Key facts
- AI video generation tools have drastically reduced production costs for microdramas in China.
- Over 120,000 microdramas were released in the first three months of 2026, with 95% generated by AI.
- The microdrama industry's shift to AI has led to a "bitter winter" for live-action productions and actors.
- Microdramas are a growing export for China, with overseas revenue reaching $1.5 billion in the first eight months of 2025.
- New regulations in China will require microdrama plots to adhere to 'correct political direction' starting in September.
China's microdrama industry is rapidly shifting from live-action productions to AI-generated content, a transformation that is impacting jobs and positioning the country for a new wave of service exports. While China's significant goods trade surplus has drawn attention to sectors like electric vehicles and solar panels, a less visible shift is occurring in services, with exports rising significantly.
In the town of Hengdian, nicknamed "China's Hollywood," filming sets for microdramas are falling quiet as AI-video generation tools have become dominant. These tools can produce the popular, vertically shot, short-form shows at a fraction of the cost. According to Chinese state media, over 120,000 microdramas were released in the first three months of 2026, with 95% of them generated by AI. This technological disruption is creating uncertainty for creatives, with actors like Junlin reporting a "bitter winter" due to fewer production opportunities.
Microdramas, typically consisting of 90-second episodes that weave together longer plotlines, first gained popularity during the pandemic. They have since expanded globally, with overseas revenue reaching $1.5 billion in the first eight months of 2025, a nearly 195% increase year-on-year. The global download of Chinese micro-drama apps also surged during the same period. This model, which relies on direct user payments through apps, allows for faster expansion and replication in overseas markets compared to traditional content exports. Chinese companies are increasingly adapting scripts for local audiences and employing local actors and production teams, moving beyond simply translating Chinese hits.
The widespread use of AI is accelerating changes across the industry, from script development and translation to editing and recommendation systems, thereby reducing costs and production cycles. This trend is being closely watched by China's censors, who are set to implement new rules in September requiring microdrama plots to "adhere to correct political direction."