The second half of the skit: The giants come on stage and start the "hundred-dollar war"

Under the wave of mobile Internet, the short drama industry is becoming a new business arena. From mini-program short dramas to short drama apps, the collision and innovation of business models are changing the industry landscape. Head companies such as ByteDance and Kuaishou have laid out independent short drama apps. This article leads us to analyze and look forward to the development trend of the short drama market, let's take a look!

If you have the patience to wait a few more days, you can watch short dramas on the short drama app for free, which cost only two or three hundred yuan each.

If you search the App Store with the keyword "short drama", you will find nearly 30 related apps. Unlike the "grassroots" short dramas in mini programs, they are often backed by leading companies.

Hongguo Short Drama is a product of ByteDance, Hippo Theater belongs to Dianzhong Technology, and Xingya Short Drama is backed by the leading short drama production company Jiuzhou Culture. At the end of November last year, Kuaishou also launched an independent short drama app Xifan.

Behind the changes in the content front is the collision of different business models.

The mini program short dramas make money from the users’ paid viewing fees, while the short drama app adopts a model of ad-free subscription or free viewing after ads are unlocked, acquiring users at a low price and promoting the slogan of “Massive short dramas for free viewing”.

After being portrayed as a new outlet for gold in one wealth-making myth after another, what kind of changes will the short drama industry face in the storm brought about by the giants?

1. “The giants always have a keen sense of smell”

From "The Miraculous Son-in-Law of Medicine" and "The Best Son-in-Law", which have hundreds of episodes at a time, to "The God of War Prince's Pampered and Fierce Little Medical Concubine" and "The Little Beggar Repays His Gratitude Ten Years Later", which have been watched more than 1 million times, when you open the Hongguo Short Drama App, the familiar taste of "rustic but luxurious" hits you in the face.

Among them, there are mini-program short dramas that have passed their seven-day shelf life, as well as 10-minute horizontal screen short dramas on Mango TV. They are labeled with familiar cool drama labels such as counterattack, reversal, workplace, marriage and love, urban, and brain hole, as hooks to attract users.

What's more, all the content is almost free.

The most common way to play short drama apps is that users can watch a certain number of episodes for free, and then have to watch ads to unlock the next episodes or pay to subscribe to a membership that is ad-free. The membership fee ranges from 98 yuan to more than 200 yuan: the annual membership fee for Hongguo Short Drama is 98 yuan, and the monthly fee is 10 yuan; the subscription fee for Hippo Theater is 99 yuan, and the annual fee for Xingya Short Drama is 208 yuan. For Xifan App, which mainly features Kuaishou short dramas, the last few episodes need to be unlocked by watching ads.

In other words, the money users spend watching a drama in the mini program is enough for them to watch it on these apps for a year.

"Short dramas on mini programs are really too expensive. It costs two to three hundred yuan to watch a 100-episode drama." Titan, an investor who follows the short drama track, told Snow Leopard Finance that if users can watch the short dramas for free as long as they can endure for 7 days, it is still very tempting for users.

The method of acquiring customers at low prices quickly took effect.

In the recent free entertainment app rankings, Hippo Theater and Hongguo Short Drama have repeatedly ranked among the top ten. Many media outlets quoted insiders as saying that Hongguo Short Drama has reached about 5 million daily active users. According to Zhao Haonan, who works in advertising, the number of Hippo users on the day it reached the top of the app list was at least 10 million.

Behind most of the short drama apps are leading companies related to the short drama business.

These include content traffic platforms represented by ByteDance and Kuaishou, leading companies such as Jiuzhou Culture and Capacity Interactive Entertainment that focus on short drama production, as well as players that have entered the short drama track from other fields, such as traditional online literature platforms such as China Online and iReader, and online literature distribution companies such as Dianzhong Technology and MCN agency Maiya Media.

ByteDance is regarded as an "App factory" by the outside world, and Douyin is the most concentrated channel for buying volume for mini-program short dramas, so the birth of Hongguo Short Drama is not surprising. The latter two types of companies usually deploy mini-programs and apps at the same time, and are mainly self-sufficient in terms of content.

Hongguo Short Drama, Hippo Theater and Xingya App have attracted much attention in the industry. According to Qimai data, Hongguo and Hippo were first launched in August 2023, Xingya was launched in September, and the earliest launch time of other apps can be traced back to the end of 2022.

There are even more new players eager to try. According to media reports, Jumei.com founder Chen Ou is preparing to build a short drama platform. A short drama investor mentioned that the company that developed the video dating app Yidui also has plans to make a short drama app.

A short drama producer told Snow Leopard Finance that he did not take the short drama apps seriously when he saw them in the first half of the year, but after discovering that apps from large manufacturers and leading companies were launched in large numbers, he realized that real changes were coming.

"The giants always have a keen sense of smell."

2. Spending a lot of money and getting caught up in a new storm

In the short drama industry, which has been hailed as the most popular industry due to the wealth myth of “earning over 100 million yuan in 8 days”, a new storm is brewing.

