This report reveals a precipitous drop in revenue for Douyin’s popular short dramas—180 million views yielded a mere 180,000 yuan in settlement for the production team. Revenue from 10,000 views plummeted from 100 yuan to the current 5-10 yuan. Some studios that invested over a million yuan have now stopped production to cut their losses and are forced to exit the market at a complete loss.

According to QuestMobile data, Hongguo’s monthly active users have exceeded 300 million. Since its launch in August 2023, Hongguo’s user base has grown 30-fold in two and a half years. Among independent short drama apps, Hongguo accounts for nearly 90%.

 

Regarding this bill data, the heads of two leading short drama production companies told Southern Weekend reporters that it is basically true, and that it is not only live-action short dramas that are losing money, but AI dramas are also losing money.

A leading production company provided a screenshot to a reporter from Southern Weekly. The company producing a purely AI-generated drama wrote on its WeChat Moments: “Good news: 90% hit rate. Bad news: We’re losing money.”

This is somewhat unexpected. With the advent of Seedance 2.0, it seems inevitable that AI-generated dramas will replace live-action dramas. However, in reality, platforms’ revenue-sharing policies are shifting back towards live-action dramas.

On May 11, 2026, Douyin Group’s Short Drama Copyright Center announced an increase in the revenue sharing ratio for live-action dramas. Under natural traffic scenarios, the revenue sharing ratio for paid content will be increased from 70% to 80%, and the advertising revenue sharing budget for free content will be increased accordingly.

With platform policies shifting, short drama practitioners have reached another crossroads.

 

On April 18, 2026, extras dressed in ancient costumes waited for their turn on the set of a period drama short film in Lu’an, Anhui Province. (Visual China photo)

Overrated AI dramas

Over the past two years, Hongguo has rapidly expanded its market share by providing different percentages of guaranteed fees to producers, quickly capturing half of the market.

However, with the arrival of AI dramas, in mid-February, Hongguo verbally notified its live-action drama partners that all unstarted projects should be suspended, and the minimum guarantee policy was adjusted.

This policy has plunged many small and medium-sized production teams into a predicament of tight cash flow, resulting in a sharp decrease in the number of live-action dramas starting production.

On April 30, 2026, the China Netcasting Association released the “Guidelines for the Creation of Micro-Dramas” (hereinafter referred to as the “Guidelines”) for the first quarter of 2026. The Guidelines show that in the first quarter of 2026, the entire industry launched approximately 128,000 micro-dramas, of which approximately 122,000 were AI-generated micro-dramas, accounting for more than 95%, while live-action dramas accounted for only 5%.

 

The 122,000 AI-generated short dramas are a result of the low cost, high efficiency, and scalability brought about by AI, which has made AI dramas a major content producer in the short drama industry.

The guidelines also revealed another statistic: during the 2026 Spring Festival season, the number of live-action dramas released was about 1/50 of that of AI dramas, but the total number of views reached 25 times that of AI dramas.

Wang Xin, an employee of a leading live-action short drama production company, told Southern Weekend that even the hit AI drama “Bodhi’s Arrival AI Live-Action Version” only had 500 million views across the entire network before it was taken down, and its popularity on the Red Fruit website did not exceed 100 million, while many live-action dramas can reach 2 billion or 3 billion views.

She believes that although the production capacity of AI dramas has increased rapidly due to explosive growth, the content is too homogeneous, the traffic is scattered, and the monetization efficiency continues to decline.

Pang Zheng, director of AI short dramas and comics, also believes that some so-called “hit” AI dramas, despite their impressive data, are actually losing money. This is because the data depends on streaming. For example, a hit AI short drama on Douyin with over 300 million views only has 140,000 favorites on the Hongguo platform, while another AI drama with less than 75 million views has 340,000 favorites on Hongguo.

 

According to data from DataEye-ADX, an industry monitoring service platform for short dramas, there were 44,000 AI dramas/anime series in April, but 85% of them did not reach one million views, which means that a large number of AI dramas did not reach the audience.

“The platform initially wanted to attract new male users with AI short dramas, but later found that it didn’t work and even lost female viewers. Currently, AI dramas can’t retain users and have no commercial value,” Wang Xin told Southern Weekend.

“The platform is king.”

The short drama genre, which had been bombarded by AI for two months, saw new changes in April 2026.

On April 7th, Hongguo announced a comprehensive crackdown on low-quality comics, intercepting and penalizing over 3,500 such works within a week. A week later, at the 13th China Internet Audio-Visual Conference, Hongguo Short Drama announced a 500 million yuan investment, signaling its continued support for innovation in live-action short drama content and the development of realistic themes.

On April 30, Douyin Group’s Short Drama Copyright Center issued a notice officially adjusting the revenue sharing ratio for animated dramas. Previously enjoying the highest revenue sharing ratio, the ratio for humanoid dramas dropped from 60% to 40%, while 3D animated dramas saw a 20% reduction in their revenue sharing.

 

“Hongguo’s early promotion of AI short dramas was aimed at seizing the technological dividend to capture the short-term traffic market. By using AI short dramas, it quickly filled the platform’s content volume and completed its market positioning,” Zhao Ruizhe, deputy secretary-general of the Micro-Short Drama Professional Committee of the China Television Artists Association, told Southern Weekend.

