In Depth: Micro Drama Platforms Knock Down Paywalls as Viewers Lose Interest

Chinese micro dramas—very short, culturally addictive video series—have seen explosive growth since their emergence in 2022, but industry trends indicate growing audience fatigue with overused plot devices. As a result, consumers are less willing to pay for individual episodes, pressuring platforms to innovate both their content and revenue models. Platforms such as ByteDance’s Hongguo Short Drama have responded by prioritizing higher quality productions and making content free, supported instead by advertising revenue, a strategy now gaining wider adoption across the industry. [para. 1][para. 2]

The micro drama format features episodes often under a minute, with attention-grabbing, melodramatic plots catering to fragmented viewing habits and an emotionally driven audience, especially amid economic uncertainty in China. Hongguo, launched only two years ago, rapidly became the category leader by monthly active users—212 million as of June 2024, surpassing even legacy giants like Alibaba’s Youku. This marks the first instance where a micro-drama app has overtaken a traditional long-form video platform in user numbers. [para. 3][para. 4][para. 5]

The total Chinese micro drama market skyrocketed to 50.5 billion yuan ($7 billion) in 2024—exceeding the national box office—and is forecast to reach 63.4 billion yuan in 2025, a 26% increase. However, the original pay-per-view model is faltering due to viewer fatigue and generic content, along with stiffer government regulation, including crackdowns on overly sensational or “anti-intellectual” themes. As a result, more platforms are following Hongguo’s ad-supported, free-to-view approach while raising content quality to attract advertisers instead of direct consumer payments. [para. 6][para. 7][para. 8][para. 9]

By late 2024, the free-ad-supported model claimed more than half of the market, with expectations it will rise to 80% in 2025. Hongguo’s model, where users watch ads or earn redeemable coins to view the next episode, mirrors the success of ByteDance’s Fanqie Novel, China’s largest online literature platform using a similar ad-based, free-to-read model. Hongguo has funded higher-budget productions and paid over 2 billion yuan in revenue-sharing to partners since mid-2024. ByteDance even merged teams across platforms, optimizing operations to resemble established long-form giants. [para. 10][para. 11][para. 12][para. 13][para. 14]

Seeking further growth, micro drama platforms are also expanding overseas, with the U.S. accounting for nearly half of all global micro drama revenue. However, competition remains fierce: over 300 apps vie for market share internationally, yet 90% are predicted to fail due to high marketing and production costs. Leaders such as ReelShort (owned by Crazy Maple Studio) saw profits turn into losses with increased content spending, and others like Kunlun Tech reported triple-digit percentage rises in quarterly losses, despite surging revenues, as up to 80% of revenue is spent on advertising abroad. [para. 15][para. 16][para. 17][para. 18][para. 19][para. 20][para. 21][para. 22]

Cost, originality, and localization challenges plague international expansion, prompting some platforms to use AI for dubbing, translation, content highlights, and special effects. While AI dramatically reduces costs and labor in translation and dubbing, producing entire dramas with AI remains technically unreliable, often requiring manual corrections. Despite these hurdles, industry executives remain optimistic that free, high-quality, ad-supported micro dramas will become the dominant model, leveraging vast audiences—already 500 to 600 million monthly users—and validating source material for broader screen adaptation. [para. 23][para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35]