Why does China Literature have to launch "Qidian Theater"?
In early July, China Literature launched "Qidian Theater", integrating live-action short dramas and AI manhua dramas into this new app.
Viewed in isolation, this move might seem like just another player entering the short drama track. But when we broaden our perspective to the entire content industry, the situation reveals a subtle dynamic: short video platforms are leveraging massive traffic to move upstream and seize IPs, while content companies holding vast story libraries are striving to build their own downstream distribution channels. Qidian Theater has landed precisely at this crossroads of this industry collision.
For a long time, China Literature has played the role of an upstream "ammunition depot", responsible for creating high-quality stories and waiting for film and television companies to adapt them for screen productions. However, with the explosive rise of short dramas and AI technologies, industry rules have shifted — an online novel can be transformed into short video content for users in just a few days. Amid this content boom, downstream distribution channels and user data have unexpectedly become the most profitable segments.
From an offensive and defensive perspective, China Literature's entry into the short drama app market is a strategic move to avoid being sidelined. In 2025, China Literature proved that the monetization path from web novels to short videos is not only feasible but also highly efficient.
Why Now?
At first glance, China Literature's launch of "Qidian Theater" appears to be merely adding a new channel for watching short dramas, but on deeper inspection, it marks a transformation in the company's stance and position within the content ecosystem.
In the past two years, short dramas have rapidly evolved from an emerging content format into a mass entertainment product covering hundreds of millions of users. As of February 2026, the industry's monthly active users have further reached 718 million. User education is largely complete, and short dramas have transitioned from a content trend to a stable traffic carrier.
China Literature's profit logic follows a linear path. On the front end, it operates online reading through platforms including Qidian Read, Qidian Chinese Network, and QQ Reading; on the back end, it selects IPs from a massive library of web novels, then brings works like *Joy of Life* and *My Heroic Husband* to the film and television market through licensing, co-development, and its own production studios.
For a long time, this model remained stable, and China Literature only needed to maintain its text-centric IP content library, leaving long video platforms to handle the distribution and broadcast of film and television works. However, long-form video production is a capital-intensive, long-cycle process, where a single series often takes one or two years from project initiation to release, and can only absorb a very limited number of IPs.
The turning point emerged in the past two years. The boom of short dramas, coupled with AI tools that reduce costs and improve efficiency, has drastically lowered the barriers to web novel adaptation. Especially by 2026, a story no longer needs to wait years to be adapted into a long series — it can be turned into a live-action short drama, AI manhua drama, or dynamic comic within days.
Data tells the most intuitive story. China Literature's 2025 financial report shows that 400,000 new writers and over 800,000 new novels joined the platform in a single year. Supported by technology, China Literature launched more than 120 short dramas last year alone. Its AI manhua drama business, which gained momentum only in the second half of the year, produced nearly 1,000 titles — 12 works including *The Excellent Son-in-law of Ming Dynasty* and *Mysterious Life Pattern* exceeded 100 million views, with the AI manhua drama segment generating over 100 million yuan in revenue in the second half of the year.
The surge in production output requires a corresponding outlet, and both content logic and commercial logic were validated in 2025. As video production grows exponentially, the old operational approach is no longer viable. New dramas are launched every day, and if China Literature still queues up for distribution via platforms like iQiyi, Tencent Video, Youku, or ByteDance's channels, it will not only face higher costs but also lose its "internet-native sensibility".
Current short drama and AI manhua drama production relies entirely on user completion rates, character popularity, and recommendation feedback to guide subsequent content creation. Without access to first-hand user data, IP operations become a blind attempt to "feel an elephant by touching its parts".
This explains why China Literature is determined to launch "Qidian Theater". It is not just building a trendy video player, but creating its own exclusive "private plot", and even developing a brand-new production relationship structure dedicated to short dramas within its existing content ecosystem.
Once a novel's popularity is validated by readers on Qidian Read, it can immediately be adapted into a short drama or AI manhua drama within the same ecosystem, and then directly presented to users on "Qidian Theater". For exclusive content in particular, this complete closed loop allows content to circulate entirely internally. More importantly, exclusive content is more capable of leveraging monetization levers — generating higher revenue through mechanisms like membership subscriptions, on-demand payments, and advertising systems.
However, this product is not entirely a 2026 mobile internet innovation; it even retains traces of traditional horizontal-screen apps, displaying short dramas in a shelf-style layout rather than a vertical-scroll information feed format.
Most short drama content is primarily designed for horizontal viewing — even for 9:16 vertical-screen footage, users must rotate their phones to watch in full screen. Watching horizontal-screen short dramas on a mobile phone creates an unusual experience, which differs from mainstream short drama formats like Hongguo Short Dramas and WeChat mini-program short dramas.
Restructuring the Value Chain
Treating "Qidian Theater" as a mere short drama product would be underestimating China Literature. Its real underlying ambition lies in redefining its ecological position in the content industry — redistributing the substantial profits of the entire content sector.
