A hand-drawn poster promoting the movie “The Cow Comes”. It will be seen in Beijing cinemas on August 21, 2026. Widely ridiculed for its shoddy visuals, China’s low-budget animated film “Cow Lai” became a viral hit, with crowds flocking to theaters to see just how bad it was. (Photo by Pedro PARDO/AFP via Getty Images)
Pedro Pardo | AFP | Getty Images
With the proliferation of artificial intelligence capabilities and decreasing attention spans, Chinese producers are flooding this zone with short drama films to see which ones will be hits.
Producers of vertical titles assess audience interest before making major efforts toward distribution and audience acquisition. Compared to traditional entertainment models, which invest far more money into production, short-form drama companies can test demand with less financial risk.
“Platforms and producers can test opening clips of vertical dramas with specific audiences and expand promotions if viewers convert,” said Ashley Dudalenok, founder of ChoZan. This allows companies to put more money into titles that drive engagement, and pivot quickly from titles that don’t. In short, it’s a fail-fast approach.
Generative AI has accelerated this mass production strategy by reducing the time and cost required to create new titles. According to estimates released by the China Netcasting Service Association, approximately 128,000 short dramas were released in China in the first quarter of 2026, and more than 95% of them were AI-based. CNSA estimates that China’s micro-drama and steamed bun market will be worth approximately 100 billion yuan (US$15 billion) in 2025. The format has surpassed long-form video in average daily usage and ranks second in the audiovisual category.
Jiaxing, China – July 21: Staff members work on script improvement, location shooting, AI post-production, and international translation and distribution at a microdrama production company in Jiaxing, Zhejiang Province, China on July 21, 2026. Jiaxing City has gathered dozens of micro-drama related companies and established several professional industry platforms to support the growth of this field. (Photo courtesy of VCG/VCG, Getty Images)
Video Visual China Group | Getty Images
According to the report, vertical titles can generate strong ad revenue, with opt-in video ads generating approximately 11 times more revenue than Mintegral’s Android benchmark in the first half of this year.
But high spending on distribution and audience acquisition can eat away at some of the profits generated by cheaper production.
While a short drama may only cost a few hundred thousand yuan to produce, “it can cost much more to get it seen by the right audience,” Dudarenok said. She estimated that the cost of purchasing 1,000 promotional advertising impressions will rise from 50-80 yuan in 2023 to about 150-200 yuan in 2025, and may exceed 300 yuan during the competitive period.
Mass production and low production costs do not necessarily lead to commercial success.
While some great hits can generate large amounts of revenue, most still fail to generate a meaningful return on investment, Dudalenok said.
Competition for viewers is also increasing, with short-form drama campaigns paying an average of 2.3 times more per app install than Mintegral’s Android benchmark, while the number of active advertisers and ad creatives has more than doubled, according to the report.
“Ushirai”
And one of the year’s most attention-grabbing short films may not have worked as well. According to official Chinese box office statistics, Niu Lai grossed 45.5 million yuan (US$6.76 million) during its three-week run, while widely circulated unofficial estimates put the production budget for Chinese animation at around $200.
However, “Niu Lai” had a very poor initial performance and only became popular after people decided to realize how bad it really was. They may not have survived long enough to succeed with a fail-fast approach.
Seema Shah, vice president of Sensor Tower, said all entertainment platforms are competing for a “finite resource” – time, noting that the number of daily active users and time spent on the platform are among the most important metrics of user engagement.
Given the intense competition, paid acquisition has become the core of short drama distribution strategies.
“Charging has to be some kind of step forward,” James Haslam, head of marketing at Mintegral, said in an interview. He noted that the distribution of short dramas is “some viral, some purely social, and very aggressive user acquisition,” and that app discovery is rarely organic.
Industry experts are divided over whether short drama specialists or traditional incumbents have a stronger distribution moat.
Haslam said short-form drama companies may have an advantage over traditional entertainment companies in terms of agility, performance marketing and familiarity with new acquisition channels. On the other hand, Mr. Shah pointed out that: Netflix The company was recognized as the best-positioned incumbent due to its size, customer retention, and global distribution capabilities.
Although short-form dramas compete with traditional entertainment formats such as Hollywood movies and television for viewing time, experts say they are not a direct replacement from a consumer perspective.
Sensor Tower’s Shah said short dramas are unlikely to displace existing entertainment formats. Part of their appeal is that they require little involvement from viewers and “offer easy hooks,” but the continued success of blockbusters suggests that viewers still value “high-quality, well-produced content.”
Dudalenok said the widespread adoption of the short drama format “doesn’t indicate that movies or premium TV are dying.” Film and television still have advantages that short-form dramas cannot easily replicate: big-screen spectacle, prestige, deeper library value, and building franchises across formats.
—CNBC’s Evelyn Cheng contributed to this article.
