E-commerce Blazes the Trail, Subsidy Cuts as a Bold Move, and the Battle in AI: Hongguo Short Dramas Have No Retreat

From 2023 to the present, in the three years since Hongguo Short Dramas was launched, the keyword has been nothing but "growth".

It has hardly encountered any rival that can compete with it. Its free strategy has allowed it to stand at the top of the short drama market without a fight. According to QuestMobile data, in February this year, the monthly active user scale of Hongguo Free Short Dramas App exceeded 300 million, with a net increase of nearly 140 million year-on-year.

It hasn't killed and can't kill long - form video platforms, but it is indeed taking away more users' viewing time. In February this year, on average, each user spent 125 minutes on Hongguo Short Dramas every day. One after another, long - form video platforms have been left behind in terms of core user indicators. In June and November last year, the monthly active user scale of Hongguo Short Dramas surpassed Youku Video and Mango TV respectively.

In the short drama ecosystem, Hongguo's role is continuously becoming more important, and its say is constantly increasing.

It is constantly expanding and enlarging its ecosystem, offering more real - money subsidies, attracting more screenwriters, directors, actors, and production parties, and becoming the rule - maker and trend - setter. Now, almost every move of Hongguo Short Dramas can stir the nerves of upstream and downstream practitioners.

This is a victory for Hongguo and also a victory for short dramas.

Short dramas have long been a mainstream content form, covering 718 million users. Not only young people are watching, but also the middle - aged and elderly groups. Not only users in low - tier cities are watching, but also users in first - and second - tier cities are watching.

Image/QuestMobile

From another perspective, short dramas are also one of the content forms most affected, transformed, and impacted by AI.

When AI already has the ability to generate all actors, scenes, and plots, the changes are not only limited to the content production method, but are deeply hidden in every link of this industry and fall on every role in the ecosystem - this brings more possibilities and greater vulnerability.

Similarly, this is not only a contradiction in short dramas, but also a contradiction that Hongguo needs to face and solve.

It has left its competitors far behind, and its pursuit of commercial returns is becoming more and more urgent.

However, after standing firmly in the C - position in an industry that is rapidly iterating and whose trends change almost every day, Hongguo needs to be more cautious and vigilant with every step it takes than before.

01 E - commerce as the vanguard, Hongguo enters a new "money - making" cycle

Hongguo Short Dramas' foray into e - commerce is not a momentary impulse, but a precise layout that has been in the works for nearly a year.

In May 2025, Douyin Group established a short drama copyright center, merging the BD teams of Douyin Short Dramas and Hongguo Short Dramas into a unified window with the nature of a middle - platform. This step seems to be an efficiency optimization within the organization, but in fact, it solves a core problem on the content supply side - when creators can reach two billion - level traffic platforms, Douyin and Hongguo, through one entrance, the efficiency of content supply is greatly improved, and repetitive losses are compressed.

Five months later, the "Order" entrance was officially launched in the Hongguo Short Dramas App, fully connecting to the Douyin e - commerce page. When users are watching dramas on Hongguo, they can directly purchase "drama - same - style" and brand store products, completing the complete closed - loop of placing orders, making payments, and tracking logistics. Among the five Tabs on the home page, the middle entrance is directly set as the mall interface.

Also in this month, Hongguo's e - commerce potential was truly perceived by the outside world for the first time.

On October 17, 2025, "the king of short dramas" Ke Chun made a surprise appearance in the October Rice Field live - streaming room, attracting more than 100,000 viewers to watch simultaneously within an hour, setting a sales peak for the brand in the past 90 days. When a short drama actor can convert drama - chasing fans into purchasing power in the live - streaming room, the chemical reaction of "short dramas + e - commerce" has begun to show.

By April this year, Douyin e - commerce initiated an organizational structure adjustment and officially established an independent "Hongguo E - commerce" department, on par with core departments such as the industry product department and the user product department.

So far, the logic of Hongguo's e - commerce business has become clear: to transform short dramas from a pure content field into a trading field.

"Search for the same style" is the core measure of this logic. When users pause the playback while watching a short drama, the system will automatically recognize the current picture and pop up a "Search for the same style" prompt, allowing users to complete the purchase without jumping to Douyin. In terms of coverage, this function covers almost all short drama content - not only can the female lead's outfits be recognized with one click, but also watches, wedding dresses, and chandeliers in restaurants can be searched for the same style. Behind this is Hongguo's in - depth reuse of Douyin e - commerce's huge product pool.

