Tomato short dramas are rising strongly, and Douyin has formed a group to harvest the short drama market

Recently, ByteDance has invested heavily in the expansion and development of Tomato Short Drama. This article starts from the development history of mini-program short dramas, analyzes the reasons why the short drama industry has been prosperous all the way and its profit model, and looks forward to the future development prospects of Tomato Short Drama. Recommended for students who are interested in the short drama industry.

Recently, ByteDance’s short drama APP Hongguo Short Drama was officially renamed Tomato Short Drama.

Although Hongguo Novel has always belonged to the Tomato Novel business line, giving the short drama business a mature brand name clearly reveals ByteDance's intention to expand the short drama business.

Short dramas have been popular in the lower-tier cities for a year, but many people in first-tier cities still know very little about this invisible market. Even those who have studied the short drama industry in depth, or even the short drama writers and directors, are still confused about the industry. “Why would anyone watch this kind of thing?”

Everyone already knows the answer.

The sinking market is too vast. Usually, a short drama has 100 episodes, each episode is 2 minutes long, and the plot must hit the audience's cool spot. "Revenge of the rich", "Marriage first, love later", "Rebirth" and "Time travel" are the unchanging themes of short dramas. A short drama producer summarized the character of the short drama protagonist as: extremely exaggerated evil, extremely powerful, and extremely low intelligence.

Because of its accurate grasp of human nature, short dramas have taken off quickly. Titan, an investor who has been paying attention to the short drama industry since September last year, told Zizibang that "in August and September last year, the daily consumption of short dramas was about 10 million yuan, and now it has reached more than 70 million yuan."

"Most of the advertising fees from the short drama industry have flowed into ByteDance's pocket." Titan roughly calculated that the advertising fees ByteDance will receive from short dramas this year will be close to 20 billion yuan.

Now, ByteDance has chosen to reap the benefits from both ends. In addition to advertising fees, ByteDance is trying to continue to reap traffic from the short drama industry through a free route.

ByteDance has taken a similar path in the online literature industry. Tomato Novel has eroded China Literature's market share by offering free content. Recently, New Voice Pro reported that Tomato Novel's daily active users have exceeded 90 million and are about to exceed 100 million.

In an era when paid literature was still the mainstream, Tomato Novel launched a surprise attack by harvesting traffic from the online literature industry for free, and then monetizing the traffic using the traffic gameplay that ByteDance is good at - a portion of the advertising fees from the short drama industry was invested in Tomato Novel.

Tomato short plays are following the path of Tomato novels.

When mini programs emerged, most of them adopted a paid model. After the producers invested in platforms such as Douyin and Kuaishou, they directed users to WeChat mini programs. Usually the first 10 episodes were free, and if you wanted to watch them, you had to become a member or purchase a single episode.

As short dramas enter the public eye, a free model similar to Tomato Novels has emerged in mini-program short dramas: replacing payment with browsing ads. China Radio and Television Media's Hippo Theater and Byte's Tomato Short Dramas both follow this route, except that Hippo Theater still has a membership model, while Hongguo Novels' free route is more thorough.

Obviously, ByteDance wants to replicate the success of Tomato Novels, earning advertising fees from short drama companies on one hand, and quietly developing its own short dramas on the other. Just yesterday, Tomato Short Drama rushed to the fourth place in the App Store, followed by Douyin Express and Douyin. ByteDance is entering the short drama business in a group.

1. The rise of short plays

The first team to discover the mini-program short drama business was the team doing the novel CPS business. Titan explained that for the purpose of novel advertising, they shot short dramas as advertising materials, which made the short drama business have a strong sense of accounting.

According to the App Growing data report, in 2022, one of the hot investment materials for novel apps was real-life role-playing short plays, with advertisements naturally inserted into the plays.

"After companies that promote new media novels shot short videos to promote novels, they found that promoting novels requires secondary conversion. Why not just shoot short dramas?" explained Dai Riqiang, founder of Mengsheng Culture, which began incubating and producing short drama content last summer.

Titan pointed out that another key factor in the rise of mini-program short dramas is that this year, Douyin opened a path to jump to WeChat.

Before the opening, the construction of Douyin's mini program was not complete, and it was unable to smoothly and smoothly take over the huge traffic imported by paid investment. After the jump path was opened, short video materials were placed on Douyin and then jumped to the mature WeChat mini program, which created a relatively smooth conversion path.

