China’s AI short-drama market expanded rapidly in the first half of 2026, but the output did not bring broad profitability. Statistics cited by The Paper showed that 221,900 AI short dramas went online during the period, and 98.7% of them ended up losing money.
By that calculation, only one out of every 77 titles was able to cover its costs. The report described an industry running on extreme volume while leaving most participants without returns.
Massive viewing figures failed to convert into profits
The 221,900 titles generated a combined 515.738 billion views in six months, but that audience scale did not convert into earnings for most producers.
Lin Qiwen, vice president of Chinese ad placement analytics firm DataEye, said many practitioners believed AI would lower the barrier to production. In his view, that same dynamic also caused creators to lose money faster.
AI live-action-style dramas cooled after an early surge
DataEye said AI live-action-style short dramas began to surge in March, and the format’s share of new releases at one point approached 65%.
Viewer demand, however, did not keep pace with the rise in supply. The share of total views taken by live-action-style AI dramas once climbed to 80%, then fell back to 68% in June, down about 12 percentage points from the high. The report said audiences were showing fatigue with increasingly similar AI-generated faces.
Live-action short dramas also came under pressure
The older live-action short-drama business was hit as well. On the Hongguo short-drama monthly ranking, the number of new live-action titles dropped from a February peak of 432 to just 110 in June, a decline of more than 60%.
Audience structure shifted at the same time. According to the report, viewers of AI short dramas and animated short dramas rose from 120 million last year to 600 million, while live-action short dramas had 251 million viewers. The gap widened over the course of six months.
Regulatory review rules and support measures moved in parallel
As pressure on the live-action film and television sector grew, China’s National Radio and Television Administration on May 14 released the Implementation Plan for the Creation and Distribution of Premium Micro Short Dramas. Under that plan, six key platforms will invest at least 6 billion yuan to support high-quality live-action micro short dramas.
At the same time, authorities also used the Measures for the Development and Management of Micro Short Dramas to set review checkpoints for AI short-drama output, putting scrutiny on one side and support on the other.
The report’s conclusion was that low-cost replication, once treated as the sector’s defensive advantage, is no longer enough. Making a drama is no longer the difficult part. The harder question now is whether audiences are willing to watch it, and how platforms will carry out the review responsibilities set by regulators.