Goldman Sachs said in its latest research note that AI is reshaping the value chain of China’s entertainment industry. The bank said content supply is moving closer to abundance, while user time and attention remain limited, a mismatch that could drive more industry profit toward top IP and distribution platforms.
The report said multimodal AI has already reduced production costs by 80% to 95% across animation, music, advertising videos and short dramas. Production efficiency, it added, has improved by 5x to 10x.
Output is rising fast
Goldman Sachs said that in the first eight months of 2026, output of short dramas and mini-series was 13 times the full-year 2025 level. New game releases rose by more than 8 times. On Hongguo, a leading short-drama platform, more than 90% of series have adopted AI-generated content.
Benefits will not be shared evenly across the chain
Goldman Sachs said an explosion in content supply does not mean every part of the industry will benefit. The value of traditional production and execution functions is likely to be compressed, while the scarcity of top IP and creative assets may become more pronounced.
For content distribution platforms, the bank said they may benefit from supply growth. At the same time, the competitive moat built around copyrighted content libraries could come under pressure if AI-generated content becomes widespread.
Different tracks face different pressure points
Among subsectors, Goldman Sachs said online gaming appears relatively more resilient. Major publishers including Tencent and NetEase may use AI to extend the life cycle of mature IP. Long-form video platforms may see short-term gains from lower costs, but over a longer period they still face pressure from declining user time and from AI content eroding the advantage of copyrighted libraries.
Two risks remain
Goldman Sachs also said AI entertainment still faces two major risks: difficulty in monetization and tighter regulation.