AI short dramas do not arouse strong emotional resonance among the audience, but burn through the funds of short drama companies.
Two years ago, people were still complaining that short dramas were low-quality, unappealing and vulgar. Two years later, short dramas have almost taken over the vast majority of the public.
Even Jia Zhangke, Yu Hua and Mo Yan have all stated that they are watching short dramas.
Statistics further verify this trend.
Data from QuestMobile shows that in February 2026, the overall monthly active users of the short drama industry reached 718 million, while the monthly active users of the Red Fruit Short Drama app alone exceeded 300 million. In July this year, the daily active users of Red Fruit hit 168 million, a year-on-year increase of 107%, surpassing the sum of the daily active users of iQiyi, Tencent Video, Youku and Mango TV.
Not only are domestic audiences addicted to short dramas, but overseas users are also deeply hooked.
PineDrama, the overseas short drama app under ByteDance, has accumulated over 100 million downloads and around 7 million daily active users 9 months after its launch.
According to DataEye, driven by AI short dramas, the overseas short drama market size will increase from about 4 billion U.S. dollars in 2025 to 6 billion U.S. dollars in 2026, representing a 50% year-on-year growth.
Thus we can see that Tencent has launched the "Green Bubble Short Drama" mini-program to increase its layout in the short drama track. Meanwhile, *Sanxingdui: Past and Future*, China's first AI hyper-realistic theatrical film, is scheduled to be released in cinemas across the country on October 23.
However, despite the seemingly booming development of the short drama industry, the story of its profitability is rather ironic.
The Confusing Market Brought by AI Short Dramas
The impact brought by AI short dramas is extremely huge.
Seedance 2.0 has cut the generation cost to around 0.6 yuan per second for 720P resolution and 1.5 yuan per second for 1080P. The production cost of AI comic dramas has been reduced to 800 to 1200 yuan per minute, which is about one fifth of that of live-action short dramas; the cost of an AI hyper-realistic human drama has dropped to 60,000 to 100,000 yuan, while a live-action drama of the same scale costs more than 500,000 yuan.
Theoretically, with substantial technological progress and sharply reduced costs, the industry should have ushered in an outbreak of creativity and profitability.
Disappointingly, the content supply has exploded, but few producers have reaped the benefits.
In the first 8 months of this year, 430,000 micro short dramas were launched across the internet, 13 times the total number of last year, of which AI dramas accounted for over 90%. However, according to DataEye, taking 50 million views as the break-even benchmark, less than 1.3% of AI dramas could recover their costs in the first half of the year, meaning only 1 out of roughly 77 new dramas can reach the break-even point.
Is there no demand in the market? The answer is no.
Statistics show that in May 2026, the scale of micro short drama users has reached 851 million, accounting for 66.7% of the total number of internet users. In the past 4 months, the user scale of micro short dramas has increased significantly compared with before, with about 133 million new users, a growth rate of nearly 20%, hitting a new high in the past two years. The main influencing factor is the introduction of AI dramas and comic drama content.
Then look at the content popularity. Among the TOP 10 most popular works on the Red Fruit Short Drama popularity list, there were only 2 AI dramas and 8 live-action dramas in May; by June, the number of AI dramas rose to 3. In July and August, AI dramas took up 7 and 9 spots respectively in the TOP 10 popularity list.
It can only be said that humans are completely outperformed by AI. Users are getting more and more addicted to AI short dramas, but the problem is that there are far too many dramas chasing a limited amount of user traffic.
To compete for users' attention, platforms are producing more and more homogeneous content. Fixed themes such as counterattack and revenge, conflicts between mothers-in-law and daughters-in-law, and tragic romance in wealthy families are remade over and over again. Many dramas only change the characters' names and slightly adjust the plot details, with almost identical core routines.
A few days ago, when the author talked about short dramas with friends, they found that a workplace short drama they both watched had almost exactly the same plot, except that the protagonist in one version was female, and the protagonist in the other version was male.
This situation is not difficult to understand.
On the one hand, increasing the volume of content does bring results. This is similar to the early days of short videos. Everyone claims that they want to watch "high-quality content", but the algorithm recommendation mechanism determines that emotionally stimulating content is always easier to get traffic than in-depth content.
On the other hand, the short drama industry is in a stage of rapid development. As AI has lowered the industry threshold significantly, the entire industry is mixed with good and bad players. Many teams only pursue quick monetization. Their main methodology is mass production and rapid launch, hoping to accidentally get the favor of traffic algorithms and make a quick buck.
But the results are not very optimistic.
There are more and more dramas, but high-quality hits that can go viral across the whole network and generate public discussion are extremely scarce. In the first quarter of this year, the hit rate of AI short dramas was only 0.16%, among which 64% of the works had less than 1 million views, not even enough to cover the computing power cost.
More importantly, the production cost is not the largest part of the short drama business. The advertising delivery cost accounts for the largest proportion of the total cost of short dramas.
It is reported that the advertising delivery cost of short dramas usually accounts for 70% to 90% of the recharge revenue. For a hit drama with over 100 million yuan in recharge, the advertising delivery cost often reaches 60 million to 80 million yuan. After deducting production costs and various revenue shares, the actual profit may only be a few million yuan.
In terms of advertising delivery efficiency, according to industry rumors, the delivery ROI of AI dramas is generally only 1.03 to 1.07. At the same time, the revenue per thousand views of AI short dramas is also declining. According to relevant data, a year ago, the revenue of AI short dramas per 10,000 views was between 30 and 100 yuan, but now it has dropped to 5 to 10 yuan.
