The ceiling of short dramas seems to be far from being reached

In 2023, the short drama track has become very popular, and in 2024, the popularity of short dramas seems to be even stronger. Let’s take a look at the current situation and prospects in this article.

The popularity of short dramas has become even stronger in 2024. Even Lei Jun, the most popular "cool article male protagonist" on the Internet, is planning to enter the short drama track.

Although Xiaomi Group has not yet responded directly to the rumor, the job descriptions for "Product Operations Manager" and "Browsing Information Product Operations" on its recruitment website clearly mention that they need to be "responsible for assisting in the research, testing and development of product features for internal innovation projects (such as videos, short dramas, etc.)".

The market generally believes that Xiaomi may use short dramas to strengthen its brand marketing promotion, just as many companies such as Pinduoduo and 360 are already doing.

The stock prices of many companies that have taken advantage of the short drama concept have risen. Since 2023, the short video concept stocks have risen by more than 40%. The three-year-old video short drama seems to be ushering in a new round of upward development.

Why do short plays, which are not of high quality in the eyes of professionals, have such a vitality that exceeds people's expectations? Compared with the stories and actors forced by capital, ordinary people use real money to invest in the short plays they like, which makes the commercial value behind the short plays continue to shine.

01

The market size of large-scale short dramas is growing rapidly at home and abroad.

Short dramas usually refer to dramas that are only broadcast on online platforms, with each episode lasting less than 10 minutes and with clear character portrayals and plot advancement.

What makes short dramas so fascinating is that they have compact content, less foreshadowing, and plots full of dramatic conflicts and even melodrama, allowing users to finish watching an episode of a short drama in a short period of time and form a complete viewing experience, which is very much in line with the current fragmented entertainment needs of users.

Compared with feature-length movies or TV series, short dramas have lower production costs and are easier for creators and production teams to get started with. They can try out various themes, character settings, and narrative techniques, and even give the audience a refreshing feeling.

With the continuous emergence of hit works, the market size of the short drama industry is growing rapidly. According to iMedia Research, the market size of China's short dramas will reach 37.39 billion in 2023, up 267.65% year-on-year. It is expected that the market size of China's short dramas will reach 100.68 billion in 2027, with huge market potential.

In addition to the market size, the supply and demand of short dramas are very prosperous. Last year, the number of short dramas registered reached 3,500 and nearly 100,000 episodes, including highly acclaimed works such as "Auntie's World" and "Escape from the British Museum" and highly popular works such as "Xu Yan" and "Zhao Ya".

Short drama users are found in first- and second-tier cities and lower-tier markets, and can watch short dramas at home, while dining, commuting, or waiting. A survey shows that more than 60% of netizens watch short dramas repeatedly, and more than one-third of micro-short drama users watch short dramas almost every day and have a strong willingness to pay.

The revenue of popular short dramas is usually considerable. For example, the revenue share of "Provoke" exceeded 8 million yuan in the first two weeks of its broadcast. The box office revenue share of "Please! Don't Spoil Me" exceeded 30 million yuan, which still maintains the revenue share record of iQiyi, Youku and Tencent Video short dramas. The 24-hour recharge flow of the mini-program drama "After a Flash Marriage, Mr. Fu's Vest Can No Longer Be Hidden" exceeded 20 million yuan.

Revenue from short dramas has also become a focus for some listed companies. For example, Lemon Studios, the producer of the hit short drama "Twenty-Nine" and also the leading domestic long drama production company, had revenue of 32.23 million yuan from short dramas in 2023, an increase of more than 12 times year-on-year. The proportion of revenue increased to 2.6%, and the gross profit margin increased from a loss in 2022 to 25.6%. The early investment in short dramas has achieved a positive cycle.

The producer of "Provoke" is Chinese Online, whose overseas company CMS's ReelShort is the leader in short drama overseas exports, with a net turnover of US$35.78 million in 2023 and US$34.15 million in Q1 of 2024 alone, close to the level of the whole year of 2023, proving that the scale of the overseas short drama market is also growing rapidly.

The United States is ReelShort's core market, contributing over 67% of revenue and over 21% of downloads. Users in developed countries such as Canada, Australia, and the United Kingdom are more inclined to pay for content; emerging markets with a large user base such as India, Brazil, and the Philippines have huge advertising monetization potential.

As ReelShort opened up the market, more domestic giants paid attention to the huge potential overseas market and went overseas to develop short drama apps. According to public data, the total overseas downloads of the top overseas apps in 2023 were nearly 30 million, and the total net turnover exceeded US$55 million.

In an era when Chinese companies are competing to expand overseas, short plays are also making great strides abroad.

02

Popular short dramas are a powerful tool for attracting traffic and selling goods.

As a type of film and television work, short dramas also follow the industry's 80/20 rule. Most of the works are shoddy, unpopular and unreputable. However, Internet platforms still give short dramas considerable support because they see the huge commercial value of short dramas in attracting traffic and bringing in goods.

In 2021, when the short drama industry was just beginning to develop, the short video platform positioned short dramas as being able to bring traffic to bloggers and platforms. After all, for creators and MCNs on these platforms, the business model of short dramas and short videos is to attract traffic and increase fans, and after becoming a KOL, they can receive advertising orders or sell goods through live broadcasts.

Take Kuaishou as an example. It launches short dramas of different themes and types according to the schedule. For example, it launched "Donglanxue" during the winter vacation, which has over 550 million views. The purpose is to establish a connection between short dramas and real-life nodes, cultivate users' viewing habits, and continuously enhance its appeal to users.

