(Yicai) March 13 -- China’s booming short drama industry is undergoing a major shift as artificial intelligence reshapes production economics, leading to job losses, company closures, and falling demand for mini-drama studios.

The disruption comes as companies increasingly replace live-action productions with AI-generated content due to significantly lower costs. The transition is also weakening the advantages that helped cities such as Xi’an and Zhengzhou emerge as major short-drama production hubs.

According to a report by the China Netcasting Services Association, China’s short-drama market reached CNY50.4 billion (USD7.3 billion) in 2024, up 35 percent from a year earlier and surpassing China’s annual box office revenue for the first time. The micro-short drama sector directly employs about 219,000 people and indirectly supports another 428,000 jobs, creating about 647,000 employment opportunities. 

The changes highlight how AI could further reshape the industry’s employment structure and production model, as companies cut costs and reduce reliance on physical filming infrastructure. 

Industry Workers and Film Bases Feel Immediate Pressure

Before this year’s Chinese New Year, Wang Benzhi secured a production manager role at a short-drama company and planned to start after the holiday. However, his start date was repeatedly delayed, and earlier this month he was told the company had halted its live-action project and was fully shifting to AI productions, eliminating the need for his position, he told Yicai.

Wang said he has contacted several other short-drama companies, only to find many had already transitioned to AI production while others had shut down entirely. As a result, securing stable employment in the sector has become increasingly difficult.

Liu Gangtao, an employee at the Dream Factory Studio Base in Xi’an, said the facility’s filming schedule used to be updated almost weekly last year due to strong demand. Now, as of March, less than half the schedule board is filled.

“During the busy times last year, there were usually seven or eight production crews filming simultaneously at the base,” Liu said. He added that heavy electricity use sometimes caused voltage instability and even burned out transformers.

However, when Yicai visited the site recently, only two production crews were filming, including one long-term client that had signed an annual framework agreement. Such clients were introduced this year, with the base offering about a 40 percent discount compared with standard rental rates.

Managers at several short-drama filming bases in Zhengzhou also told Yicai that while previous years saw constant activity during this period, it is now common to go half a day without seeing a single production crew.

Several cities without strong traditional film and television industries rapidly developed into “short-drama capitals,” including Xi’an and Zhengzhou.

According to Xi’an Daily, the city had more than 200 short-video production companies by 2023, with about 60 percent of China’s micro-short dramas produced there. The boom also led to the development of film bases and industrial parks supporting the upstream and downstream segments of the industry.

AI Reshapes Short Drama Production Economics

However, the rise of AI has significantly altered the live-action short-drama market. Wu Qiang, head of a Xi’an-based short-drama production company, told Yicai that producing an 80-episode series previously required more than CNY300,000 (USD43,570) in actor salaries alone, with total costs exceeding CNY400,000.

Using AI, however, production costs can fall to just over CNY100,000, he said, as there is no need to hire actors or rent props and locations, with a single computer able to complete the work. Actor costs have effectively fallen to near zero, demand for physical filming locations has shifted toward computing power rentals, and post-production editing is increasingly being replaced by algorithms.

Wu added that cities such as Xi’an and Zhengzhou rose quickly as short-drama centers largely because of their relatively low costs for locations, materials, and labor, which enabled low-cost industrialized production. With the rise of AI, however, those cost advantages are disappearing.


Editor: Emmi Laine