The trend of short dramas going overseas has reached Shanghai Lingang. What kind of companies can stay at the table?

(Source: Shanghai Observation News)

Recently, digital culture company Guan Shi Qian Yao settled in Lingang New Area, focusing on short drama production and overseas expansion. Over the past six months, Lingang has gathered more than a dozen short drama-related companies, all of which are expanding into overseas markets.

In recent years, the domestic short drama industry has experienced an explosive growth, driving rapid expansion in overseas markets. A group of entrepreneurs have entered the scene, replacing domestic themes like “霸总” (bossy CEO) and “rebirth” with foreign faces, adding English subtitles, and targeting Europe, America, Southeast Asia, and other markets, attempting to replicate traffic miracles abroad. Data shows that over 300 Chinese short drama apps have gone overseas, with leading platform ReelShort once surpassing TikTok to top the US App Store download charts. By the first three quarters of 2025, the Chinese short drama export market had exceeded $1.5 billion.

However, in just a year or two, the trend has begun to shift. Many once-flourishing teams are now facing losses, and the industry has shifted from a “gold rush for everyone” to a “pressure on most.” As the boom recedes, the industry reaches a critical crossroads: why has the previous dividend faded? What kind of companies can stay in the game? At this moment, where is the next opportunity?

Boom receding: From traffic dividends to capability dividends

Guan Shi Qian Yao’s predecessor was a film and TV company with many years of experience in long-form dramas. Last year, they decided to pivot to short dramas. According to partner An Ran, after several years of development, domestic short drama exports have formed a stable commercial closed loop. This year, with platform maturity, user habits forming, and monetization models running smoothly, a large influx of capital and teams has begun, making short dramas one of the fastest-growing content formats globally.

Although overseas markets are still in a competitive stage compared to China, making money is far from easy. MCN agency Grape Media, which has deep experience in overseas video platforms, feels this most acutely. “One or two years ago, there were many doing overseas short dramas, but that has clearly decreased recently,” said Vice President Li Jinxin. The reason is harsh—people are gradually realizing that only a few can truly make stable profits, and most are losing money.

A common view is that short drama exports are shifting from traffic dividends to capability dividends.

Li Jinxin analyzed that the early explosion of domestic short dramas relied on a strong supply of web novel IPs, fast-paced, satisfying storytelling, and industrialized mass production. After going overseas, this model was directly copied: translating and adapting popular domestic scripts, having overseas teams shoot, or using foreign actors on domestic sets, then launching on overseas platforms.

In this industry chain, many small and medium production teams like Guan Shi Qian Yao and Grape Media serve as contractors. They take on orders from platforms or rights holders, responsible for filming, editing, and post-production, earning guaranteed production fees and revenue sharing after release. Another more direct approach is translation and dubbing: translating popular domestic short dramas into multiple languages for distribution through overseas channels, earning traffic and ad revenue.

Rather than “cultural export,” the logic of short drama overseas expansion resembles exporting a data-driven industrialized content production methodology. The initial wave of overseas short dramas was based on China’s massive web novel IPs, which accumulated extensive user data domestically. Insights into what themes go viral and what twists retain viewers are modeled clearly. With simple localization, these can quickly break into new markets.

But as the industry matures, the competitive logic is changing. Many practitioners realize that the era of universal traffic boom has passed. For small and medium production teams, previously overlooked risks are now surfacing.

Most notably, costs are rising. Producing overseas short dramas was once simple: shooting domestic hits abroad. But this path is no longer easy. An Ran cited Bulgaria as a popular overseas filming location for Chinese productions, with mature infrastructure and abundant production resources. However, geopolitical conflicts, energy shortages, and soaring prices have sharply increased shooting costs.

Some teams choose to build European or American sets domestically, but even with lower overall costs, new issues arise. Overseas audiences prefer local faces, but there are few Western actors in China, and their skills vary. As viewers shift from initial novelty to higher demands for quality, acting, and scenery, rough content is easily discarded.

Industry competition is also intensifying. The consensus in short drama profitability is: production is not the biggest cost, traffic investment is. A short drama costing around $100,000 to $200,000 often needs several times that amount in advertising spend to become a hit. Leading platforms, with data and traffic channels, can test precisely and reinvest efficiently, making ROI relatively controllable. But many small and medium teams lack funds, have little data, and face high trial-and-error costs, easily falling into a cycle of “more filming, more losses.” The industry is gradually consolidating into a head-dominated pattern, squeezing profits for smaller contractors.

Another notable trend is the rise of local overseas short drama companies. Since this year, giants like Google and Hollywood, along with traditional film and TV forces, are accelerating their entry into the global short drama market. Li Jinxin believes that for Chinese producers, the previous “disruptive” advantage is waning. As the industry shifts from extensive growth to industrialization and quality focus, Chinese short dramas going abroad have entered a new stage emphasizing quality, long-term operation, and strategic planning.

