In these past six months, it seems as if the creators of short-form dramas have gone through half a lifetime's worth of challenges and hardships.

Summary of Key Points

The short-form drama market in the first half of 2026 was like a rollercoaster: During the Spring Festival season, live-action short dramas were still very popular, but after the festival, the policy that guaranteed minimum payments to platforms (to cover costs) was abolished, leading to a sharp decline in the production rate of live-action dramas. A large number of practitioners shifted to AI-driven short dramas, resulting in a surge in output yet a plummet in the success rate of these works. Policies towards AI-driven dramas have shifted from encouragement to stricter regulation, intensifying industry consolidation. Live-action dramas are trying to maintain their position through seriesization and differentiated themes, while AI-driven dramas face challenges from both regulatory oversight and reduced profits. Expanding into overseas markets has become a new direction for development, but only the top teams have a significant advantage. Overall, the industry has moved away from easy profits; only those with high-quality content and technical expertise will survive.

I. Live-action Short Dramas: From Widespread Success to Focused Competition

The abolition of the minimum payment policy after the Spring Festival left small and medium-sized teams without financial support, causing a dramatic drop in the production rate of live-action dramas. However, live-action dramas have not been completely abandoned:

• Clear Trend towards Consolidation: Companies like Shengxi Huashi focus only on projects with well-known actors, cutting out those featuring less famous performers. The few surviving live-action dramas are either part of established IP series (such as the "Grandma" series) or feature unique themes that resonate with audiences (realistic, family-oriented stories that provide emotional fulfillment).
• Performance Still Matters: In March 2026, two live-action dramas generated over 8 million in revenue per month, and more than 200 dramas earned over 1 million each, indicating that audiences still value high-quality content. AI-driven dramas have actually pushed live-action dramas to improve their quality; if the live-action version of an IP is poorly made, viewers may criticize it as inferior to the AI version. As a result, live-action dramas now place more emphasis on detail.
• Division of Teams: Few companies still specialize solely in live-action dramas; most adopt a dual approach, with some shifting heavily towards AI (for example, Chengdu Zhongdu Technology).

II. AI-driven Short Dramas: A Market Boom and Bust Driven by Policy Changes

The first half of the year saw a period of rapid expansion for AI-driven dramas, followed by stricter policy measures:

• Initial Overexuberance: Platforms offered high commissions (60% for AI dramas and 50% for 3D anime-style dramas), leading to a surge in production (AI-driven dramas accounted for 95% of the total output in Q1), with some even temporarily outperforming live-action dramas in popularity (such as "Bodhi's Reincarnation" AI version).
• Subsequent Regulation: In April, platform commissions for AI dramas were reduced to 40%. In July, broadcasting authorities introduced new classification standards, distinguishing between high-quality (over 800,000 yuan in revenue) and lower-quality (300,000–800,000 yuan) content, making it harder for AI-driven dramas to be produced carelessly.
• Challenges for Small Teams: The era of high commissions is over, and profits have decreased, leading to layoffs at many companies (with numerous job postings related to anime-style drama production on platforms like REDnote). Now, AI-driven dramas must focus on producing high-quality, concise content to survive.

III. Changing Industry Roles: Screenwriters Becoming More Involved in Production

The emergence of AI-driven dramas has expanded the roles of screenwriters:

• In Live-action Dramas: Screenwriters focus on writing the plot and dialogue, leaving the direction of fight scenes and camera movements to directors.
• In AI-driven Dramas: For low-budget projects without dedicated directors, screenwriters must specify every detail (e.g., "a fantasy battle scene where the protagonist swings a sword with the camera moving from bottom to top") so that the AI can generate the correct visuals.
• For High-budget AI Dramas: Directors still play a role, but in most mid- to low-budget projects, screenwriters must take on additional directing responsibilities. This poses a challenge for screenwriters but also highlights the importance of content quality; those skilled with AI tools can transform their scripts directly into finished products (for example, Erdong's team used AI to adapt their own novels).

IV. Expanding into Overseas Markets: A New Opportunity or a Pitfall?

Expanding overseas was initially unprofitable, but TikTok's success in May has renewed interest: Some dramas generated over 21 million in revenue per month, with the highest earning up to 1.8 million. However, not all teams are suited for this:

• Small and Medium-sized Teams: They can try, as overseas platforms often look for domestic-style hits (similar to AI-driven dramas), but high-quality scripts are in short supply, so success depends on the content.
• Top Teams: They have a greater advantage; for instance, Tinghuadao, which specializes in female-oriented content, can find a market abroad due to universal appeal.
• Caution for Small Teams: Without mature content and distribution capabilities, entering overseas markets can be difficult, as they may struggle with cultural differences and unsuitable content.

V. Future Trends: A Golden Age for Screenwriters?

Despite the turmoil of the first half of the year, industry insiders are optimistic about the future:

• Opportunities for Live-action Dramas: The popularity of top actors continues, and there could be a surge in demand in the second half of the year, but only high-quality teams will seize these opportunities.
• Enhanced Status for Screenwriters: With AI tools becoming more accessible, screenwriters who master them can significantly impact content quality, leading to a greater role in production (for example, Jiulu Feixiang's use of AI to remake their novels, which became viral).
• The Inevitable Role of AI: Whether creating live-action or AI-driven dramas, screenwriters must learn to use AI for assistance; otherwise, they will be left behind.
• A Healthier Industry: The industry will become more competitive, with only those who understand content and technology thriving. The "golden age" for screenwriters is ahead.

In summary, the short-form drama market in the first half of 2026 was a period of significant change, eliminating teams that relied on temporary trends. Only those with genuine talent and expertise will succeed. AI is not an enemy but a tool; live-action dramas are not doomed—success depends on producing high-quality content. In the future, only those who understand both content creation and AI technology will have a solid foundation in the short-form drama industry.