The surge in artificial intelligence capabilities has led to a significant increase in the production of short-drama films in China, with approximately 128,000 titles released in the first quarter of 2026, over 95% of which were generated by AI.
This strategy allows producers to gauge audience interest before heavily investing in distribution, enabling a fail-fast approach where they can quickly pivot away from underperforming titles. The microdrama market is projected to reach about 100 billion yuan (US$15 billion) by 2025, with vertical titles generating substantial advertising revenue.
However, the cost of audience acquisition is rising, complicating profitability despite low production costs. For instance, the cost of acquiring 1,000 promotional ad impressions has increased from 50–80 yuan in 2023 to around 150–200 yuan in 2025.
While some short dramas, like 'Niu Lai,' have gained attention, the competition for viewer engagement is fierce, with campaigns paying significantly more for app installs.
Experts are divided on whether short-drama specialists or traditional entertainment firms have a competitive edge, with some suggesting that platforms like Netflix maintain a strong position due to their scale and customer retention.
Overall, while short dramas are gaining popularity, they are not expected to replace traditional entertainment formats, which still hold value for audiences seeking high-quality content