After TikTok, Micro Dramas Could Be China’s Latest Disruptor to Global Entertainment

Jeffrey Katzenberg was probably too early when he launched Quibi (short for quick bites) in early 2020. The company closed down six months later having consumed nearly $1.5 billion of capital.

Fast forward four years and the global market (excluding China) for micro-dramas, or ultra short fiction content made for consumption on the go, is said to be worth $2 billion a year. It is expected to double by 2025.

Like Korean webtoons, micro dramas are digitally native content, made for viewers using handheld mobile devices. That may be one of the reasons why the streaming services that lean into TV sets and PCs (such as Netflix and Disney+) flourished during COVID lockdowns and why micro dramas took off once people began to commute and travel for leisure again. Most scroll vertically, like social media and unlike a book or magazine.

China, however, is the world leader with a market size that probably equals the rest of the world. And it is reported to be growing faster still, possibly 250% annually. Chinese state media reported that the sector had gross revenues of $5.2 billion (RMB37.4 billion) in 2023, equivalent to about 70% of the country’s theatrical cinema market. 

The market leaders in China are Kuiashou, which was in user-generated short video before the micro drama took off and listed on the Hong Kong stock exchange in early 2021, and Douyin, the Bytedance-owned sister of TikTok.

Typically, micro drama shows may have 60-100 episodes, with the term ‘episode’ used loosely. Per episode running time of 30-120 seconds is typical. A scene, basically.

But a significant difference from user-generated Reels or Shorts on leading social media platforms, the micro dramas are professionally-generated content with the beats of story-telling in the right places.
Chinese tech giant Tencent, which seeks to be an enabler of micro dramas, recently presented the genre as enjoying high levels of creativity: “Vampires in love. A woman who unknowingly marries a billionaire. The homesick Chinese jade teapot that makes a daring escape from a museum. A chef who time-travels to the Ming Dynasty — to cook up a storm, naturally,” it said by way of example.

More skeptical viewers suggest that the category is saturated with stories of crude revenge and cheating husbands. And the package is frequently delivered in over-wrought and simplistic bites, quite the opposite of the premium series that is the native long-form content of mainstream streamers

Earlier this year, Douyin hired iconic Hong Kong film director Stephen Chow (“Shaolin Soccer,” “Kung Fu Hustle”) to mentor a cluster of creatives dabbling in the format.

At the APOS media and entertainment conference in Indonesia this week, a fistful of Chinese executives was on hand to present their new version of quick bites to 550 decision makers from global media conglomerates, Asian entertainment players and private equity investors.

Presenters included: Nan Yapeng, VP of Crazy Maple Studio & GM at overseas market leader ReelShort; Zhou Jian, CEO of MicroshowTime and founder of Playlet Short Drama Platform, Will Ning, chief legal officer at MegaMatrix and FlexTV and Liu Jin Long, CEO of ShortMax.

Further analysis came from Ronan Wong, co-founder of AR, a Hong Kong-based aggregator, which also has a mission to connect talent, represent micro drama studios and to produce and distribute the new content across Asia.

“The micro drama market is not competing with streamers nor TV channels, but provides a better storytelling and watching experience to TikTok or YouTube users,” Wong told Variety.

Possibly as disruptive as the shows themselves is the array of business models on offer. Monetization comes in ad-supported video-on-demand (AVOD), subscription (SVOD) and transactional (TVOD) variants. Or a hybrid. The freemium model, with half a dozen initial free-of-charge episodes hooking viewers and sucking them into sections which require some form of in-app payment, is widely prevalent.

That makes them a lot like the dominant video game model in China (where game consoles are rare) and which, at $20-40 per season, can actually work out more costly than monthly, recurring streaming subs. Other platforms are priced at $20 per week or $200 per year.

The business is still evolving fast and might be considered high risk if production prices were not so low.
Production cycles are as short as two to three months and per episode costs may be as low as a few thousand dollars. That means there is relatively little in the way of barriers to entry and that non-traditional media players are jostling with established companies.

Katzenberg’s Quibi was reported to have spent $100,000-125,000 per minute on its shows, with episodes of up to ten minutes each. With far less investment, Chinese hit show, “Unparalleled,” produced by Xi’an Fengxin Culture, was reported to have earned gross revenues of $14 million in its first eight days of release in August last year.

“With productions happening in just two months and return on investment happening [for some] inside 60 days, the landscape feels like a science-fiction,” says Anne Chan Wong’s partner at AR.

Indeed, distribution and marketing costs may be significantly higher than investment in production. AR calculates that for every dollar of revenue, the players spend around 80% on advertising and user acquisition expenses. Another 10% goes to the content and the remaining 10% is used for platform operation.

Still, there are signs that the format is being emulated in parts of East and Southeast Asia – less so in India – and in the U.S. and that the Chinese companies are exporting their business model. Reelshort, which counts Tencent and Baidu among its backers, is the biggest platform for micro dramas in the U.S.

Three major China-backed micro-drama apps were downloaded 30 million times across both Apple’s App Store and Google Play in the first quarter of 2024, grossing $71 million internationally, according to analytics company Appfigures, Reuters reported recently.

“The industry’s unique production, marketing, and operational approach challenges traditional content creation norms. Success now hinges on refined data points and capturing mass emotions, making constant iterations crucial for show monetization,” said Wong.