1.074 billion people are scrolling through short videos: Why do platforms want to switch to a different profit-making approach?

China's short video market is facing a problem that has never emerged before:

Where can we find new users?

Research Report on the Development of China's Online Audio-Visual Industry (2026) shows that by the end of 2025, the number of online audio-visual users in China has reached 1.099 billion, among which short video users hit 1.074 billion, with a penetration rate of 95.4%.

In other words, among Chinese internet users, almost 95 out of every 100 people use short video services.

What is more notable is that among major internet applications with a user penetration rate of over 80%, short video is still the only application that sees simultaneous growth in both user scale and penetration rate.

The user base is still expanding.

But the room for growth is completely different from that of a few years ago.

When a product covers 1.074 billion people, the core problem the platform faces next will gradually shift from "how to get more people to watch videos" to:

How to generate more revenue from the same over 1 billion existing users?

This is likely the most important business model transformation for short video platforms in the next few years.

After 1.074 billion users, the biggest change is that "nearly all potential users have been covered"

Over the past decade, there has been an extremely simple and effective growth formula for China's internet industry:

New users × usage duration.

The more users there are, the greater the commercial value.

The longer the daily usage time, the more opportunities for ad display, and the more accessible entry points for various business models such as e-commerce, games, and paid memberships.

The short video industry has pushed this logic to the extreme.

Around 2016, short video was still a relatively new form of content.

Later, with the popularization of smartphones, the improvement of mobile network speed, and the maturity of algorithm recommendation, short video quickly evolved from an entertainment tool for young people to a basic internet application used by almost the whole population.

By the end of 2025, the number of short video users has reached 1.074 billion.

The total number of Chinese internet users is at the level of about 1.1 billion.

This points to a very straightforward question:

How many more users can we possibly add?

Of course, the user base may still grow in the future.

New internet users will continue to join the internet, the penetration rate among the elderly group may increase, and platforms may also expand into overseas markets.

But at least in the domestic Chinese market, the era driven by "adding tens of millions or even hundreds of millions of new users every year" has seen a significantly narrowed room for growth.

In a sense, this is a problem that all super-sized internet platforms have to face eventually.

When the user base is only 200 to 300 million, the top priority is to acquire more users.

When the user base exceeds 1 billion, the top priority is to operate the user value.

Just one word makes all the difference, and the business logic is completely different.

In the past, the competition focused on "who can get users to stay longer", in the future, it will focus on "how much value every minute of user time can generate"

After the user size approaches the ceiling, there is another way to drive growth:

Get users to stay longer on the platform.

This is also one of the most fiercely contested indicators among internet platforms in the past few years — total user duration.

Why does short video have huge commercial value?

One very important reason is that it allows users to consume content continuously.

After a 10-second or so video ends, the next one starts immediately.

Algorithms are getting better at understanding user preferences, and the cost for users to leave the platform is getting higher and higher.

Eventually, the platform obtains extremely high total user duration.

Data shows that in 2025, the average daily usage time per capita of online audio-visual users has reached 201 minutes, a year-on-year increase of 4.2%.

What does 201 minutes mean?

More than 3 hours.

This is already a very huge time asset.

But the problem also arises right here.

There are only 24 hours in a day.

Short video cannot increase user usage time infinitely.

It has to compete for time with work, sleep, social interaction, games, e-commerce, long video, and even offline life scenarios.

After both user scale and usage duration reach a high level, if the platform simply pursues "longer viewing time" continuously, the marginal return will get lower and lower.

Thus a new problem emerges:

Can the same one minute of user time generate higher value?

This is exactly what platforms need to compete for in the next stage.

The first change: Advertising is no longer just "the more ads you show, the more money you earn"

One of the most mature business models of short video platforms is advertising.

When users scroll through videos, the platform inserts ads into the content feed.

The longer the user stays, the more ads can be displayed in theory.

But this model has a natural limit:

Too many ads will annoy users.

Platforms cannot infinitely increase ad density just to raise revenue.

Therefore, the truly important variable for the advertising business in the next stage will probably no longer be just "displaying a few more ads", but:

Make each ad more valuable.

For example, can an ad accurately find potential consumers?

After seeing the ad, will the user swipe past it directly, or click on it?

Will the user make a purchase after clicking?

If an enterprise invests 1 million yuan in advertising fees, how much sales revenue can it generate in the end?

These data will become more and more important.

In the past, platforms sold traffic.

Going forward, platforms need to prove more that:

My traffic can bring actual conversion results.

This is also why algorithms, data analysis, AI-generated ad materials, and intelligent delivery tools are penetrating deeper and deeper into the advertising business.

If AI can automatically generate dozens of sets of ad materials and test their effects in real time for different crowds, advertisers can get higher conversion at lower costs.

For platforms, this means that even if the total user duration does not increase significantly, one minute of traffic can still be sold at a higher value.

Growth shifts from "quantity" to "efficiency".

The second change: Short video is increasingly becoming a "shopping mall"

There is another way to make money that is more direct than advertising:

Transactions.

In the past, we opened short video apps to watch content.

Now more and more often, we will make purchases conveniently right after watching the videos.

A group-buying link can be attached to the end of a restaurant review video.

Goods can be sold under a product review video.

A travel video can link to hotel reservations and ticket purchases.

Even a micro drama can embed brands, products, and cultural tourism destinations.

The Research Report on the Development of China's Online Audio-Visual Industry (2026) released a notable data point:

In the past six months, 58% of respondents have purchased products or services that they had never tried before because of online audio-visual content.

This shows that short video is not just competing for "entertainment time".

It is influencing consumption decisions.

This is also why short video platforms are increasingly becoming a super commercial entry point.