“AI+” as a new industry variable

Facing these challenges, both companies share a similar approach: abandon short-term speculation, focus on content and technology, and build long-term competitiveness.

Li Jinxin believes that the core logic of short dramas remains “those who get content, get traffic.” While domestic hits remain an important reference for overseas creation, adapting to local markets, keen market insights, and user analysis are now more critical. For example, Western markets value logical coherence, with fewer satisfying points but no absurd storytelling; Southeast Asian audiences prefer fast-paced, highly twisty plots; Middle Eastern regions are particularly fond of themes like family and brotherhood, which are less popular domestically.

Breakthroughs in AI technology are becoming a recognized new variable. Data shows that by 2026, AI animated dramas (including AI virtual human dramas) will account for nearly 30% of the total 8.67 billion views during the Spring Festival period. Industry forecasts predict that the user base for AI animated dramas will grow from about 120 million in 2025 to 280 million in 2026, with a market size reaching 24 billion yuan.

The most fundamental change is that AI has thoroughly reconstructed the production costs and methods of short dramas, achieving extreme cost reduction and efficiency. An Ran calculated that traditional overseas filming of short dramas costs at least nearly $100,000 per project. AI animated dramas are priced per minute, with ordinary quality costing around 100 yuan, and high quality about 2,000 yuan. Even the latter, a 60-minute animated drama, costs less than $20k—only a tenth or less of traditional filming costs.

AI short drama “Huo Qu Bing” (Huo Qubing) still.

Moreover, since AI is not limited by scene, weather, or personnel, it can reduce the production cycle from several weeks to just a few days. Once the process is streamlined, the cost of replication is extremely low, theoretically allowing unlimited output. With breakthroughs like Seedance 2.0 domestically, this efficiency will continue to improve, opening space for various genres and greatly enhancing China’s competitive edge in going abroad.

“In the mainstream mobile viewing scenario, AI animated dramas’ visual quality already meets user demands. To some extent, AI makes ‘everyone a producer’ possible, very suitable for small teams or even solo entrepreneurs starting with low costs and lightweight operations,” An Ran said.

This cost advantage is also changing platform procurement logic. Li Jinxin revealed that platforms previously purchased many real-shot short dramas but are now gradually shifting toward testing and acquiring AI animated dramas. AI is increasingly becoming the industry’s mainstream production method.

How the entrepreneurial ecosystem can support the next stage of short drama exports

While AI boosts productivity, it also drives short dramas from content industry into a new stage driven by computing power. Massive creative ideas are rapidly realized, and many AI short dramas are continuously going overseas, supported by increasing computing power needs and stable, high-speed, compliant data channels to overseas.

In this context, a good industry ecosystem can help entrepreneurs better seize opportunities. In recent years, Lingang has focused on digital culture and cross-border data, launching the C5 entrepreneurial support system for small teams and solo entrepreneurs, creating exclusive OPC communities, and releasing measures to develop a “super individual” economy in Lingang New Area. These include providing accessible computing power, low-cost spaces, cross-border compliance support, and international network services. In less than half a year, over 150 teams involved in short drama exports and cross-border services have gathered in the OPC community.

“The key difference in short drama overseas production is not where it’s done, but whether policies and industry ecology are compatible,” Li Jinxin said. Lingang’s direct overseas network links, efficient data transfer, abundant computing resources, and supportive policies for digital culture and digital entrepreneurship make it ideal for AI-driven short drama R&D, translation, distribution, and operation, helping companies reduce costs and grow steadily.

Major platforms have also launched AI animated drama creation features.

2026 is predicted to be the “AIGC content industry year one.” Besides Lingang, many regions in Shanghai are accelerating their layout of the “AI+short drama” industry. In March, the Zhangjiang Qingchuang Camp AIGC Short Drama Startup Base was inaugurated, covering computing services, AI animated drama production, digital cultural innovation, and talent training, providing comprehensive hardware and support services for related companies and startups.

However, as AI liberates productivity, does it also diminish the core value of creation? An Ran believes that although AI can quickly generate storyboards and complete basic drawings, the abstract creative abilities unique to humans—such as emotional rhythm, shot design, and artistic aesthetics—can never be replaced. “AI reduces physical labor costs and improves content production efficiency, but the ultimate quality of a work still depends on human creativity and aesthetics.”

The trend of short drama exports continues, but how far it can go remains uncertain. An Ran is confident of one thing: the industry is bidding farewell to wild growth and entering a stage of internal strength competition. Companies willing to focus on IP, control quality, read users, and embrace technology will not be easily swept away regardless of how the boom shifts.

Title: “The Short Drama Export Wave Has Reached Shanghai Lingang—Which Companies Can Stay at the Table?”

Column Editor: Mao Guanjun Image Source: Online Material

Source: Author: Jie Fang Daily, Shen Siyi