Short dramas seem to have fallen into the same dead end as long-form TV dramas, and those who can get a small share of the profit are considered lucky.
At this time, the overseas expansion of short dramas seems to be regarded as a new promising opportunity.
Another Way Out: Going Global!
Chinese web novels, games and short dramas are now regarded as the "three new cultural exports", which are constantly making waves in overseas markets. According to data from TikTok for Business, the current monthly active users of overseas short dramas are about 260 million, 150 million of whom are AI short drama users.
At the same time, different from the domestic market, the overseas market has formed a distribution pattern centered on independent apps. The independent app model has obvious advantages: it allows manufacturers to directly control user data, pricing and operation data, and retain more revenue through subscription, pay-per-episode and advertising channels.
Even though TikTok's short drama section is expanding rapidly, the in-app purchase revenue of overseas short dramas in 2026 is still more than 10 times the revenue shared by TikTok. What's more, the independent app market is far from forming an oligopoly pattern.
Some very intuitive growth cases have emerged. For example, *Persian Revenge*, an AI short drama with a total production cost of only 3,000 yuan, achieved a GMV of 500,000 U.S. dollars 72 hours after its launch on overseas platforms, with a revenue multiple of nearly 1200 times.
But if you look at several leading overseas companies, you will find that this business is not that simple.
According to DataEye, in the first half of 2026, the top three overseas micro short drama apps by in-app purchase revenue are DramaBox, ReelShort and NetShort, reaching about 195 million, 188 million and 128 million U.S. dollars respectively, and all the top 5 apps are still Chinese companies.
But the reality is that the growth is strong and the revenue figures look impressive, but the profitability is far from satisfactory.
Chinese Online's total sales expenses in the first half of 2026 reached 254 million yuan, accounting for about 44% of its revenue. In 2025, the company suffered a loss of 671 million yuan, of which sales expenses were 953 million yuan, accounting for 57.54% of revenue, and promotion expenses accounted for 759 million yuan. In its 2025 annual report, the company explained that the growth of sales expenses was mainly related to the promotion of overseas business.
The total revenue has increased, but the profits are first taken away by the traffic platforms. Even Maple Interactive, the parent company of ReelShort, recorded a revenue of 5.721 billion yuan in 2025, with a net loss of 85.8378 million yuan. High revenue has not been converted into high profits, which is also under the pressure of business expansion and high investment.
DramaBox is an overseas product of Dianzhong Technology. According to 36Kr Global, Dianzhong Technology once disclosed that its overall gross profit margin is about 10%, and the net profit margin of its short drama business is less than 1%, which also faces the problem of high user acquisition costs eroding profits.
Similar to the domestic market, competition is also becoming increasingly fierce.
According to DataEye-ADX, the number of overseas short drama platforms has increased from about 100 to about 400 within a year, and the number of competitors is growing faster. Local overseas platforms have started to make efforts. In the third quarter of 2025, among the TOP 30 short drama apps, the download share of Chinese apps has dropped from 95% in the same period of the previous year to 67%.
In September this year, four products including Inkitt CandyJar (Germany), Vigloo (South Korea), My Drama (Ukraine) and Shortical (Israel) were shortlisted in the TOP 20 overseas micro short drama apps by in-app purchase revenue, ranking 14th, 16th, 17th and 19th respectively.
Of course, ByteDance will not miss the overseas market either. On the one hand, it has launched an independent overseas short drama application platform, and PineDrama still performs extremely well with its free model. On the other hand, since the second half of 2025, TikTok has incubated multiple AI short drama accounts by paying for custom production. At the same time, it has launched mini-programs to aggregate more content. The latest disclosed data shows that in the first quarter of this year, the total revenue share of AI short dramas on the platform exceeded 2 million U.S. dollars, with a quarter-on-quarter increase of 300% and a year-on-year increase of over 6 times.
With the increasing number of platforms, the traffic price has been pushed up, and users' choices have become more scattered. As a result, the growth dividend still exists, but the cost of advertising delivery is getting higher and higher.
Short drama companies that want to maintain growth can only continue to increase their advertising investment. In other words, the challenges faced by the domestic short drama industry will also emerge in overseas markets.
Reference Sources:
1. Growth Workshop: On the Loss of Chinese Online: Who Has Eaten the Profit of Short Dramas Going Global?
2. Mirror Entertainment: The Boom of AI Short Dramas Going Global: Revenue Increased by 1200 Times, Orders Surged by 5000%, Companies Including Yuewen, ByteDance and Chinese Online Have Entered the Market One After Another
3. DataEye Research Institute: 2026 H1 Live-Action Micro Short Drama Report: The Market Size Is Expected to Exceed 121 Billion Yuan, of Which the Size of Free Micro Short Dramas Reaches 57.3 Billion Yuan, and the Number of New Dramas Put into Advertising Delivery Reaches 163,000
4. Kuai Dao Finance: The Great Shuffle of the Short Drama Industry: 90% of the Players Are at a Loss, and the Leading Company Dominates the Market
5. China Entrepreneur Magazine: Short Dramas Have Long Suffered from Low Profitability
6. Zhongtai Securities: The Wave of AI Short Dramas Going Global Is Rising, AI Film and Television Entertainment Is Poised for Rapid Development
This article is from the WeChat Official Account "Bohu Finance", written by Bohu Team, authorized for release by 36Kr.