The domineering president harvests Southeast Asia

The enthusiasm for the short drama market has been ignited in the past year. At the same time, short dramas going overseas has also become a major trend. Many short dramas are loved by users in different countries for their simple, direct and fast-paced content style. In this article, the author focuses on Chinese short dramas, and let's see how short dramas capture overseas audiences step by step.

In 2024, the overseas market is unprecedentedly competitive, and Chinese entrepreneurs are gearing up to export China's business model, entrepreneurial ideas, and strategic play overseas. They still firmly believe in the "time machine theory" and hope to bet on China 20 years ago in advance. This article focuses on Chinese short dramas and sees how short dramas capture overseas audiences step by step.

2024 is the right time for short dramas to go overseas.

In fact, as early as the late autumn of 2023, ReelShort, a short drama product launched by Maple Leaf Interactive, a subsidiary of China Online, made its mark in the international market with its unique charm.

On November 11, 2023, this product achieved amazing results on this day: after deducting the fees paid to the App Store, the net income was as high as US$459,000, equivalent to about RMB 3.28 million. Just one week later, as of November 17, its cumulative net income had exceeded US$22 million, equivalent to about RMB 160 million.

This achievement is not only impressive in terms of numbers, but also has caused a stir in the capital market. On November 8, the A-share market stocks of China Online, iReader Technology, Topway Video, and Huanrui Century all hit their daily limit, and investors' enthusiasm for the short drama market was thoroughly ignited.

Two weeks later, on November 22, the short drama interactive game sector as a whole rose by 5.09%, with Chinese Online's increase exceeding 10%. Many stocks such as Tianwei Video, China Broadcasting and Gravity Media also hit their daily limit. As of the close of November 24, the market value of Chinese Online had soared by 14.6 billion yuan in November, becoming a dark horse in the market.

ReelShort’s success is no accident.

Zhang Yi, CEO and chief analyst of iMedia Consulting, revealed that the Silicon Valley-based team has been actively exploring a more localized production strategy since the end of 2022. They abandoned the traditional "Made in China" label and instead adopted overseas filming teams and European and American actors, while retaining the core of China's popular short drama themes and combining elements such as werewolves and vampires that are more familiar to European and American audiences, creating a series of "earthy" short dramas that are deeply loved by local audiences.

Data from SensorTower shows that ReelShort's users have a balanced gender distribution, with men and women accounting for about 50% each, and the average age is around 30 years old.

This series of data shows that short dramas are loved by users in different countries for their simple, direct and fast-paced content style.

1. Short drama dark horse, galloping on the fast lane

After the State Administration of Radio, Film and Television officially named "online short drama" at the end of 2020, this market entered the fast lane of development. In just a few years, short dramas have grown from an emerging content form to a huge industry with a mature industrial chain and industrialized production model.

The conditions for short dramas to go overseas are ripe, as can be seen from the data.

According to the iMedia Research consulting report, the market size of micro-short dramas in my country is expected to reach a staggering 37.39 billion yuan in 2023, with a year-on-year growth rate of 267.65%.

The success of domestic short dramas is inseparable from the participation and layout of online writers and platforms. In particular, the compatibility between short and medium-length online literature and short dramas is extremely high. One short and medium-length online literature can support the production of a 20-30 episode short drama. This matching of content and form has further developed the value of online literature IP.

It can be seen that the first condition for short dramas to be successful overseas is that there is a "tap water" for online article adaptation. Many people in the film and television industry call micro short dramas "short video versions of online articles."

Overseas readers' acceptance of and willingness to pay for Chinese online literature continue to increase, which not only verifies the cross-cultural communication capabilities of online literature, but also provides rich IP resources for short dramas.

The second condition is the global popularity of short video platforms such as TikTok and Reels, which provide excellent channels for display and promotion of short dramas.

Third, the industrialization of shooting is the basis for the overseas expansion of short dramas.

For example, Hangzhou Linping is committed to becoming "the government that understands micro-short dramas best", and has proposed to make every effort to build a five-in-one film and television micro-short drama industry development brand of "writing - shooting - broadcasting - reviewing - investing", and to create a micro-short drama industry chain integrating creation, shooting, production, distribution, trading to derivative industries.

In fact, the rise of China’s micro-short drama market has also created “replication” conditions for “short dramas going overseas”.

According to the iMedia Research consulting report, the scale of China's micro-short drama market is expected to reach 37.39 billion yuan in 2023, with a year-on-year growth rate of 267.65%.

The core of the popularity of short dramas is "pressure". Most of the audiences are at a bottleneck in their careers or lives. They relieve anxiety and uneasiness and gain spiritual comfort and satisfaction by watching stories about the grudges of wealthy families and overbearing CEOs. This is the same all over the world.

