Summary of Key Points
Kunlun Wanwei's overseas AI short drama project has recently faced a wave of salary disputes, with multiple screenwriters reporting that their fees have been delayed for several months. The company claims that the delays are due to an internal anti-corruption investigation, but there are differing opinions on the details of this investigation. Meanwhile, Kunlun Wanwei's revenue increased by 44% in 2025 to 8.198 billion yuan, yet it suffered a significant loss for the second consecutive year (a net loss of 1.593 billion yuan), mainly due to excessive investment in AI and overseas short drama businesses. Overseas short dramas rely on a "money-burning" model to generate profits, which makes them less profitable compared to competitors like Dianzhong Technology. The company's founder, Zhou Yahui, recently stepped down as a director and is now focusing on the AI computing field. The new management team faces challenges in both business profitability and internal management, as Kunlun Wanwei is in a period of transformational pain.
Detailed Analysis
1. Salary Disputes: Anti-Corruption Investigation or Deliberate Delay?
Multiple screenwriters involved in Kunlun Wanwei's overseas short dramas have not received their fees on time, with amounts ranging from several thousand to 110,000 yuan, and some have waited for up to five months. The company's explanation is an "internal audit investigation." Xia Fan (alias Frank), who was in charge of the project, reported corruption within the department, and the affected teams are on vacation, requiring the screenwriters' cooperation with the investigation before payment can be made. However, after the screenwriters submitted their materials, there was no further progress from the company, and some were even advised to file a lawsuit to get their money.
Kunlun Wanwei claims that the screenwriters' content is inaccurate, but they have communication records to prove otherwise. There could be two possible scenarios: either there is indeed an investigation into corruption (such as overreporting of fees or accepting bribes), but the process is too slow; or the company is using the investigation as a pretext to delay payments, given the high costs associated with overseas short dramas. Either way, it creates an uncertain situation for creators, where whether they receive their money depends on luck.
2. Rising Revenue, But Higher Losses: Where Did the Money Go?
Kunlun Wanwei's revenue in 2025 reached 8.1 billion yuan, a 44% increase year-over-year, but it still had a net loss of 1.59 billion yuan, or 1.7 billion yuan after excluding non-recurring items. The money was mainly spent on two areas:
- AI Research and Development: 1.676 billion yuan (an 8.6% increase year-over-year) was invested in large models and AI technology, with no immediate returns.
- Overseas Short Dramas: Operating costs amounted to 2.574 billion yuan (a 71.9% increase year-over-year), far exceeding revenue growth. Short dramas rely on advertising to attract users—investing in Meta and Google to encourage downloads and subscriptions. The higher the revenue, the more money spent on advertising, creating a cycle where profits are not enough to cover costs.
In short, Kunlun Wanwei is "using today's money to bet on tomorrow's growth," but this strategy has led to increasing losses rather than profit.
3. Why Are Overseas Short Dramas a "Money-Burning Game?"
The logic of the overseas drama industry is "buy traffic → attract users → generate subscriptions → buy more traffic." However, profitability is difficult to achieve:
- High customer acquisition costs: To attract more users, companies must pay for advertising on platforms like Meta and Google, which become more expensive as user numbers increase.
- High content development risks: It's costly to test whether a script will be successful or appealing to consumers, with a low chance of creating hits.
- Revenue does not equal profit: Although Kunlun Wanwei's products like DramaWave have high download volumes, the revenue generated may not cover the costs of advertising and production. For example, Dianzhong Technology's short dramas have a net profit margin of less than 1%, which is already considered good in the industry, while Kunlun Wanwei is likely losing money.
This is similar to running a milk tea shop: selling 100 cups a day, but expenses for rent, ingredients, and marketing exceed revenue, resulting in losses.
4. Comparing with Dianzhong Technology: Why Can They Profit While Kunlun Wanwei Cannot?
Dianzhong Technology's overseas short drama business generated 530 million US dollars and was profitable, mainly due to its "high content efficiency":
- Existing IP portfolio: Dianzhong previously focused on mobile reading and has a large collection of popular web novels that can be directly adapted into dramas, reducing the need for time-consuming scriptwriting.
- More targeted advertising: Their content has already been validated by the market, allowing them to target users who are likely to engage with their products, minimizing waste.
- Strict cost control: Dianzhong Technology has a gross profit margin of 10%, while Kunlun Wanwei's net profit margin for short dramas is less than 1%. With no existing content base, Dianzhong can operate more efficiently.
5. Zhou Yahui's Transition: Can the New Management Team Overcome the Challenges?
Founder Zhou Yahui has left Kunlun Wanwei to focus on AI computing (Aijieke Xin). The new chairman, Fang Han, has a technical background and is in charge of large models. However, the new team faces two major challenges:
- Cash flow pressure: Developing large models requires funding, while overseas short dramas are a source of cash but currently causing losses and salary delays.
- Internal management issues: The anti-corruption investigation and resulting delays indicate that the company expanded too quickly without proper management in place.
- Business transformation difficulties: Kunlun Wanwei's existing businesses (Opera, StarMaker) are growing slowly, and the new businesses (AI, short dramas) have not yet become profitable. The new team must prove their profitability to gain market confidence.
In summary, Kunlun Wanwei's problems lie in the inefficient use of funds and inadequate internal management that cannot keep up with its rapid expansion. The ability of the new management team to resolve these issues will determine whether the company can transition from a "money-burning" growth strategy to stable profitability. For creators, collaborating with such companies requires caution, as the payment process is highly uncertain. For investors, it's crucial to see if Kunlun Wanwei can convert its investments in AI and short dramas into actual profits; otherwise, the stock price may continue to decline.