The "Drama - same - style" entrance has also been launched under the Hongguo Short Dramas mall tab. Image/Hongguo Short Dramas App

This is just the beginning. What Hongguo really values is not the sales volume of a single product, but the imaginative space of "the plot is the shelf".

When the female lead makes a comeback, there is a space to display clothing, beauty products, and bags; when there is a conflict between the daughter - in - law and the mother - in - law, there is a usage scenario for kitchenware and cleaning products; in middle - aged and elderly dramas, nutritional products and massagers can naturally enter the family narrative. Products are not inserted in the form of advertisements, but are hidden in characters, plots, and scenes.

Different from the "watch and buy" model, Hongguo has chosen a low - interference design of "pause to trigger". Only when users actively pause will the system pop up the "Search for the same style" button, choosing the commercial node at the moment when users actively trigger it, minimizing the damage to the sense of immersion.

For Douyin e - commerce, Hongguo's participation also fills in the link of "passive product placement": users are passively influenced by the plot on Hongguo, actively access product information through AI search on Doubao, and place orders through interest - based recommendations on Douyin. The linkage of the three platforms forms a complete consumer decision - making chain.

As an e - commerce industry analyst pointed out: "The core competitiveness of Hongguo E - commerce does not lie in e - commerce itself, but in the synergy of the ByteDance ecosystem. It doesn't need to build its own supply chain or build a logistics system from scratch. It only needs to seamlessly connect the content consumption scenarios of 300 million users to the infrastructure of Douyin e - commerce - sharing the product pool, reusing the algorithm model, and connecting the transaction chain. In this sense, e - commerce live - streaming is an inevitable choice for Hongguo to open up a second growth curve."

For Hongguo Short Dramas itself, it also needs to speed up the exploration of more commercial monetization paths other than advertising.

In 2025, the advertising revenue of Hongguo Short Dramas is expected to be around 20 billion yuan, but the monetization efficiency and imaginative space of relying solely on advertising have reached the ceiling; the year - on - year growth rate of Hongguo's monthly active user scale is no longer steep; doing e - commerce instead of relying solely on monetization will obviously bring a higher ARPU per user.

02 Reducing subsidies, reducing subsidies, reducing subsidies. What is Hongguo in a hurry for?

If e - commerce is Hongguo's attempt to "increase revenue", then canceling the guaranteed share is the knife for "cutting costs".

Hongguo's reduction of the guaranteed share mechanism is not a one - step process, but a "gradient cooling" that has lasted for nearly eight months.

In September 2025, at the Zhengzhou High - quality Development Conference for Micro Short Dramas, Hongguo announced that the Guo Ran Plan would no longer provide guaranteed funds for the introduced completed dramas, and instead adopted a pure share - cooperation model. Only a very small number of high - quality dramas can still enjoy the guarantee.

In mid - February this year, Hongguo Short Dramas issued a notice to completely cancel the guaranteed cooperation for live - action short dramas of small and medium - sized production parties. Previously, the platform provided a guaranteed income of 200,000 - 350,000 yuan per drama for production parties, along with a maximum share ratio of 70%, which was the core guarantee for small and medium - sized teams to receive payments. After the policy adjustment, small and medium - sized production parties need to bear all investment risks by themselves.

Then, on April 27 this year, Hongguo's knife was swung at AI - simulated human dramas.

Multiple comic drama practitioners revealed that after April 27, all scripts under review had their guarantees cancelled and were changed to a pure share model, with a share ratio of about 20%. In response to this news, Hongguo Short Dramas told the media that the statement was untrue, emphasizing that some scripts still retained the guarantee policy.

Overall, the three rounds of subsidy reduction, targeting different cooperation models and different - scale cooperation parties respectively, form a clear path for Hongguo to shift from "burning money for growth" to "profit - first".

The guaranteed share mechanism was once one of the most crucial institutional designs in Hongguo's rise. Simply put, this is a risk - sharing model: the platform pays a fixed guaranteed fee to the production party, and then conducts an excess share based on indicators such as the playback volume after the work is launched.

The essential difference between this and the pure share model lies in the different risk - bearers. Under the guaranteed model, the platform bears the main risk, and the production party has a stable income; under the pure share model, the production party is responsible for its own profits and losses, and the platform pays according to the effect.

