AI Content Abundance Creates New Industry Challenge In China: Falling Costs, Rising Competition And Shrinking Margins
In Brief
China’s AI short drama market faces overproduction challenges as falling costs, rising competition and weaker monetization pressure the industry to prioritize quality.
China’s AI-generated short drama industry has expanded at a startling pace this year, but new data suggests the sector is now colliding with the limits of an “abundance” model built on cheap content alone.
According to a report from research firm DataEye, roughly 1,300 new AI-produced short dramas are now uploaded daily across Chinese platforms — a pace that, extrapolated from first-quarter data, would total over 120,000 titles released industry-wide in just three months, with AI-driven productions accounting for more than 95% of all new releases.
The surge has been driven by fast advances in video-generation models and production tools that allow creators to convert an entire novel into a finished short drama with minimal manual effort. Production costs for AI short dramas have fallen by roughly 90% compared to live-action equivalents, with a polished AI production now costing under 200,000 yuan versus around 1.5 million yuan for a traditional live-action series.
Traffic Costs Are Eating Into Profits
That cost collapse has not translated into broader profitability. Because production itself makes up only a small share of total spending, the real battleground has shifted to advertising and audience acquisition, which now account for roughly 70% of total outlays.
As a flood of AI-made dramas competes for the same pool of viewers, the cost of reaching 1,000 impressions has more than doubled year-on-year, while revenue per 1,000 views has dropped from around 60 yuan in late 2025 to just 15–30 yuan now — nearly halving returns even as advertising spend climbs.
The combination of soaring acquisition costs and falling per-view revenue has squeezed margins industry-wide. Top-tier production companies are still largely profitable thanks to higher-quality output and more professional operations, but mid-tier firms now see profitability rates of only 3–5%, and companies below that tier rarely exceed a 2% chance of turning a profit.
The “hit rate” for breakout success has also collapsed: among newly released AI comics-style dramas fewer than 1 in 1,000 titles becomes a breakout, a success rate below 0.1%.
Industry figures cited in the report, including executives from Beijing Jutou Technology and Banshui Technology, suggest the sheer volume strategy — flooding platforms with low-cost content and betting on probability for hits — has reached its practical limits.
Rising token costs, tightening platform content review, and new regulation taking effect July 1 — the National Radio and Television Administration’s classification standard for AI micro-dramas — are expected to push the industry away from a “volume over quality” approach and toward more selective, higher-quality production as the sector matures.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