In just one year, the domestic mini-program short drama market has rapidly expanded to a scale of 30 billion yuan.

In this transformation, the integration of Douyin and WeChat has played an indispensable role. The strong support of WeChat, Douyin, Kuaishou and other platforms has also injected strong impetus into the prosperity of the short drama market. Douyin, with its precise user portraits in the short video ecosystem, combined with the efficient payment capabilities of WeChat mini-programs, has created a smooth path for users from traffic generation to conversion.

Therefore, overseas short dramas have entered the "volume era", the first of which is the quality level.

"The audience is very picky." The shooting quality of the short drama is close to that of a movie. The production cost of each episode is as high as thousands of dollars. This is no longer a quick money game of "small production and big profit" in the eyes of laymen. The creators are already rolling up the "borders of storytelling with vertical screens." They hope to break the limitations of traditional short dramas through innovative storytelling methods.

The success of short dramas going overseas depends not only on their quality, but also on the choice of subject matter.

The content team is well aware that only by combining the "cool points" of the East and the West can a truly popular short play be created. Therefore, during the adaptation process, they will deeply localize the original script to ensure that the story can resonate with overseas audiences.

In fact, the natural advantage of the domineering CEO's overseas expansion is that it happens to capture the commonality of the "cool points" of the East and the West. The world view of the domineering CEO's short drama always revolves around "exclusively favoring the female protagonist", which for ordinary people, has a deep sense of "dopamine" substitution.

Of course, not all short dramas are suitable for overseas sales. “Time-travel dramas” and “son-in-law dramas” are quite popular in the domestic market, but they are not well adapted to the overseas market.

In the business model of short dramas going overseas, multiple strategies coexist to adapt to the needs of different markets. For example, a popular domestic short drama enters the European and American markets through English subtitles and English dubbing, or purchases novel IPs from the European and American markets for adaptation and filming, and there is also a self-made drama that uses European and American actors and sets in all aspects, which is more deeply integrated into the local culture.

2. Where did the skits go?

In the late autumn of 2023, China's A-share market ushered in a wave of "short dramas" again.

The rise of this round of market is closely linked to a special interactive game, "It's Over! I'm Surrounded by Beauties". This game is similar to common short plays, combining the compact plot of short plays with the interactivity of games, providing players with a brand new experience.

The plot of the game is centered on a male protagonist who is in huge debt and has encountered setbacks everywhere. He unexpectedly wins the favor of several women when he is at the bottom of his life. Players only need to pay about 40 yuan to enter the game from the male protagonist's first-person perspective, and make choices as the plot develops, thus affecting the direction of the emotional line.

Driven by this market phenomenon, the concept of short dramas has once again rapidly heated up in the A-share market. The share prices of leading companies such as China Online and Insai Group soared in a short period of time, with an increase of more than 125%.

With capital support, the popularity of short dramas going overseas is becoming more and more intense.

At present, the main consumption areas of short dramas overseas can be divided into two major areas: one is Europe, America and Australia, and the other is Southeast Asia. The audience tastes and preferences of these two markets are different, but both have shown a strong interest in the compact and interesting content form of short dramas.

In the process of short dramas going global, the preferences of different countries and regions have gradually emerged. The Southeast Asian market, especially Indonesia and the Philippines, has a strong demand for short dramas. Audiences in these regions have a special liking for short dramas with "light themes", such as youth romance and CEO dramas. In the European and American markets, although the total number of short dramas is relatively small, there is also a certain audience base. Brazil is the main consumer market in the Americas.

In the competition of the domestic short drama market, game companies are becoming more and more active. Currently, game companies involved in short dramas can be divided into three categories:

The first category is Internet giants represented by Tencent, ByteDance, Kuaishou, etc. These companies are not only the main distribution platforms for short dramas, but also actively participate in the production of short dramas. They have laid out their layout in the short drama track early and have rich resources and experience. Tencent and Kuaishou began to get involved in the field of micro-short dramas as early as 2019, and ByteDance also joined the competition in the short drama industry in 2021. According to Datawin's data, in the first half of 2023, a total of 481 micro-short dramas were launched on domestic long and short video platforms, of which Douyin launched 212, Tencent and Kuaishou launched 100 and 68 respectively. These three platforms account for nearly 80% of the entire market, fully demonstrating their strong strength in the field of short dramas.

The second category is game companies that have personally made short dramas, including NetEase, Perfect World, and Tianyu Digital Technology. These companies have a deep accumulation in the game field, but they are not satisfied with the status quo, but actively explore new content forms. The popular short drama "Cute Baby Comes, Daddy is the Boss" launched by NetEase has soared in recent times and has been warmly welcomed by the audience. Perfect World has also tried micro short dramas on the Douyin platform and achieved impressive results.

