Hongguo's daily active users have exceeded the sum of the DAUs of iQiyi, Tencent Video, Youku and Mango TV, and the long-form video giants have lost to the two-minute instant-gratification short dramas.

What hurts more than the distress of literary critics when learning that Jia Zhangke has fallen in love with short dramas, is the huge shock of iQiyi, Youku, Tencent Video and Mango TV after seeing the daily active user data of Hongguo.

On September 9, QuestMobile released the latest monitoring data. As of July 2026, the daily active users of Hongguo Short Drama under ByteDance have reached 168 million, with a year-on-year increase of 107%. This DAU figure has exceeded the total sum of the four long-form video giants, namely iQiyi, Youku, Tencent Video and Mango TV.

▲ Note: The image is from Visual China

At the moment when the traditional film and television industry is suffering widespread losses, and Yang Zhentian frankly admitted in a podcast that the launch rate of film and television projects is only 30% of that of last year, Hongguo, which has taken the lead relying on the "free + algorithm" model, not only thrived all the way and overturned the game table that long-form video platforms have painstakingly operated for ten years, but also fundamentally reshaped the underlying logic of public content consumption.

However, as the user scale gradually approaches the ceiling and new regulatory rules are fully implemented, how long can Hongguo's rapid advance last?

Algorithm + Content: Achieve Dimensionality Reduction Strike

In the early days of their establishment, long-form video platforms once hoped to build a moat for Chinese film and television content by imitating Netflix's subscription model, but in 2026, this hope has been shattered by free short dramas.

Financial reports show that as of the end of the first quarter, Tencent Group's revenue increased by 9% year-on-year, but the subscription revenue of long-form video members decreased by 2% year-on-year. Mango TV, which has always been renowned for its profitability, has also suffered a heavy blow. Although its revenue in the first half of 2026 barely maintained at 6.194 billion yuan, a year-on-year increase of 3.86%, the attributable net profit plummeted cliff-like to only 202 million yuan, a year-on-year collapse of 73.58%.

Under the double blow of the fierce impact from short videos and the overall downturn of the advertising market, iQiyi has been struggling in the mire of losses since the second half of 2025. Its net loss in the first quarter reached 234 million yuan, hitting the largest single-quarter loss in the past four years.

The production cost of episodes remains high, often reaching tens of millions or even hundreds of millions of yuan, and the production cycle generally lasts for one to two years. The stagnant or even shrinking member base is obviously unable to support the expansion of this heavy-asset model. As a result, the review of launched projects has been tightened, and the approval standards for creators and casts have become increasingly strict, forcing the long-form video market to fully contract.

▲ Note: The image is generated by AI

In contrast, Hongguo Short Drama's revenue successfully exceeded 5 billion yuan in the first quarter of 2026, and the average daily user stay duration surged to 125 minutes, which means an ordinary user will unconsciously watch nearly 60 episodes of short dramas on Hongguo every day.

The shift of users from paying for long-form videos to indulging in free exciting dramas did not happen overnight, and it is also inseparable from the fuel added by long-form video platforms themselves.

From forcibly stacking SVIP on top of basic VIP, to the advanced on-demand viewing for the final episode that once aroused public anger but made a comeback; from restricting the definition of cross-device screen projection, to VIP exclusive recommended ads and small interludes in the drama that cannot be skipped even after recharging, what users get at a high cost on long-form video platforms is not an honorable viewing experience, but a matryoshka-style charging trap.

The exhaustion and boredom brought by various charging strategies of long-form video platforms provided the psychological soil for the outbreak of Hongguo short dramas. The difference in content presentation forms between the two types of platforms determines the final flow of users' attention.

The narrative logic of long-form videos is classic delayed gratification: it takes 3 episodes to lay the foundation of the world view, 5 episodes to shape character conflicts, and the climax that really makes the audience feel hearty often does not come until the end of a season. In today's fast-paced and high-pressure modern society, the audience's patience has long been worn out by fragmented information, not to mention that many long dramas themselves have worrying quality.