The previous path was:

Watch videos → get entertainment.

Now it may become:

Watch videos → generate interest → search → place order → consume offline at the store.

If this closed loop can be established, the value of a user will no longer only depend on how many ads he watches.

It will also depend on how many goods he buys through the platform, how many hotels he books, and how many local services he purchases.

From the perspective of business model, this is a very big change.

Platforms are shifting from "selling attention" to "participating in transactions".

The third change: Content itself will also start to generate revenue directly

Another trend worth paying attention to is that the value of content is being re-calculated.

The biggest advantage of short video in its early stage is low production cost.

One person with one mobile phone can create content.

A large amount of UGC content continuously flows into the platform, and the platform obtains nearly unlimited content supply.

But when the industry enters a mature stage, users' requirements for content quality are also rising.

Micro drama is a very typical example.

It quickly gained a large number of users in the early stage by relying on "short, fast, and highly engaging" features.

By 2025, the average daily usage time per capita of micro drama has reached 129 minutes, exceeding that of long video.

When a content category occupies such a huge amount of user time, the industry will naturally shift from extensive production to high-quality production.

Why?

Because content quality not only determines the number of views.

It may also determine membership revenue, brand cooperation, copyright value, IP derivatives, overseas distribution, and even offline consumption.

A piece of content with real IP value can be monetized repeatedly.

It can be played on short video platforms today.

Its overseas copyright may be sold tomorrow.

Brand licensing cooperation may be launched the day after tomorrow.

After that, it can also be developed into games, cultural tourism projects, or other derivative products.

Thus, the indicator that platforms used to care most about — "view count" — is no longer sufficient.

For truly high-value content in the future, the question to answer is:

How many times can a piece of content make money? How long can it generate revenue?

This is why copyright and IP value are becoming important again.

The fourth change: AI may make "producing a video" cheaper and cheaper

There is another variable that is surging into this industry:

AI.

The Research Report on the Development of China's Online Audio-Visual Industry (2026) shows that the total number of AI-generated videos and audio clips has exceeded 2 billion by 2025, an increase of more than 14 times compared with 2024.

The biggest impact behind this number is not just that "AI-generated videos are becoming more and more common".

It is that the cost structure of the content industry is changing.

In the past, shooting a commercial video required script writing, shooting, actors, editing, and dubbing.

Now AI has been applied to multiple links including script writing, image generation, video production, dubbing, digital human creation, and even post-production.

For platforms, this may bring two completely opposite results.

First, the amount of content will be larger and larger.

Because the production cost has been reduced.

Second, ordinary content may become less and less valuable.

Because when massive amounts of AI-generated content pour into the platform every day, "the ability to produce videos" itself is no longer a scarce resource.

What will become truly scarce is:

Creativity, brand, IP, credibility, and the ability to stably attract users.

This is very similar to the development of text content in the early days of the internet.

When everyone can write articles, what is really valuable is not "the ability to write", but "having people willing to keep reading your content".

AI may accelerate this process once again.

Therefore, the biggest value that AI brings to platforms is not necessarily creating more content.

More importantly, it may reduce the cost of the entire business system.

Generate ad materials at lower costs.

Complete content review faster.

Understand user preferences more accurately.

Produce micro dramas at lower costs.

Complete translation and overseas distribution with higher efficiency.

Ultimately, what platforms pursue is:

For every yuan of revenue generated, can the cost of content and operation be further reduced?

Why this change is important for all content platforms?

Putting these changes together, we can see a very clear trend.

In the past, the growth formula of short video platforms might be:

More users × longer usage time.

In the future, it will probably gradually become:

Existing users × higher business efficiency × more transactions × higher-value content ÷ lower cost.

This is a completely different set of formulas.

The former model competes for traffic scale.

The latter model competes for operation capability.

Once entering this stage, the competition between platforms will become more complex.

Who has a better recommendation algorithm?

Who has a higher ad conversion rate?

Who can convert content traffic into e-commerce, local life services, and other transactions?

Who can build a better copyright and IP system?

Who can use AI to further reduce content and operation costs?

The importance of these questions will keep rising.

This is also why the fact that short video users have reached 1.074 billion does not mean the industry "has no room for growth".

On the contrary.

After user growth approaches the limit, the truly complex commercial competition is just beginning.

When evaluating short video platforms in the future, don't only focus on user count

For ordinary readers and investors, this also means that the way to observe internet platforms should change.

In the past, when a platform announced user growth, people could easily draw the conclusion:

The more users there are, the bigger the business will probably be.

But when the user scale has reached the 1-billion level, the explanatory power of this logic will become weaker and weaker.

In the future, there are at least five indicators worth paying attention to.

First, look at revenue per user.

After the number of users stops growing significantly, how much revenue each user can generate becomes more important.

Second, look at advertising efficiency.

It is not the number of ads, but whether the money advertisers invest can get better returns.

Third, look at transaction scale.

Whether e-commerce, local life services and other businesses can truly convert traffic into consumption.

Fourth, look at content assets.

Whether the platform has high-quality content, copyrights and IP that can generate revenue for a long time.

Fifth, look at cost.

Whether AI can truly reduce the cost of content creation, review, customer service, marketing and operation.

These five figures may determine the commercial value of the platform in the next stage better than "how many new users have been added".

The number of online audio-visual users in China has reached 1.099 billion, and the number of short video users has reached 1.074 billion.

This is an astonishing figure.

But from a business perspective, it is more like a dividing line.

In the past decade, the biggest story of the short video industry is to bring more and more people into the ecosystem, and get more and more people to form the habit of watching short videos.

This story has been basically completed.

The new story to be told next is:

When more than 1 billion people are already here, how much value can the platform create for each person, and how much profit can it make from that?