The $20 Billion Short Drama Business: The More Rustic, the More Profitable - Revealing the Secrets of the Short Drama Industry
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The $20 billion short drama business: The more rustic, the more profitable.
A 'highly profitable' industry has suddenly come into the public eye.
With returns exceeding 10 times the investment, minimal upfront costs, and no long waiting periods for payouts—coupled with tangible success stories of peers 'buying houses and upgrading to BMWs'—who wouldn't be tempted?
"I used to look down on it, thinking that 'those kinds' of short dramas were the last refuge for failures in the film and TV industry. Now, I even feel a bit 'unworthy' of joining," screenwriter Liang Geng told City Boundary. Last year, he dismissed the mass-produced mini-program short dramas, but this year, he had no choice but to jump in.
Dubbed as 'kicking web movies and punching revenue-sharing dramas,' mini-program short dramas have been labeled as 'the most profitable track of 2023,' becoming the new investment target that everyone inside and outside the industry is curious about.
"At its core, it's a financial product—creating one or two benchmark works, then selling investment shares to raise funds," commented Liu Qi, a veteran in the short drama industry, noting that current mini-program short dramas are enjoying dual benefits from channels and lax regulation. "It's actually quite borderline."
When investors asked Liu Qi whether it was worth investing, his reply was: "If it's your own money, I wouldn't recommend it. The market is way too hot."
Why the sudden popularity?
The explosive growth of the short drama sector had already shown signs last year.
In last year's report by "City Boundary," the popularity of short dramas was still largely confined to professional platforms. Companies like Kuaishou, Bilibili, and Tencent Video had launched their own short drama brands, while tech giants such as Baidu and Xiaomi also showed interest in entering the short drama market, collaborating with their free novel platforms.
Amid the film industry's downturn, excess capital and talent quickly flooded into the short drama sector, driving production costs from tens of thousands to millions of yuan. Some producers told "City Boundary" that many online novel platforms proposed "joint investment" models, requiring production teams to contribute funds as well. "The production team does the work and delivers the product, but whether the investment can be recouped is uncertain," they said. At the time, for investors, costs of several hundred thousand yuan were already significant in a tight market, leaving most in a wait-and-see mode.
Starting in June 2022, after Douyin opened external links, low-cost mini-program short dramas suddenly emerged, unleashing a surge of investment in the short drama market. Similar to the logic of redirecting to online literature links, Douyin acts as a traffic generator, while WeChat provides a seamless service for users to watch and pay.
Beneath the surface, the hidden demand for binge-watching addictive dramas exploded uncontrollably. This led to wealth-creating stories like The无双 spending over 100 million yuan in eight days, Oh My! The Empress Goes to Work generating 12 million yuan in 24 hours, and After the Flash Marriage, Mr. Fu's Secret Identity Is Exposed surpassing 20 million yuan in daily revenue.
Zhong Rong's company, which started by producing online movies in its early years and even secured a recommendation spot on iQiyi's homepage, found that their experience in online movies was difficult to adapt to the rhythm of short dramas. Their first mini-program short drama with a female-oriented 'revenge' theme performed poorly, resulting in minor losses.
They are planning to try the 'God of War' genre again—a script type with 'golden fingers' that dominates over 50% of the market. Considering the low returns from pure production fees, with costs ranging from 300,000 to 500,000 yuan, they will also invest half of the funds themselves.
Currently, those rushing blindly into the short drama industry share this mindset. The cost of producing a short drama has been compressed to 300,000–500,000 yuan, and the corresponding investment costs have dropped to a level where 'people are willing to take a gamble.' In the eyes of many investors, the low cost, coupled with the ability to diversify risks, means that the capital invested in each project is minimal, and even small losses are within an acceptable range.
'Everyone has a gambler's mentality now—betting on whether a project will go viral, aiming for high returns with minimal investment,' said Zhong Rong.
Liu Qi told 'City Boundary' that some bold production teams are only chasing quick profits, releasing content for just three days to make a fast buck. This type of content gambles on how quickly regulators will act. In September this year, the industry circulated news that borderline inappropriate clips like 'eunuchs bathing the empress' could no longer be aired.