Hongguo short dramas turn narrative into an efficient industrial rule: a suspense every 3 seconds, an emotional reversal every 15 seconds, and the average duration of each episode is only 2 minutes. Strong and frequent emotional fluctuations are integrated into the plot, firmly locking the audience's attention.

On the other hand, the page design of long-form video platforms and the recommendation mechanism that puts key projects on the homepage focus on "people looking for content". Users need to select from a large number of posters, watch lengthy previews of previous episodes, and finally make the heavy decision of whether to pay.

Hongguo uses ByteDance's algorithm to achieve accurate recommendation. Every stay, every like, and even the tiny delay of the user swiping the screen will become effective data collected and analyzed by the algorithm. After the user finishes watching an episode of the plot of "overbearing CEO protecting his wife" or "counterattack and revenge", there is no opening or ending credits, and they can smoothly connect to the next episode.

With the support of this system, the continuous increase of user viewing duration comes naturally.

Go Beyond Single Advertising, Build a Closed-loop Ecosystem

However, Hongguo is not an App that only relies on free exciting dramas to sell patch ads. Its real highlight is that it is perfectly embedded in ByteDance's "internal circulation ecosystem".

As one of the largest free online novel platforms in China, Tomato Novel is an important source of narrative texts for Hongguo short dramas, which has precipitated a huge amount of online novel IPs verified by hundreds of millions of clicks. These text stories that come with traffic genes and have been voted by readers with their reading duration have become a steady stream of script library for short drama creators.

In addition to converting its own online novels into short drama scripts, the platform also adopts the model of "script prepayment + step-by-step revenue sharing", which will advance part of the start-up capital for high-rated external scripts, greatly easing the cash flow pressure of small and medium-sized production teams, and locking in high-quality production capacity in the market.

At the same time, with the continuous iteration of ByteDance's AI video large models such as seedance 2.0 and 2.5, from inputting prompt words to generate storyboard scripts with one click, using large models to carry out AI virtual scene construction, generating realistic digital human characters, and even completing post-production automatic editing and intelligent dubbing with one click, AI has cut the production cost of short dramas by 90%.

In the past, a live-action short drama that required hundreds of thousands of yuan in cost and several months of preparation can now be completed and delivered in a few days by two or three "super individuals" with AI tools at a cost of only tens of thousands of yuan. In this way, Hongguo has established a low-cost, high-frequency, completely data-driven industrial assembly line, and the trial and error cost continues to decline.

▲ Note: The image is generated by AI

After skipping the long and expensive incubation period of traditional film and television at the production level, Douyin, which has more than 700 million DAU, has become the promotion and capture position of Hongguo. The short drama operation team will put a large number of high-energy plot clips with the most suspense and tension in Douyin's information flow, accurately reach the target sinking groups or specific interest circles, and use mini-program components or App download links to achieve seamless traffic diversion.

The huge public domain traffic has been successfully diverted into Hongguo. The platform does not simply rely on jumping to external e-commerce links to earn meager "traffic purchase tolls", but locks users inside the App, and fully extracts the life cycle value of traffic through immersive incentive ads, brand customization and embedded e-commerce components.

Especially after the emergence of a large number of hit AI short dramas in the summer vacation, the e-commerce closed loop of virtual idols bringing goods has been continuously implemented within the ByteDance ecosystem.

The leading actor of the AI short drama The Laid-off Girl is not a real person, but a virtual heroine named Fang Taozi. After becoming popular for her exquisite modeling and delicate painting style in the short drama, Fang Taozi's personal account has gained more than 550,000 fans on Douyin, and her fan growth speed has crushed most real bloggers who have been struggling on the Internet for many years.

The creation of a sense of real human has made Fang Taozi precipitate a group of fans with high stickiness and strong emotional projection. According to the data exposure of "Julong Xingtu", Douyin's marketing service platform, Fang Taozi's commercial advertisements are divided into three grades: the quotation for 1 to 20 seconds of short videos is 168,000 yuan; the quotation for 21 to 60 seconds of videos is 208,000 yuan; and the quotation for long video advertisements over 60 seconds is directly as high as 258,000 yuan.