Since the emergence of digital content platforms, different internet companies have generally specialized in different media formats: novel writers and video producers each operated their own profit streams. China Literature sold IPs at the upstream end, while long video platforms handled downstream distribution, with each party performing its respective role. Back then, IPs were scarce resources, and whoever owned hit stories like *Joy of Life* held greater bargaining power.
But this model has been completely overturned by short dramas and AI. The threshold for IP adaptation has now dropped to an extremely low level, where a novel can be turned into a short drama or AI manhua drama and delivered to users in just a few days, with content output growing at a hundredfold speed compared to the past.
When content becomes so abundant that users cannot possibly consume all of it, good stories are no longer the sole competitive advantage. User attention and distribution channels have become the new bottleneck that restricts development.
This brings about a harsh reality: IPs can no longer be treated as one-time transactions. They need to be developed into continuously revenue-generating assets. Data from every stage — comments during novel serialization, short drama completion rates, and AI manhua drama payment rates — determines whether an IP should next be adapted into a feature film or a game. Whoever controls this data will become the true industry leader.
Looking at the broader industry landscape, Disney is fully committed to developing Disney+, while ByteDance has positioned itself with Tomato Novels on one hand and Hongguo Short Dramas on the other. All major players are pursuing the same goal: tightly enclosing content production, distribution, and users within their own ecosystem to keep all profits internal.
China Literature's confidence stems from its rich resources. It has hundreds of millions of monthly active users and China's largest web novel library. Every story selected for video adaptation has already been validated by readers' real consumption and reviews on Qidian Read, carrying inherent traffic appeal.
Yet crises are also looming. Short video platforms, leveraging their powerful algorithms and massive user bases, are increasingly exerting reverse control over content companies. If China Literature does not build its own distribution channels, the user data of its carefully nurtured IPs will be taken over by external platforms when they are distributed on third-party channels. Over time, these platforms could even use algorithms to dictate how China Literature should write its stories.
Therefore, "Qidian Theater" represents a necessary defensive counterattack that China Literature must launch.
The content industry has evolved from a simple "story competition" to an "ecosystem competition". What Qidian Theater is fighting for is not trivial market share in the short drama sector, but China Literature's overall dominance over the entire IP lifecycle.
Overcoming Multiple Barriers
The launch of "Qidian Theater" only secures an entry ticket; the real major challenge is that it has stepped into a market already saturated with fierce competition.
The short drama market has undergone tremendous changes today. Free content models have become mainstream, AI has drastically reduced the cost of short drama production, and audience expectations are increasingly demanding. By launching an independent app at this stage, China Literature must face a series of industry challenges.
Despite having over 100 million monthly active users, the immersive pleasure of reading novels is fundamentally different from the instant gratification of watching short dramas. Reading novels requires readers to actively engage their imagination, while short drama consumption relies on algorithms to deliver content seamlessly. How can China Literature convert its text-accustomed user base into active consumers who top up subscriptions, follow updates, and binge-watch videos on Qidian Theater? The entire user time-grabbing operational system needs to be built from scratch.
An even more critical barrier lies in the core competitiveness of major tech companies: algorithm and operational capabilities. Previously, China Literature's expertise focused on collaborating with writers and managing reader communities. But running a video platform demands intelligent recommendation algorithms and precise monetization systems for advertising.
Why has ByteDance's Hongguo Short Dramas achieved such success? It relies on ByteDance's formidable recommendation algorithm and cold-start mechanism. In this regard, China Literature is a high-achieving student with a partial subject weakness, needing to make up for its shortcomings in algorithms and technology.
At the same time, upon its launch, Qidian Theater must directly confront the "ocean of content garbage" spawned by AI. How powerful are AI tools? They can complete script parsing, dubbing, and storyboarding in a streamlined workflow, allowing a small team to mass-produce numerous dramas.
China Literature itself is leveraging these technologies, having produced nearly 1,000 AI manhua dramas in the second half of 2025. But this creates a problem: when low-quality, assembly-line content floods the entire internet, a platform's content curation ability becomes a matter of survival. How to identify potential high-value works that could become the next *Joy of Life* from the massive amount of overflowing videos, while eliminating low-quality content that only chases temporary traffic, is a severe test of the platform's judgment.
All these factors will ultimately be reflected in financial performance. Running a platform is a capital-intensive endeavor, with research and development, traffic acquisition, and promotion all requiring substantial investment. While China Literature's solid 4.05 billion yuan revenue from online reading can offset part of the content costs, the short drama industry is facing increasingly strict regulatory requirements, with filing, content review, and algorithm governance all consuming significant manpower and resources. Qidian Theater must precisely calculate every penny between user acquisition costs and revenue from advertising and membership subscriptions to avoid financial collapse.
The competitive focus of the content industry is shifting. Original IPs remain important, but they are no longer sufficient to determine competitive outcomes. Content production, video distribution, user operations, and data feedback together constitute the core competitiveness of a content company.
What Qidian Theater truly needs to prove is whether China Literature can translate its accumulated IP advantages from web novels into operational capabilities suited for the short drama era.
This article is from the WeChat public account "Xiu Tai", written by Shi Can, and published with authorization from 36Kr.