From 2023 to 2024, this mechanism played a huge role in ecosystem construction. The short drama industry was just starting, and a large number of screenwriters, directors, actors, and production parties were on the sidelines regarding this emerging content form. Hongguo eliminated their concerns with real - money guaranteed commitments, attracting a large number of creators to pour in. Data shows that in 2024, Hongguo's share amount increased from 100 million to 300 million yuan, and in 2025, the monthly share of scripts increased from 50 million to over 80 million yuan - the effect of spending money was significant.

It is no exaggeration to say that the guaranteed mechanism was one of the key driving forces for Hongguo to grow from zero to a monthly active user scale of 300 million in two and a half years. It solved the problem of "who will shoot" in the most direct way, quickly accumulating a massive content library for the platform.

However, the problem is that this mechanism gradually deviated during operation.

The goal of some production parties became "earning the platform's guarantee" rather than "creating good works", continuously compressing costs and mass - producing homogeneous low - quality short dramas. A person in the industry revealed that "many short drama production parties can make money by taking advantage of the platform, and some screenwriters use AI to write scripts to earn screenwriting fees, resulting in extremely poor benefits after the short dramas are launched."

An informed source also told Tech Planet that Hongguo previously rapidly expanded its business scale through self - produced short dramas, but there were problems with risk control in the self - produced business, and many people took advantage of loopholes to get huge guaranteed production fees. After Hongguo's internal management realized this loophole, it seems that they no longer focused on self - production.

From this perspective, Hongguo's continuous subsidy reduction is actually a targeted make - up - for - lost - ground - the bugs brought about by the rapid expansion of the scale in the past need to be fixed.

However, the impact of subsidy reduction is not evenly distributed. Leading companies are basically not affected and even benefit from it.

Wang Shuai, the hit director who shot "A Commoner of High Rank" and "Assuming the Name of Langya", revealed that Hongguo came to him with projects as soon as the internal rules were adjusted, and his schedule for 2026 is fully booked.

Behind this is a deeper change: Hongguo is shifting from "inclusive subsidies" to "targeted investment in leading players". According to information disclosed by Hua Yuesheng, the person in charge of content cooperation at the Douyin Group's short drama copyright center, at the China Network Audio - Visual Conference in May 2026, the guaranteed support budget for live - action short dramas in 2026 exceeds 1.5 billion yuan, and the average guaranteed amount per drama has increased by about 60% compared with last year - the highest incentive for a single leading drama is 1.5 million yuan, and there is also a special fund of 200 million yuan dedicated to supporting differentiated content such as realistic and suspenseful dramas.

Image/Hongguo Short Dramas official WeChat account

In other words, the 1.5 billion yuan is not reduced but more concentrated. The average guaranteed amount per drama has increased by 60%, but the threshold for getting the guarantee has also increased simultaneously. Not everyone has increased by 60%, but "the remaining group of people" has increased by 60%.

"Friendly to leading players, squeezing out middle - tier players, and weeding out tail - end players" - Hongguo Short Dramas is conducting a precise screening.

03 How can Hongguo achieve self - consistency in the transformation of AI dramas?

Hongguo's stance in the AI wave is somewhat "contradictory" to a certain extent.

Now, it is trying to find a balance between "high - quality live - action dramas" and "high - volume AI dramas".

In the past period, the iterative improvement of the capabilities of underlying multi - modal large models and video generation models, as well as the advantages in terms of production costs they bring, have made AI comic dramas, AI - simulated human dramas, and AI live - action dramas increasingly popular.

According to data from Shenzhen Chuangliang: From January to February 2026, the daily advertising expenditure for comic dramas was about 15 million yuan, of which AI - simulated human dramas accounted for only 5%; in March, the daily expenditure of the overall market rose to 60 - 80 million yuan, and the proportion of AI - simulated human dramas rose to 35%; in April, the daily expenditure of the overall market reached 120 million yuan, and the proportion of AI - simulated human comic dramas was 50%; in May, the daily expenditure of the overall market exceeded 160 million yuan, and the proportion of AI - simulated human dramas was as high as 70%.

However, the wave of AI - simulated human dramas only lasted for about half a year, from the end of 2025 to May 2026. At the end of April, the platform was hit by a wave of takedowns. From April