The third category is Guangzhou game manufacturers who take short dramas as a new transformation direction. As one of the important bases of China's game industry, Guangzhou has many game companies and rich distribution experience. In recent years, with the rise of the short drama market and the popularization of distribution methods such as buying volume and investing, some game companies in Guangzhou have begun to shift their business focus from games to short dramas. They use their advantages in buying volume and investing to actively try business models such as short drama distribution and investment. Among them, Benjie Network has launched the "Benjie Theater" applet and launched nearly 20 short dramas, achieving good results.

3. Can you make money?

In 2023, the short drama market grew rapidly like a storm, and the driving force behind it was the profound changes in the content production model.

In the past, both traditional TV series and short dramas faced the same dilemma: they were far from users, had high costs, and had long production cycles. There was always an insurmountable gap between content production and user preferences. However, the C2M model of mini-program short dramas is like a clear stream, with production determined by sales, and the downstream investment data is directly fed back to the upstream production link, thus greatly improving the efficiency of content realization.

However, the long-term scale of the short drama market does not depend on supply, but on the demand side. The convenience and diffusibility of content determine the size of the user base, while the quality and entertainment intensity of the content determine the amount of per capita payment. Under this logic, the MAU of short dramas is expected to soar from the current 300 million to 800 million to 900 million, and its market size is also expected to increase from 30 billion yuan to 100 billion yuan.

As the market continues to mature, the monetization model of the short drama industry is also quietly changing. From the initial paid model to the paid + free hybrid monetization model, the short drama industry is gradually covering a wider range of people. At the same time, mini program short dramas are also evolving in the direction of "mini program + APP" to meet the increasingly diverse needs of users.

In terms of profit model, overseas short dramas mainly rely on user payment and advertising revenue sharing. User payment is divided into "single episode unlocking" and "membership" and other methods.

Short drama applications such as ReelShort can generate up to RMB 2 million in daily revenue, with most of the revenue coming from paid episodes. In addition to free episodes and some episodes unlocked by watching ads, users need to pay to watch subsequent episodes. In addition, some platforms such as GoodShort have also tried a membership subscription model to provide users with more value-added services.

However, with the gradual transformation of content production of the leading overseas short drama platforms, coupled with the high cost of location shooting and marketing, a single monetization strategy can no longer meet the needs of long-term development. Therefore, advertising monetization has become an important channel to make up for the short board of short drama applications in overseas markets. By cooperating with hyper-casual games, general tool applications, etc., short drama applications can access more advertising resources and achieve diversified monetization.

However, as the market continues to develop and competition intensifies, the profit model of short dramas going overseas will become more diversified and innovative in the future. For example, by combining with e-commerce and offline activities, a more complete audio ecosystem can be created to provide users with richer experiences and services.

In terms of pricing, the European and American markets have stronger paying power, and the price per episode is usually higher than that of the domestic and Southeast Asian markets. For example, the price per episode of a mainstream European and American short drama is about 0.54 US dollars (about 3.78 yuan), while the price per episode of a domestic short drama is often between 0.6-2 yuan.

However, high investment costs and uncertain hit rates are still important factors restricting the overseas development of short dramas.

According to Wang Xiaoshu, founder of Jiashu Technology, most of the 1 yuan of box office revenue for micro-short dramas is used to pay for advertising, and the actual income for the producers is very small. This means that only a few hit dramas can achieve profitability, while most dramas face the risk of losses.

Therefore, how to reduce investment and traffic costs and increase the hit rate has become an urgent problem to be solved in terms of profitability of short dramas going overseas.

4. Final Thoughts

To sum up, as the domestic market structure begins to take shape, the market share and profit margins of leading manufacturers are also further increasing. They stand out in the fierce market competition with their compliance advantages, license advantages, scale advantages and first-mover advantages. The overseas market has become a new blue ocean. Pioneers such as ReelShort have successfully run through the business model, pointing the way for latecomers.

It can be said that the short play, a "vulgar" art form, is quietly gaining a foothold in the overseas market, and its role cannot be underestimated. Don't think that "vulgar" is derogatory, after all, after a hard day's work, no one wants to be taught a lesson. Therefore, the short play is clearly positioned as a mass entertainment product, which is simple and easy to understand, but can bring a deep emotional experience.

In the future, short dramas will gradually evolve from short-term business to long-term business by optimizing business models, reducing costs, and improving content quality. The platform's focus will also shift from short-term traffic monetization to long-term content operations. The overseas market will become a new growth point for the short drama industry, and its long-term space is expected to reach tens of billions of dollars.

Author: Li Mumu, Editor: Hu Zhanjia, Operation: Chen Jiahui

Original title: Domineering CEO Harvests Southeast Asia | Overseas Special

Source public account: LingTai LT (ID: LingTai_LT), sharp, objective and unique business insights.