innocence" to editors.

"The current industry consensus is to strictly prohibit AI from directly creating online literature, but in practice, the judgment criteria are still relatively vague," said Xiaozhi, an editor at Yuewen's women's frequency. "Generally, it either relies on the editor's experience to judge or uses AI detection tools to assist in identification, but no matter which method is adopted, everyone tends to err on the side of caution rather than easily approve it."

What's even more worrying for the online literature industry is that the issues of copyright ownership and responsibility definition caused by AI-assisted creation remain unresolved.

03 Yuewen's AI Myth

In 2023, Hou Xiaonan, as Yuewen's CEO, set the tone for AIGC to assist in the development of the IP industry at the beginning of his tenure. Hou Xiaonan believes that AIGC will bring a new round of iteration to the IP industry, specifically implemented in the three areas of IP consumption, IP incubation, and IP development. In other words, Yuewen hopes the AI business can support IP operations.

Yuewen's public 2024 performance report revealed that the company achieved revenue of 8.12 billion yuan in 2024, with IP operation revenue surpassing online revenue, and IP copyright revenue increasing by 34.2% year-on-year. In 2025, Hou Xiaonan clearly stated that "IP commercialization" will be the group's key direction in the future.

Despite the impressive overall performance report, statements related to AI were relatively restrained, only mentioning the increase in daily active users and usage rate of the AI Writer Assistant, as well as "AI translation assisting Chinese works in going global." As for how AI can deeply empower IP consumption and incubation, no further elaboration was provided. An increasingly clear reality is that in the industry context in which Yuewen is situated, AI may play a role in improving efficiency, but there's still a considerable distance from truly leveraging commercialization and bringing substantive breakthroughs to IP operations.

People close to the IP copyright industry said that Yuewen's value in the capital market is mainly reflected in its support for Tencent's film and television business, with over 80% of Tencent Video's "hit dramas" last year originating from Yuewen.

As the upstream of Tencent's content ecosystem carrying IP reserves, Yuewen's own IP operation capability should be the core. However, the reality is not optimistic - on the one hand, existing online literature resources are constantly being consumed and adapted; on the other hand, new "hit seedlings" are still in development.

Hou Xiaonan also mentioned in an interview that the biggest challenge for Yuewen at present is not its inability to create hit IPs but its failure to explore a universal methodology. Creating hits is akin to "sowing seeds in the ground and seeing which ones grow." The IP "Da Feng Dagengren," which Yuewen once highly prioritized, was deemed a "hit failure" by the industry, further proving that this issue remains unresolved.

Simultaneously, under the backdrop of the primary paid reading model, Yuewen has been surpassed by Tomato Novel, which focuses on the free model, in terms of revenue and user scale, with competitive pressure increasingly prominent.

The financial report shows that in 2024, Yuewen's self-owned platform products and Tencent product self-operated channels had 166 million monthly active users, a year-on-year decrease of 19%; the monthly average paid users increased from 8.7 million in 2023 to 9.1 million, but user payment ability continued to decline, with an average monthly income of 32 yuan per paid user, a year-on-year decrease of 0.5 yuan. Faced with these issues threatening the core business, AI seems to offer limited solutions.

People close to the IP copyright industry revealed that Yuewen's most developed AI business, machine translation of online literature for overseas markets, suggests that Yuewen's various visions of AI assisting IP operations are challenging to implement. AI not only fails to address Yuewen's existing problems but also repeatedly embroils the company in controversies. Clearly, current AI is still unable to genuinely propel the cultural industry forward, so Yuewen's early AI layout resembles technological speculation.

In the long run, speculation is undeniably unsustainable. Yuewen may also be cognizant of this. In various interviews with Hou Xiaonan in 2023, AIGC frequently emerged as a keyword, and Hou Xiaonan deeply believed in the notion that "AI can help Yuewen reach a higher level." However, in the group's internal letters and various interviews in 2025, the word "AI" did not frequently appear.

For Yuewen at present, a more pragmatic choice may be to scale back AI experimentation, refocusing resources on IP derivative development (such as anime-related merchandise), writer ecosystem construction, and the practical refinement of AI creation tools. Only by solidifying the fundamental content business and stabilizing the competitive moat can technology investment truly transform into sustainable growth momentum.

This article is an original by "City Scene"

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