However, with over 40,000 AI-themed short dramas being released each month, a large amount of low-quality AI content continues to flood the market, which is not a good thing for the platform.

Live-action dramas have been brought up again by the platform. After adjusting the revenue sharing ratios for AI dramas and animated dramas, on May 11, Douyin Group’s Short Drama Copyright Center issued an announcement stating that Douyin will increase the revenue sharing ratio for live-action drama content. Under natural traffic scenarios, the revenue sharing ratio for paid content will be increased from 70% to 80%.

According to information provided to Southern Weekly by Douyin, the platform’s guaranteed support budget for live-action short dramas in 2026 exceeds 1.5 billion yuan, with the average guaranteed amount per drama increasing by approximately 60% compared to 2025. For the core category of live-action dramas, the platform will comprehensively increase the content revenue sharing ratio.

 

These include: establishing an incentive policy of up to 1.5 million yuan for top-tier dramas; launching a sequel incentive of up to 20% to encourage serial development and extend the IP life cycle; and establishing a special fund of 200 million yuan to support innovative and differentiated content such as realism, suspense, and urban ensemble dramas.

After igniting the AI ​​market, the platform then signaled that it hadn’t given up on live-action dramas. Amidst this shift in direction, the lives of production companies can only be described as turbulent. The CEO of a leading production company suspended all its live-action drama projects at the end of February 2026 and began assembling a team, finding new office space, and laying the groundwork for AI development.

Faced with the platform’s policy changes, the CEO sent three sighs to a reporter from Southern Weekly, saying, “There’s nothing we can do; the platform is the boss.”

Supported live-action dramas

According to Zhao Ruizhe, what the platform needs to do now is adjust the ratio of AI to live-action content. This includes reducing low-quality AI-generated animation and supporting high-quality live-action content, which is essentially about balancing short-term traffic profits with long-term platform brand transformation.

 

“With increasingly stringent regulations, short dramas need to move closer to mainstream, high-quality content. Relying solely on AI-generated short dramas will lead platforms into vulgar and homogenous competition. Only high-quality live-action short dramas have the potential for long-term IP development, commercial monetization, and policy compliance,” Zhao Ruizhe told Southern Weekend.

This is closely related to the attitude of the relevant authorities.

On May 14, 2026, the State Administration of Radio and Television held a meeting to deploy and promote the “Micro-Short Drama Excellence Creation and Dissemination Plan,” announcing that six key online audiovisual platforms (Douyin/Hongguo Short Drama, Tencent Video, Mango TV, Migu, Kuaishou, and Dianzhong) will invest a total of at least 6 billion yuan to specifically support the creation and dissemination of outstanding live-action micro-short dramas.

This is the largest official funding support the industry has ever received.

On May 26, the State Administration of Radio and Television released two important documents: the “Implementation Plan for the Creation and Dissemination of High-Quality Micro-Dramas” and the “Notice on the Application for Support Projects of the 2026 ‘Creation and Dissemination of High-Quality Online Audiovisual Programs'”.

 

“These two documents are the official application portal and review criteria for the previously disclosed 6 billion yuan funding.” Zhao Ruizhe believes that the micro-drama industry will completely bid farewell to the era of unchecked growth and enter a new stage of development led by national teams, supported by real money, and focused on high-quality production.

Essentially, short-drama platforms have entered a transformation phase. The emergence of AI has only accelerated the manifestation of industry problems. Long-standing, formulaic content has continuously eroded user patience, and traffic growth has already shown signs of fatigue.

“Even without AI, the industry must move towards high-quality products. The arrival of AI has amplified the problem of overcapacity, forcing the industry to abandon the competition for traffic and rely on high-quality content to maintain the long-term vitality of its business,” Zhao Ruizhe said.

In her view, this is also why both live-action and AI-generated dramas have been losing money after several months of effort. When platforms cancel minimum guarantees and reduce revenue sharing for low-quality content, the industry’s speculative dividends disappear, and the model of profiting from mass-producing low-quality content becomes unsustainable. AI has sacrificed content quality for cost-cutting, and live-action short dramas have been slow to transition to high-quality productions; neither approach has captured the long-term needs of users.

“In the short drama industry group, there is nothing but lamentation right now. Whether it’s live-action dramas or AI production companies, we jokingly say that we die from hard work, and the harder we work, the poorer we become,” Wang Xin told Southern Weekend reporter.

 

But for A-list actors, the situation is now far better than it was in March.

Wu Weibin, a short drama actor from Hengdian, finally received a role on May 26. Some of the production teams he was working with started filming five or six dramas at the end of May.

“No one watches AI shows anymore; the data can’t compare to live-action dramas,” he told Southern Weekend. “Hongguo needs good stuff and good content to fill the void so that viewers will pay for it.”

“We just hope to return to last year’s revenue-sharing level.” Wang Xin has only this expectation for the days to come. In 2025, among the top brands, five short dramas achieved revenue sharing of 30 million yuan. According to Douyin’s revenue-sharing report for March 2026, the two highest-grossing live-action dramas only achieved 8 million yuan in revenue sharing.