Screenwriter Liu Yuyang from Yuan Shang Muguang started working on short dramas in September last year. “At that time, almost all short dramas on the market made money, just like the online movies in 2015.”

In the second and third quarters of 2022, when the mini-program short drama industry was just emerging, most of the entrants were new media companies and investment companies. Gradually, Dai Riqiang discovered that all companies related to the short drama industry, including those that used to produce online movies, feature-length dramas, and MCNs, came to participate.

However, the short drama industry is not as full of gold as the outside world imagines. "The short drama industry also follows the 28 principle," Dai Riqiang explained. Not everyone can make money from this short drama feast, but the good news is that they will not lose too much.

The short drama market in 2022 is still in a state of wild growth. The cost of a short drama can be controlled at around 100,000 yuan. The shooting location can be in a villa or in an office. A short drama practitioner explained that there are even companies in the industry that commission college students to write short dramas.

The production cost of this scale is much lower than that of the traditional film and television industry, and even if several films are shot in batches, the loss will not be too great.

Rather than being a content industry, early short dramas were more like a traffic industry. Even if the quality was poor and the plot was shabby, they still had their own audience.

When Titan first came into contact with the short drama industry last year, her first impression was that “the content is a bit low”. However, from an investor’s perspective, she could not ignore the rapidly growing data of the short drama industry. “We always underestimate how big the lower-tier cities in China are,” Titan said. They once doubted whether users of short dramas would get bored with the same subject matter and the same content format.

But the short drama industry has proven itself with data. Its growth rate exceeds almost all content industry categories.

According to a report by Southwest Securities, the short drama industry chain is mainly divided into two links: short drama production and distribution. Participants include online literature, game companies, MCN agencies, film and television companies, and long and short video platforms.

As Dai Riqiang said, all companies related to short dramas have come to the short drama industry to share a piece of the pie. In the upstream production link, online literature, animation, game and other companies mainly provide IP or copyrights of short dramas, and MCN, film and television companies or creative talents cooperate to shoot and produce short dramas. They can act as copyright holders of short dramas, or they can package and sell the finished short dramas to third-party copyright holders of short dramas.

The copyright holders of short dramas can directly provide them to consumers and obtain income from the audience’s episode payments and membership recharges; or they can cooperate with distributors in a TO B manner, where the distributors are responsible for launching the short dramas on platforms including long and short videos, content communities, and mini programs, as well as providing traffic for them.

According to previous statistics from ByteDance, from Q4 last year to Q3 this year, the number of copyright holders increased from 41 to 150. Online literature had the highest transformation, accounting for 48%, followed by social networking, games, e-commerce, and film and television, such as Inke.

Due to the popularity of "It's Over, I'm Surrounded by Beauties", the short drama has entered the public eye. As of November 8, China Online's increase in the past five trading days has reached 95%, and Tianwei Video has achieved five consecutive gains.

2. How does the short drama industry make money?

"There are too many unmet content demands in the sinking market," Titan said. This was the industry's overall judgment on the short drama market last year. New media articles met some of the demands, and short dramas met some of the demands.

A college student found that her father had spent hundreds of yuan on short dramas in the past month. "He only spent a few yuan or tens of yuan each time," but a little bit adds up. A typical user behavior is that a short drama user complained about the tacky plot, but couldn't help but top up 9.9 yuan, "It's too addictive."

The "2023 China Internet Audiovisual Development Research Report" shows that among the users of micro-short dramas, middle- and low-income people account for more than 70%. The audience positioning in the short drama industry is the middle-aged and elderly groups and sinking users. The platform short dramas are mainly used by female users, and the mini-program short dramas are mainly used by male users.

Liu Yuyang told Alphabet List that last year's short drama themes were mainly about war gods for men and tragic love for women. Now there are some new themes emerging, and the content is relatively richer.

How profitable is the skit industry?

Southwest Securities mentioned in the report that all links have good profits, the copyright holder's ROI can reach 1.25-1.3, and the distributor can get about 10-15% of the turnover. According to ByteDance, for a short drama with an income of 5-50 million, the screenwriter's share is about 50,000-1 million; the filming party can get a profit of 200,000-2 million for a drama.

The copyright holders and distributors receive a higher share. The copyright holders’ income comes from 10-15% of the turnover and the users’ direct purchase of a single episode. The copyright holders’ final ROI can reach 1.25-1.3. The distributors mainly need to bear the cost of streaming and 10-15% of the turnover paid to the copyright holders. On average, the distributors get about 10-15% of the turnover profit.