The popular comic drama Give You Deep Affection to Invade the Rest of My Life on the Hongguo platform has also turned the virtual hero Duan Yan into a "top star". At the highlight moment in the drama, the hero Duan Yan affectionately gave the heroine a delicate bracelet, and the same style of bracelet was directly launched on the e-commerce platform at a price of 129 yuan. The sales volume of this product exceeded 10,000 in a short time, and the total sales of the single product easily exceeded one million yuan.

The ability to instantly convert fictional emotional value into real e-commerce GMV is far beyond the reach of long-form video advertisers.

Hidden Risks Still Exist, Where Does Hongguo's Layout Point To?

Although the 168 million DAU is dazzling, under the complex and changeable general environment in 2026, Hongguo and the entire short drama ecosystem behind it are facing systematic pressure from the inside out.

As the most core traffic engine of Hongguo, Douyin's DAU has basically touched the ceiling of the scale of Chinese mobile Internet users. The end of the incremental era means the beginning of stock game, and the dividend period of relying on the "big brother" for low-cost traffic diversion is gradually shrinking.

From its own perspective, although the low-threshold AI production enriches content supply, it also leads to a catastrophic overcapacity of AI short dramas. Rough visual effects, content homogenization, and even plagiarism phenomena such as face stealing and script washing are prevalent. Related controversies have emerged in endlessly since the outbreak of this sub-category at the beginning of the year, and the industry has fallen into red-hot involution.

▲ Note: The image is from Weibo

DataEye data shows that in the overall market of the industry in the first half of the year, AI short dramas with over 100 million views account for only 0.47%, and the probability of exceeding 10 million views is only 5.8%. This means that more than 90% of AI short drama projects are not only unprofitable, but even in a state of serious loss.

A large number of small and medium-sized teams have become cannon fodder working for the platform under the traffic crush. Data shows that in the first quarter of 2026 alone, the number of active short drama producers in the industry dropped sharply from 1216 to 698.

At the same time, the official implementation of the Administrative Measures for the Development of Micro Short Dramas on September 1 also means that the era of wild growth of short dramas has come to an end. According to the requirements of the new regulations, all micro short dramas broadcast on platforms such as Hongguo must implement the system of reviewing before broadcasting, and the exclusive Taihua mark is officially launched.

The dual review mechanism of AI preliminary review and manual re-review has raised the compliance threshold of the industry, forcing production teams to pay higher time and review costs for compliance. Compliance risks and review pressure have increased sharply, and many small and medium-sized teams lacking content control capabilities have been directly eliminated at the review stage.

For Hongguo, if it wants to avoid becoming a short-lived traffic fast consumer in the crazy and involution background, it must complete an all-round ecological evolution.

Under the current situation where 90% of the projects are losing money, only by protecting the basic disk of the creator ecosystem and improving the secondary optimization of the revenue sharing mechanism and ecological protection can the platform have the ability of continuous self-generation, so that teams dedicated to creating high-quality content can survive.

On this basis, promoting the high-quality upgrading of AI short dramas is also a top priority. Looking at the hit works in the current market, from The Laid-off Girl and Not a Demon to The Villain's Own Mother and Magic Treasure Fairy Basin, these representative works almost have breakthroughs in audio-visual, narrative or background setting.

They prove that simple AI face swapping or rough production will be eliminated by the market. Promoting more advanced models to create a new film and television form with high immersion and strong interaction is also the only way for Hongguo's future development.

The threshold built by long-form video platforms after decades and hundreds of billions of capital investment is tottering in front of AI tools and algorithm distribution.

In 2026, the war within short dramas has just entered the cruel deep water zone. Hongguo has overturned yesterday's game table, but if it wants to still sit on the throne tomorrow, it needs to prove that it can give birth to a new entertainment form that truly crosses cultural barriers and has lasting vitality.

Washing off the label of low-quality fast consumer goods is a test that Hongguo and even the entire short drama industry must go through in the second half.

This article is from the WeChat Official Account "Yidu Pro", the author is Wen Bo, and 36Kr is authorized to release it.