'Currently, there's at least some hot money flowing into mini-program dramas, which can indeed mislead certain investors. Regardless of how they raised the funds, the money is real—otherwise, multiple parties wouldn't be approaching me for discussions,' Liu Qi said. Besides production teams, some state-owned infrastructure providers have also approached him, offering IT services to get a slice of the industry chain.
The market is so hot that even outsiders want a piece of the action. For instance, live-streaming e-commerce company Yaowang Technology and Chen Ou, CEO of the delisted Jumei Youpin, have announced plans to enter the short drama market. According to 'City Boundary,' some investors previously unrelated to the film and TV industry, including state-owned enterprises and large funds, are also entering the field.
Several brokerages have stated that the development of short dramas and interactive games is still in the early stages of the industry, growing rapidly, with innovative formats expected to help the media sector find new market growth points and drive performance growth. Since November 8th, dozens of 'short drama concept stocks' have experienced consecutive limit-up surges. The most notable is Chinese Online, which saw its closing price rise by a cumulative deviation of 103.69% over seven trading days.
'This is a bit outrageous,' remarked Zhang Heng, a veteran in the film and television industry with over a decade of experience. He found this market trend rather baffling, noting that such businesses are better suited to operating quietly and making profits. The current hype in the secondary market, he said, is a bad sign.
Indeed, the consecutive limit-ups have prompted listed companies to hastily issue announcements disclosing their business progress, warning investors to be cautious of market hype and mindful of investment risks.
Tacky and Lowbrow: A New Business Venture
"This isn't a content business—it's a traffic business," said Li Tu, a VC investor in the short drama sector, to "Market Boundary."
Li Tu's venture capital firm had previously invested in a WeChat CPS company, which informed her as early as August last year that "a new industry is emerging."
Initially, it was the teams producing information flow content who discovered this business opportunity—realizing that these "tacky and lowbrow" traffic-generating videos had such a large audience. Instead of using them merely as traffic tools, they expanded them into short dramas and adopted a pay-per-view model.
Li Tu mentioned that everyone found it hard to understand—these short dramas, which compress climaxes to an extreme, are "like a novel outline," with pacing and logic pushed to their limits. "Yet, there’s a market for them, and people love watching them."
Even in online literature, a plotline like "a nobody rises to power" requires a gradual buildup with narrative arcs. But in short videos, a character’s transformation can be achieved in just a second, with two shots.
In one scene, the protagonist is being scolded harshly by his mother-in-law, and the next moment, the 'Dragon King' arrives, announcing the protagonist's noble status and inheritance of wealth. The scene then cuts to the awestruck and admiring expressions of supporting characters, maximizing the instant gratification for the audience.
On the production side, with the rise of free online novel apps like Tomato Novel taking over the low-end online novel market that originally catered to third- and fourth-tier cities, teams specializing in new media content and information flow advertising have turned their attention to mini-program short dramas.
An industry consensus is that the fastest to adapt to producing mini-program short dramas are teams with experience in shooting information flow ads and MCN agencies specializing in short videos. They inherently possess a 'sense for the internet,' can quickly create viral moments, and have an extremely precise grasp of market demands.
Professionals trained in traditional film and television find it difficult to quickly adapt to the high-volume demands of the lower-tier market. Multiple interviewees told 'Market Boundary' that 80%-90% of the costs for mini-program short dramas are spent on advertising, with 'Douyin being the biggest winner.' To a large extent, whether and how much a platform is willing to invest determines whether a drama reaches its audience. For example, the hit mini-program short drama 'Wushuang' spent over 80 million yuan on advertising alone.
According to Guolian Securities' estimates, the revenue scale of short dramas within ByteDance's ecosystem alone could reach 22 billion yuan. ByteDance's monitoring data also shows that paid short dramas, primarily mini-program short dramas, generate annual recharge revenues of over 18 billion yuan. In comparison, China's box office revenue had just approached 50 billion yuan by the end of October this year.
"I'm actually doing it too, but it feels too lowbrow to post on my social media," lamented Zhang Heng, a major film producer with numerous theatrical releases under his belt. "All I can say is that the lower-tier market is truly fascinating."
