90% of AI short drama production contractors are loss-making. Who has blocked the channel between production capacity and orders?

In the first quarter of 2026, approximately 128,000 micro-dramas were launched across the entire industry, of which AI-generated short dramas accounted for over 95%. However, on the flip side of this production boom, industry data shows that around 90% of AI short drama companies are operating at a loss.

While more and more people are becoming capable of producing dramas, securing high-quality projects has grown increasingly difficult: the AI short drama production contracting market is undergoing a structural mismatch between supply and demand.

I. Busier Yet Less Profitable: Three Structural Dilemmas in the AI Short Drama Production Market

In 2026, the AI short drama track has reached an unprecedented high point. Data from the China Network Audio-Visual Association shows that in the first quarter of 2026, approximately 128,000 micro-dramas were launched industry-wide, with AI-generated short dramas making up over 95% of the total.

Yet behind this explosive production capacity lies a collective predicament for production teams. Industry statistics indicate that roughly 90% of AI short drama companies in the sector are currently in a loss-making state. In its reporting, Dazhong Daily used the term "contract labor system" to describe the current industry division of labor: a tiny number of leading institutions continuously secure orders by leveraging their qualification and capital advantages, while a large number of small and medium-sized teams are reduced to the actual executors of these orders.

Analysis from the DataEye Research Institute believes this dilemma is no accident, rooted in the structural imbalance of the AI short drama industry chain.

The layered subcontracting "contract labor system." This past April, Dazhong Daily compared the layered subcontracting production model of the AI short drama industry to the "contract labor system" in the construction industry — a handful of leading institutions with popular works can easily secure annual cooperation frameworks from platforms, and after ramping up their production capacity to the maximum, they subcontract orders to downstream service providers. Under multi-layered subcontracting, high-quality projects are all intercepted along the "platform → leading institution → secondary subcontractor" chain, leaving a large number of small and medium-sized production teams only able to take on low-margin scattered low-price orders, or even forced to run their production capacity idly. The problem is not that there are no good projects in the market, but that the access to good projects is blocked by intermediate layers, leaving the teams that actually implement the work unable to obtain reasonable returns.

The information black box of securing projects through personal connections. Beyond the structural issues of the industry chain, there is also information asymmetry in the commercial order matching mechanism. At present, the circulation of commercial orders in the AI short drama production market relies heavily on personal networks and industry relationships, with few stable channels. High-quality projects often get fully circulated within WeChat groups and through private business connections, never entering the open market. A team's ability to secure orders often depends more on "who they know" rather than "what they can deliver." For teams with strong production capabilities but lacking industry connections, this information black box constitutes the most difficult barrier to break through.

Rapid industry differentiation. As the technical threshold for AI short drama production continues to fall, a large number of small and medium-sized institutions and individual creators have flooded in, leading to a growing number of people capable of producing dramas. However, the ability to consistently access high-quality projects remains concentrated in the hands of a few leading institutions. This rapid differentiation means a large amount of production capacity is operating inefficiently or even being wasted, resulting in a mismatch between projects and production capacity, and low matching efficiency.

The combination of these three factors has made "the busier you are, the less money you make" a common predicament for small and medium-sized production teams.

II. Exploration of Standardizing Commercial Order Circulation

To solve this problem, the industry needs a mechanism that enables efficient and transparent connection between high-quality projects and mature production capacity.

In this direction, the "Order Square" feature recently launched by the Paoman platform under iReader provides a notable industry practice case.

In terms of revenue model, the Paoman Order Square adopts a dual-model design of "minimum guarantee + revenue sharing." The minimum guarantee mechanism solves the problem of guaranteed current-period income for production teams — a guaranteed order means the team can lock in a production schedule in advance, gaining the initiative for subsequent operations; the revenue sharing mechanism means teams are no longer just completing a one-off production delivery, but deeply tying their own capabilities to the subsequent performance of the project, continuously sharing the long-term incremental value after the content goes live. The revenue-sharing projects use the platform's exclusive reserve of script resources, which means production teams can reduce the pressure of homogeneous competition right from the source.

At the commercial order matching level, the Order Square integrates the entire process of project release, independent application, production delivery, and revenue distribution, attempting to replace the past fragmented order-taking method that relied on personal connections with a set of clear, transparent standardized rules. Going forward, the platform also plans to launch diverse cooperation solutions such as computing power subsidies.

In addition, the Order Square also provides a convenient channel for teams that wish to expand into overseas markets. In the past, exporting short dramas overseas required tackling multi-link challenges spanning scriptwriting, production, distribution, and operation, and the high threshold directly locked out small and medium-sized teams. The Order Square integrates overseas scripts, production projects, and distribution channels, allowing teams with no overseas experience to participate in the overseas market using their existing production capacity without building a new business system. Notably, iReader Technology, behind Paoman, has long-term overseas operation experience, and this past April it also launched the overseas short drama app PopoVibe. These experiences are now feeding into its overseas expansion system, lowering the trial-and-error costs for small and medium-sized teams.

III. The Second Half of the AI Short Drama Industry: Connection Efficiency Becomes a New Variable

Looking at the Paoman Order Square within a broader industry coordinate system, its launch timing falls precisely at an industry turning point.

It has only been a few months since the AI short drama boom began, and China's AI short drama production contracting market is still in the "pre-standardization stage": commercial order matching relies on personal connections, and cooperation and delivery standards are opaque. These phenomena, in the final analysis, stem from the lack of a standardized infrastructure in the industry that connects "high-quality projects" with "mature production capacity" — Where do projects come from? Who will execute them? Are the delivery and settlement standards clear? These links, which have formed systematic mechanisms in other mature industries, still rely heavily on personal relationships and informal channels in the AI short drama production sector.

The essence of the Order Square is not simply to provide a project information display page, but to attempt to establish an operation mechanism that shifts commercial orders from "private circulation" to "open matching": unified release of project requirements, team self-service application, clear delivery standards, and transparent revenue rules. For production contractors, this significantly reduces the cost of obtaining information and dependence on relationships; for project parties, it also expands and standardizes the production capacity supply pool.

From the perspective of industry evolution, the timing is now ripe. As the industry develops rapidly, the market is accelerating its clearance phase, continuously eliminating low-quality, homogeneous small-scale production capacity, and the industry is shifting toward comprehensive competition covering technology, content, compliance, and operation. As production capacity transitions from "unordered expansion" to "survival of the fittest," the second half of the AI short drama industry is also shifting from a production capacity race to an efficiency competition — whoever takes the lead in establishing an efficient production capacity matching mechanism will gain a structural advantage in the new phase of competition.

For China's AI short drama production ecosystem, the establishment of standardized infrastructure will greatly improve the connection efficiency between upstream and downstream industry players; for production teams, this not only means higher order-taking efficiency, but also a chance to secure an admission ticket to the "second half of the AI short drama industry" during this critical window of industry differentiation.

This article is from the WeChat official account "DataEye" (ID: DataEye), and is published with authorization from 36Kr.