CITIC Construction Investment: Domestic short dramas continue to grow at a high rate, and overseas markets continue to be booming

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that the short drama industry began to experience explosive growth in '23. The domestic market size was 50.4 billion yuan in '24, an increase of 35% over the previous year. For the first time, the scale surpassed the movie box office and became the most mainstream form of domestic film and television content (Dataeye data). Since 23 years, the domestic short drama industry itself has also undergone three major changes: the business model has changed from paid subscriptions to advertising; producers have moved from seeking volume and scale to seeking explosive effects; the influx of traditional film and television production companies, and there is plenty of room for AI to reduce costs and increase efficiency; and going overseas continues to be booming.

CITIC Construction Investment's main views are as follows:

Change 1: The business model is shifting from paid subscriptions to advertising, and producers are shifting from seeking volume and scale to seeking explosive effects

The share of advertising revenue climbed from 11% in January '24 to 50% in October, and has become the main source of revenue for the skit industry. The reason is that a large number of new entrants are focusing on the free skit model, including Hongguo skits, Doukuo's native skits, and other internet platforms such as Pinduoduo and Meituan. In March '25, the Hongguo short drama had a monthly activity of 173 million, an increase of 220% over the previous year, and is close to the size of the long video platform (Questmobile).

In the free mode, the producer and platform are similar to the relationship between Douyin KOLs and Douyin. The production side provides content to the platform, and the platform algorithm dominates the distribution of the content. Previously, under the paid model, the producer repeated the process of “creating - streaming - re-creating new content” at a high frequency; under the free model, the producer pursued the quality of skits, and high-quality content received more traffic.

Change 2: Traditional film and television production companies are pouring in, and there is plenty of room for AI to reduce costs and increase efficiency

Stars and traditional film and television companies are actively entering the short drama industry, mainly driven by factors such as the decline in the long drama industry, the rapid division of accounts for short dramas, and high user attention. Among them, production companies such as Huace Film and Television and Ning Meng Film and Television are mainly responsible for the content production process; Mango Supermedia not only focuses on skit production, but also cooperates with Hongguo skits to introduce high-quality skit content to Mango TV and enrich the platform's content system.

AI skits are good at producing sci-fi themed content, and some of their works have already been launched. According to the bank's estimates, AI costs have been reduced by more than 70%

Change 3: Going out to sea continues to be booming

At the end of '23, only a few products, such as Reelshort, went overseas. Currently, 41 of the top 50 grossing overseas skit apps were developed by Chinese companies, accounting for over 80%.

Key products: Production capacity of Reelshort's homemade dramas increased by more than 150% year-on-year; Kunlun World Wide DramaWave was launched for only seven months, with monthly activity exceeding 10 million, ARR exceeding 120 million US dollars, and the volume of users in Southeast Asia and South America increased; overseas purchases of iDRAMA increased by nearly 300% in April.

Related companies

IP companies: Chinese Online, Palm Reading Technology, Shanghai Film. Traditional film and television production companies: Mango Supermedia, Huace Film and Television, Bona Pictures, Ning Meng Film and Television. Other companies participating in the skit circuit: Kunlun World Wide, Perfect World.