More and more people are being passively drawn in
On this assembly line of producing short-form mini-dramas, being overly 'normal' is actually a form of rebellion.
Scripts must deliver extreme engagement and cater to the needs of lower-tier users accustomed to short videos. They should avoid complex plot designs that 'challenge the audience' and instead minimize comprehension costs. Most importantly, they must deeply understand human nature. Mini-program short dramas are, to some extent, a visual adaptation of online literature. They use constantly twisting plots, high-energy 'thrills,' and 'hooks' to fulfill viewers' fantasies and entice them to continue paying.
Take the hit romance drama After the Flash Marriage, Mr. Fu’s Secret Identity Was Exposed as an example. Launched in August, it achieved over 20 million yuan in revenue within 24 hours. The script was adapted from the popular web novel After the Flash Marriage, the Tycoon Husband’s Secret Identity Was Exposed, which already had an established IP. The pacing is fast, with 10 shots in five seconds. The plot progresses rapidly and is full of tropes—for instance, the male and female leads quickly get married due to a blind date misunderstanding, and later, the male lead, hiding his wealthy identity, accompanies the female lead as she sells goods at a street stall, advancing their relationship in a pure romance style.
The data for male-targeted dramas is even more staggering: the war-themed drama 'Wushuang' achieved a single-day recharge of 55 million yuan after its release, surpassing 100 million yuan in recharges within just 8 days, setting the current highest recharge record in the short drama industry. Behind this success is Xi'an Fengxing Culture, renowned in the short drama circle as 'the go-to for national war dramas, with Xi'an's best from Fengxing.'
According to a weekly ranking of paid short dramas compiled by Short Drama Study Room, more than half of the top 10 production companies listed over the past six months are based in Xi'an, demonstrating consistent hit-making capabilities.
Zhong Rong, who has filmed short dramas in Xi'an, told "City Boundary" that due to the low cost of scene rentals, even provincial capitals can provide high-end banquet halls. Resourceful entrepreneurs have also repurposed abandoned furniture markets and warehouses, decorating them as commonly used settings like "hospitals" and renting them out by partitioned spaces.
Moreover, cities like Xi'an and Zhengzhou have gathered teams originally specialized in producing information flow ads, along with a large pool of actors honed on assembly-line productions. "Directors simply don’t have time to coach actors—they need to embody the required demeanor right away. Vertical-screen viewing demands even more attention to facial expressions and exaggerated performances," Zhong Rong explained.
This trend has left traditional film industry professionals, who were passively drawn into this market, feeling somewhat pressured.
Screenwriter Liang Geng told 'City Boundary' that when he takes revised scripts to seek investment now, familiar producers say, 'You'd have an easier time getting funding if you're willing to adapt it into a short drama.' However, after several attempts, he finds it extremely difficult to fit a complete story structure and personal aesthetic into such a short format. 'To make this work, you have to abandon personal convictions and follow traffic-driven logic,' he explains. Liang is frustrated—he struggles to understand how to provide so-called 'emotional value,' and industry trends shift too rapidly. Just a month ago, a reference sample provided by a leading online literature platform was quickly dismissed with the comment, 'Stop revising this, it's no longer popular.'
Years of experience have taught him that good films aren't afraid of momentary emotions - even if they don't perform well at the box office, history will give the final verdict. "In the film industry, those of us who still have some artistic ambition are betting on this," he says.
"We invest so much of our lives telling these stories, but in short-form dramas, there's simply no way to accommodate this. The life or death of a production depends entirely on the fleeting emotions of the audience," says Liang Geng.
But "Liang Geng and his peers" have no other choice. Many companies that used to produce web movies have switched to mini-program short dramas this year. Even veteran cinematographers who once worked on big-budget productions now find themselves shooting short videos in Hengdian due to lack of work. "Everyone feels they're gradually losing their professional dignity, but there's no alternative - we need to make a living,"
Liu Qi also lamented that many of those who recently approached her to create short dramas were people who had been optimized out from internet platforms like Bilibili, Kuaishou, and Youku.
"The prosperity we see now is actually caused by a lack of prosperity."