Of course, there are not many short dramas on the market that can achieve revenues of 5-50 million. "A drama that costs more than 10 million is a big hit," said Dai Riqiang. According to data from the Short Drama Study Room, the monthly production capacity of short dramas is 400-500, and the hit ratio is about 15%.

As more people enter the industry, the short drama industry has also entered an era of internal competition. Dai Riqiang said that the cost of a drama last year might be around 100,000 yuan, but now it is generally 400,000 yuan, and there are also dramas with higher production costs. "Short dramas have entered the era of high-quality production."

"It is necessary to be cautious when investing now," said Liu Yuyang. If you do not have high-quality resources, you should think twice. This is no longer the era of 50,000 yuan per film. Many online film producers have entered the market, and the audience's taste will soon be cultivated.

Copyright holders, filmmakers, and distributors are obviously the beneficiaries of the short drama feast. In fact, ByteDance was the first to make money in the entire industry chain.

"This industry is very hot, but in fact the gross profit margin is very low, the head effect is very obvious, and most players do not make as much money as they imagine," Titan said, adding that the gross profit of a single drama is between 8% and 13%, and the main cost is the cost of buying volume, and all the money goes to ByteDance.

According to data previously released by the Short Drama Study Room, the main battlefield for short drama releases is Douyin. Compared with the same month, Douyin's daily consumption that month has reached more than 50 million, Tencent's peak is more than 8 million, and Baidu and Kuaishou's peaks are both more than 3 million.

The quality of short dramas is important, but traffic is even more important. The industry says that the first day of traffic is the key to the growth of short dramas. Even though the short drama industry is moving towards high-quality products, it is more like a traffic business.

Douyin has always adopted a two-pronged approach to its business. It first cooperated with e-commerce platforms and then built its own e-commerce system; it first cooperated with local life platforms and then built its own store exploration and local life business ecosystem; when it comes to the short drama industry, Douyin, which is good at traffic operations, obviously will not be satisfied with just earning advertising fees.

3. Tomato skits enter the game

At the end of March 2019, Tomato Novel was launched. Three months later, Tomato Novel rose to the third place in the App Store's book category list. In 2020, Zhang Yiming started the "shopping spree" mode in the online literature industry. Within half a year, he successively invested in five online literature platforms including Wuli Culture, Xiuwen Technology, Dingtian Culture, Tadu Literature, and Jiuku Literature Network. ByteDance's IP ecosystem is gradually taking shape.

However, unlike what the outside world imagined, ByteDance would enter the traditional film and television IP industry, ByteDance's content ecosystem has entered another closed loop.

In May this year, ByteDance launched Hongguo Short Drama, which is free. It was recently renamed Tomato Short Drama. Tomato Short Drama has also recently jumped to the top of the App Store list.

"The Tomato products are not essentially a content business, but an advertising price difference business. ByteDance can do this kind of business because it can get users at a low price and support the business model," Titan said.

However, it remains to be seen whether Tomato short plays can successfully replicate the path of Tomato novels.

The positive list is that the user group of short dramas is a group of people who are sensitive to prices, and the word "free" will naturally attract a part of the group of people; after a year of rapid development of short dramas, the themes of this industry are still the same, and users are not tired of them.

The life cycle of a short drama is very short, usually only 7 days. "The short dramas collected by Tomato are all dramas that have passed their life cycle," said Titan. This means that these short dramas on Tomato have already salvaged users from the market.

"With the size of ByteDance, it will definitely affect those paid short drama platforms," ​​said Dai Riqiang. Once the Tomato short dramas gain momentum, the original payment model will inevitably be impacted. Now, Tomato is on the road to sprint. On the App Store list, except for Douyin products, the products ahead and behind it are all e-commerce products.

There is no doubt that short dramas are currently a hot track. The industry is already crowded with companies from all walks of life. Short dramas have already set off a wave of heat in the primary market. As of November 8, China Online's stock price increased by 95% in 5 days, and other short drama concept-related stocks also soared.

However, there is still an uncertainty in the short drama industry, that is supervision. At present, the review system of the short drama industry is to obtain a registration number. This industry already has a relatively complete supervision mechanism, but the strictness is far less than that of the film and television drama industry. In other words, the short drama industry still has a regulatory dividend, and all short drama companies have to do is to run as hard as possible.

Author: Tan Xiaohan

WeChat public account: Zimubang (ID: wujicaijing)