How Bite-Sized Storytelling is Reshaping Global Screens
From Vertical Screens to Global Audiences: The Rise of China’s Short Drama Industry
Content
Things that caught our attention
No, cancellation of de minimis would not kill Temu and Shein ... but the new US tariffs will if they remain unchanged. (We have made our Temu Watch #7 report, which explaines how Temu could handle the de minimis cancellation, temporarily free to read.)
It's the (temporary?) end of Temu in the us as we know it ...
Tech Buzz China’s Rui Ma was a guest on the Down Lo show, talking about China’s Startup Scene. Watch it here on YouTube.
Introduction
China’s short-form drama industry is emerging as a major force in global digital entertainment, driven by massive user adoption and innovative production techniques. For investors navigating China tech, understanding its rapid growth, evolving monetization models, and operational complexity is essential to identifying high-value opportunities.
This report examines the key dynamics behind the sector’s rise: What are the main monetization engines? How are platforms balancing paid content and ads? Who are the dominant players, and what strategies are driving scale and profitability? How are production and distribution adapting to rising demand, costs, and regulation?
Based on extensive Chinese-language sources, expert insights, and market analysis, this report offers a comprehensive framework for evaluation.
The free section outlines the industry’s explosive growth, user engagement patterns, viral content strategies, and early challenges to sustainable development.
The subscriber-only section provides in-depth investor analysis—breaking down revenue models such as paid access, advertising, licensing, e-commerce, and IP commercialization. It explores the “Dream Factory” production model, cost and efficiency structures, AI’s role, and the evolving competitive landscape. It also maps capital flows and assesses global expansion prospects.
What You’ll Learn:
The drivers behind China’s short drama market’s projected growth to RMB 100B (USD 13.8B) by 2027
How monetization models like micropayments, in-app ads, and IP licensing differ by region
Which companies (both platforms and studios) are emerging as category leaders
What operational models, production timelines, and regulatory risks matter most for cross-border expansion
Subscribe to unlock the full report and support our in-depth coverage of key China tech trends.
Enjoy,
Rita Luan, Tech Research Analyst
Overview
Short-form dramas have grown into a notable segment of the global digital content industry. This format — defined by brief episodes, condensed plotlines, and emotionally engaging narratives — caters to the fragmented attention patterns of mobile-first users. Its rise reflects changes in content consumption behavior and the operational restructuring of digital media supply chains, influenced by evolving technologies.
China plays a central role in this sector’s development. Contributing factors include the country’s advanced mobile internet infrastructure, streamlined content production workflows, and platform-driven traffic distribution systems. These have supported rapid market scaling and experimentation with monetization models such as per-episode micropayments, subscriptions, and advertising. Collectively, these mechanisms have improved conversion metrics and attracted capital and production resources.
The expansion of short-form content in China is part of broader trends, including lower production costs, changing user expectations, and increased capital availability. Standardized production processes have enabled scale while reducing costs, but have also contributed to content homogenization and concerns around creative stagnation. On the demand side, emotionally charged content has proven effective in user acquisition, though its ability to sustain long-term engagement and recurring payments remains unproven.
Chinese firms are extending this model to international markets, including North America, Southeast Asia, Japan, and South Korea. Most begin with translated domestic content and gradually move toward localized production to better fit regional tastes and regulatory requirements. These efforts face headwinds, including differences in consumer payment behavior, aesthetic preferences, and IP enforcement standards. As a result, the long-term viability and profitability of overseas expansion strategies are still being tested.
The trajectory of the short drama industry reflects familiar themes in digital media: iterative monetization strategies, supply-demand realignments, and platform-led distribution dynamics. While China's case offers useful insights, the sector continues to confront structural challenges, namely, limited creative differentiation, inconsistent user willingness to pay, and compliance pressures in foreign jurisdictions. Future growth will likely depend on whether content creators can raise production quality, platforms can optimize monetization frameworks, and firms can build effective localization capabilities across varied markets.
This report offers a structured, three-part analysis. The first section traces the growth of China's short drama market and its core drivers. The second evaluates international expansion models and their initial outcomes. The third explores future trends, focusing on innovation, monetization, and global execution. The goal is to equip investors and industry stakeholders with a grounded framework for evaluating this evolving content category.
Content, Users, and Market: A "Triple Play"
China's short drama industry is undergoing a period of explosive growth, rapidly transitioning from a niche online format to a significant player in the digital entertainment landscape. The market, valued at approximately RMB 37.39 billion (~USD 5.2 billion) in 2023, is projected to surge to RMB 50.4 billion (~USD 7 billion) in 2024, marking a substantial 34.9% year-over-year increase. This trajectory is expected to continue, with forecasts suggesting the market could surpass RMB 68 billion (~USD 9.4 billion) by 2025 and potentially exceed RMB 100 billion (~USD 13.8 billion) by 2027. This expansion signifies a fundamental shift in content consumption and monetization strategies, positioning short dramas as a key driver within China's broader content economy.
A Massive and Engaged Audience
Underpinning this market surge is a vast and highly engaged user base. As of December 2024, some 662 million Chinese viewers were tuning into short dramas, representing nearly 60% of the nation's internet users – a penetration rate exceeding that of other digital sectors like online literature or food delivery. The audience spans a wide demographic, but viewers aged 40 and above constitute a particularly valuable segment, with those aged 40-59 making up 37.3% and the over-60 cohort accounting for 12.1%. These older viewers often exhibit greater platform loyalty, spend more time watching, and show a higher propensity to pay, especially through official channels. Male viewers in this demographic are also noted for more effective conversion to paid users.
Engagement across the user base is remarkably high, with over 70% of viewers watching regularly and a third doing so daily. This consistent habit, sometimes referred to as "digital comfort food," is fueled by the format's concise structure and emotionally impactful narratives. For platforms, this deep engagement is not only fertile ground for advertising revenue but also creates opportunities for integration with e-commerce. Platforms such as Pinduoduo are strategically embedding short dramas into their shopping interfaces to increase user dwell time and drive transactions.
The Virality Formula: Crafting Shareable Content
Virality is a core component of the short drama strategy, intentionally engineered into content through the use of cliffhangers, emotional beats, and rapid plot progression designed to maximize viewer retention and social sharing. This approach is particularly effective on platforms like TikTok and Instagram, where algorithmic prioritization favors fast-paced, emotionally charged content.
Content is optimized for mobile consumption and designed for seamless sharing across social feeds. Many successful titles benefit significantly from organic amplification through user sharing, influencer engagement, and meme culture, reducing reliance on traditional advertising for user acquisition. Platforms are also experimenting with hybrid formats, such as integrating live-streaming and influencer collaborations, to deepen engagement and create new avenues for branded content and merchandise. In a competitive digital landscape, the ability to create highly shareable and emotionally resonant content is crucial for driving engagement and monetization.
Navigating Challenges and Securing Future Growth
Despite the impressive growth and innovative operational strategies, the industry faces inherent challenges. Concerns are rising about content homogenization as a result of standardized, high-volume production methods. Furthermore, while certain user segments are willing to pay, the overall average revenue per user (ARPU) remains relatively modest compared to traditional entertainment formats, highlighting a need for improved monetization efficiency.
Long-term sustainability for the sector will depend significantly on its ability to evolve beyond simply expanding scale and instead prioritize enhancing content quality and differentiation. This requires investing in higher production values, developing more sophisticated and diversified monetization models, and implementing content strategies that are more finely tuned to specific regional tastes and preferences, particularly as platforms expand internationally. The next phase of the market's development will necessitate a focus on building resilience and sustained value through qualitative improvements and strategic innovation.