Several short drama practitioners told Snow Leopard Finance that the technical barriers to making apps are not high. The biggest hurdle is the necessary qualification for video platforms - an online audio-visual license. Many apps are affiliated with companies with corresponding qualifications.

After getting the qualifications, it’s time to start spending big money.

Buying traffic is a necessary means to promote short drama apps. At present, traffic costs account for 80% to 90% of the total cost of short dramas on mini programs. Zhao Haonan said that it is difficult to estimate the current investment level of App buying traffic based on the same logic, but "hundreds of millions is certain."

Compared with mini programs, apps have more promotion channels and can reuse some of the buying experience of mini program short dramas, except that there is an additional download action.

The effectiveness of buying traffic for short drama apps depends largely on the capabilities of the delivery team.

Zhao Haonan analyzed to Snow Leopard Finance that the reason why Hippo Theater grew quickly was that while focusing on conventional buying channels, it also performed ASO optimization (App Store Optimization, which refers to improving the ranking of apps in the App Store's rankings and search results). As a result, it has long been at the top of the Apple App Store's free and entertainment lists, and this high ranking can help it acquire a large number of natural users.

According to him, Dianzhong plans to focus on Bilibili next. Bilibili is not the mainstream channel for buying volume for mini-program short dramas, but the large number of pirated short dramas here have made them realize that the young group may be a circle that can be broken through.

Going by current trends, the next few months become critical.

The upcoming Spring Festival is always a peak period for buying traffic. Titan predicts that "Hongguo will definitely launch a large-scale campaign" to target low-end users with plenty of free time. "In fact, it's not just Hongguo, any manufacturer with an idea will do this," Zhao Haonan added.

They judge that the short drama market will show a relatively clear outline at the beginning of 2024, and the overall pattern will stabilize by the middle of the year.

Until then, variables may still arise at any time.

Whoever can find a more cost-effective promotion channel outside the current mainstream channels will have a greater chance of success. Content reserves are also the key to improving competitiveness. What can truly reflect advantages and widen the gap is the hit. If other platforms see the dividends of the short drama track and are willing to become a new traffic pool, it will also have an impact on this storm.

Titan said that even if you have the qualifications and funds, you should be cautious when entering the market. Once you enter, you must be mentally prepared to "fight" against Hongguo Short Drama and ByteDance behind it. "What if one day ByteDance restricts other short drama apps from being released on Douyin?"

3. The short play ushers in a mid-game battle?

The emergence of a large number of short drama apps is not surprising.

The life cycle of a mini-program drama is only 7 days. There are a large number of expired dramas on the market, and the film producers also hope that there will be channels to reuse these works. In addition, the profit model of mini-program dramas is to quickly buy volume and quickly recover, but the cost of buying volume is getting higher and higher, and the channel fees that cannot be underestimated are also squeezing the profits of the film producers.

Although the cost of buying traffic for short drama apps is only high, its advantage over mini programs is also clear - retaining and awakening users, "exploring more monetization paths and even developing other businesses." Therefore, it is more valued for its long-term value.

In Titan's view, the mini-program short drama model will not die out. Another producer also emphasized that since this model has become very mature, the logic of running a hit in the mini-program will not change.

Although it is still in the primitive accumulation stage of spending money to gain users and the business model has not yet been implemented, the impact of free short drama apps on the industry cannot be ignored.

When users have free options, paid short dramas will inevitably be impacted. Companies that control content must also think about how to respond to changes and which monetization path to choose - earning copyright fees from expired content or building their own platform to earn membership fees and advertisers' money.

The giants are stirring up a new storm. Is this a good thing for the industry?

Some practitioners are very excited about this: "Making a short drama app is equivalent to building our own platform. Don’t we have our own Youku, iQiyi and Tencent Video?" But some people pour cold water on it: Over the past decade, long video platforms have burned hundreds of billions of dollars, which is far beyond the reach of short dramas.

From being "parasitic" on mini programs to being an independent short drama app, this change reflects a rule that applies to many industries - after reaching a certain stage of development, they move from dispersion to aggregation. From the current model, the most reference for short drama apps is the online literature industry, but it is still impossible to determine its ceiling.

Titan provided a method of calculation: multiply the daily activity of Tomato Novels by the average customer spending of the short drama. But she emphasized that this is only a possibility, "the market has been volatile recently."

An Internet practitioner who follows short dramas is skeptical. In his opinion, entering the App industry now is a "retro" behavior, which requires high promotion costs and user psychological costs. More than one industry has proven that among the entrants who rush in, the majority are cannon fodder. "Just like the 'Thousands of Broadcast Wars' back then, and for example, in the free online literature track, how many people have 'died' besides Tomato?"

Zhao Haonan also believes that if short drama apps continue to rely on buying traffic, they can only stay at the level of promoting the company's brand. Except for products backed by Douyin and Kuaishou, the best way out for other apps may be to be acquired by a video platform.

Traffic and money are still there, but there are not many outlets. All players are eager to reshape the world in the short drama industry, but before that, they need more time to accumulate strength and stand the test.

Author: Li Nan

Source: Xuebao Finance (ID: xuebaocaijingshe), faster, deeper and wiser