Using celebrities to promote dramas and using dramas to promote celebrities is also known as an effective means for Kuaishou to drive the growth of platform traffic. For example, during the winter vacation period of Kuaishou's short dramas, the total number of views of their personal content exceeded 1.16 billion. Short drama actors such as Jin Chao have gained a higher status and begun to enter the long drama market.

Relying on the platform's own advantages in short videos, live streaming, and e-commerce businesses, Kuaishou provides excellent commercial monetization support for short drama creators, including actors, including platform subsidies, traffic incentives, establishment of profit-sharing rules, paid viewing, brand cooperation, and live streaming sales.

According to the "2023 Kuaishou Short Drama Data Value Report", Kuaishou has launched more than 90 commercial short dramas and has more than 35 brand cooperations. In Q3 2023, the short drama investment revenue increased 10 times month-on-month, covering e-commerce Internet, food and beverages, beauty and skin care and other industry fields. The role of short dramas in marketing is evident.

In order to better realize the closed-loop ecosystem from short content production to marketing monetization, Kuaishou even directly chose to cut off the commercial promotion and delivery methods of third-party micro-short drama applets, allowing short dramas to collaborate with Kuaishou live broadcast, e-commerce and other channels to the greatest extent in the full-domain closed-loop link.

Some brands also conduct marketing directly through customized short dramas. For example, the short drama "Heartbeat More Than a Moment" customized by Hansu has been viewed 1.19 billion times, driving the sales of the Hongmanyao series products to more than 1.5 million units through all channels in the first half of the year. It is regarded by many consumer brands as a successful case worthy of imitation.

Brands have also explored new ways to sell products through short dramas, deriving a combination of techniques such as slicing traffic, plot number configuration, and live broadcast room acceptance from the simplest and most direct hanging links and blue word settings.

The e-commerce platform Pinduoduo has added a short drama channel entrance under the Duoduo video on its homepage, and directly provides all dramas for free. Of course, there is no free lunch in the world, and Pinduoduo's goal is to use short dramas to attract users in the sinking market to stay and develop its content e-commerce.

Therefore, Pinduoduo's short drama channel also includes "live broadcast", "attention", and "recommendation" content, and interspersed with product promotion videos. Usually after watching 7-9 episodes, a product promotion video with a product jump link will pop up, and the pushed products are basically highly matched with the user's recent search and browsing records.

It can be said that as the development of live e-commerce enters a bottleneck period, using scripted, story-based short plays for marketing and promotion has become an important direction for MCN organizations and e-commerce platforms to seek transformation and build diversified operating models.

03

There are many monetization opportunities in the short drama industry chain.

Not only are major Internet platforms and top UP hosts competing for the dividends of the short drama track, countless ordinary people are also trying to grasp this new code to wealth.

The short drama industry chain can be divided into three major stages: output, production and distribution. The participants in the production stage mainly include providers, contractors and copyright holders. It is a stage with a relatively low entry threshold. It can even be said that as long as you have good ideas and good creativity, you may be able to participate.

Moreover, the production cycle of a short drama is not long. It only takes 2-3 months from the start of production to obtaining revenue sharing (the script writing cycle is 15-25 days, production is 6-15 days, and post-production is about 14 days). Basically, the revenue sharing situation can be seen in the second month after the launch, which is also a good thing for many start-ups and investors.

The cost of a short play includes script, production, advertising, placement, distribution, video CDN cost, and mini-program technical channel fee. 1) The script fee is usually a minimum of 10,000-100,000 + 1%-2% of the recharge turnover; 2) The production fee is usually 400,000-600,000 + 2%-8% of the recharge turnover. The real big expense is still the investment turnover.

After the short drama is produced, the platform will choose to place advertisements by itself or open it to distributors. Only when the ROI is higher than 1.18-1.2, the single drama can make a profit. Therefore, the cost of self-placed advertisements accounts for about 83%-85% of the recharge flow, and the distributor needs to pay an additional 2-5% of the flow share to the distributor.

It can be said that when the core content of many short dramas is relatively similar, the success rate and conversion rate of investment are the key to determining the income of short dramas. After all, the core life cycle of most short dramas is only half a month, and they need to increase the volume immediately when they are released. It is very important to choose which platforms and at what price to invest.

Of course, the birth of a hit short drama cannot be achieved by simply throwing money at it, nor can it even be guaranteed by excellent production. More often than not, it still needs to be able to mobilize users' emotions, allowing users to spontaneously like, forward, and recharge after gaining emotional values ​​such as entertainment, refreshment, healing, and empathy.

The rapid rise of short dramas is not only because the audience wants to see some refreshing stories, but also because the audience also wants the opportunity to write their own stories.

After all, a considerable number of audiences have long been fed up with the high-ranking capital, directors, and stars defining what a good story is, and then producing some so-called long-form blockbusters to dominate the screen and the market, and then earn money that ordinary people would never dare to imagine in their lifetime.

In addition, short plays can be organically combined with many business formats, such as interactive short plays + games, short plays + VR/AR, short plays + offline immersive theaters or escape rooms, short plays + AI technology. These models have commercial potential worth exploring.

However, too much hot money has poured into the short drama track within a year, and the market is chaotic with good and bad content mixed. In order to attract attention, some even spread soft pornography, violence, and hate content. It is time for relevant departments to introduce regulatory measures.

After the policy patch, if the investment in a micro-short drama exceeds 1 million, or it needs to be attracting investment, or recommended on the homepage of a video website, or prepared for paid broadcast, it needs to be registered as a "key online micro-short drama", which is conducive to the standardization and long-term development of the industry.

With the introduction of these policies, Internet platforms, investors, producers and many people who want to get a piece of the pie in the short drama track should also realize that the short drama industry is not a place where they can grow wildly and make huge profits. The 28 effect and the risk of losses will always exist.