Brokerages Debate AI Short Dramas: After Production Costs Fall, Where Does the Money Flow?

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On October 21, the AI short drama and anime drama concept continued to heat up in both the A-share and Hong Kong markets. In early A-share trading, Yue Media recorded a second consecutive limit-up, Wentou Holdings hit the limit-up, and Baina Qiancheng rose more than 14% at one point; on the Hong Kong side, Duiba surged more than 40% intraday and has gained nearly 160% since the start of October, while Straw Bear Entertainment and Tongtong AI Social both rose more than 5%. On the previous trading day, Yue Media and City Media had also both hit the limit-up in early trading.

From online literature copyrights and film and television production to video models and distribution platforms, an increasing number of companies are involved in this rally. AI short drama is an important form of implementation among them, and the scope of brokerage discussion has expanded to AI simulated-live-action short dramas, medium- and long-form dramas, films and interactive content, with the cost structures and return cycles of different businesses also beginning to enter the research field of view.

Guojin, Huafu, Huaxi, Guosheng, Zheshang, China Merchants and other brokerages have successively offered their judgments in recent days. Increased supply, platform investment and model iteration are the common basis on which many institutions are bullish; but after production costs fall, whether profits ultimately stay with content companies or flow to IP, tools and channels is still difficult to answer with a single round of share price gains.

Sorting through the relevant views, after AI lowers production costs, production itself is no longer scarce, while high-quality IP, platform distribution, industrialized workflows, overseas operations and a commercialization loop become scarcer instead. But the divergence is more reflected in the choice of the order of beneficiaries and the path to commercialization: some are bullish that tool invocation will scale up first, some emphasize the bargaining power of platforms and copyrights, and others place greater imaginative space in medium- and long-form content.

Behind this round of resonance, there are four main drivers.

First, progress in model capabilities. Video models such as Seedance and Kling have continued to upgrade in continuous shots, character consistency and complex actions, and anime drama production has shifted from "single-shot generation" to "workflow production." Guojin Securities estimates that AI can compress the roughly 50-60 day production cycle of a traditional anime drama to within 30 days; after a six-person team uses an Agent, monthly output rises from 1 to 5 titles, and the production cost per minute falls from about 1,000 yuan to about 400 yuan.

Second, platforms are competing for supply. Volcano Engine launched the Seedance film and television cooperation plan, with incentives of up to one million yuan per project; Bilibili upgraded the "Awakening Anime Drama Plan 2.0"; and Tencent Huolong Anime Drama, Kuaishou and Youku are expanding their content pools with minimum guarantees, computing power subsidies and traffic support. Platforms are putting in real money, which shows that AI short drama has become a key lever for platforms competing for user time and advertising inventory.

Third, overseas markets have verified growth. ByteDance's PineDrama has surpassed 100 million cumulative downloads about nine months after launch, with about 7 million daily active users, reinforcing market expectations for the space of overseas short dramas. The business model in overseas markets can extend from the domestic IAA advertising revenue-sharing model to a hybrid model of IAP in-app payments, subscriptions and advertising, thereby raising the ceiling for monetization per user.

Fourth, content forms are "spilling over." AI video is extending from anime dramas and simulated-live-action short dramas to long-form dramas, films and interactive content. Zheshang Securities, China Merchants Securities and others believe that the pricing logic is upgrading from "AI anime drama cost reduction" to "reconstruction of film and television production methods," which gives platforms, IP, traditional film and television production and multimodal tools valuation flexibility at the same time.

Industry trends and investment directions have reached consensus

Taking the recent brokerage views together, the market has formed a relatively clear consensus. AI anime drama is not a mere thematic concept, but a scenario in AI video applications that has relatively early achieved scaled supply and commercial validation; however, production capability is rapidly homogenizing, and industry value will shift from "who can make it" to "who has high-quality IP, platform traffic, distribution capability and reusable industrialized workflows."

Huaxi, Huafu and others believe that high revenue growth in the industry does not equal widespread high profitability for production companies; traffic buying, platform revenue-sharing, content homogenization and an extremely low hit rate will still suppress midstream profit margins.

Returning to investment opportunities, these sell-side views point to three common directions. The first is the closed loop of IP and platforms; the second is tools and Agents that have already formed real invocation volume and customer payments; the third is production and distribution companies with validation from revenue, profit or leading works. For companies that have only cooperation agreements, project plans or concept labels but whose related revenue has not yet reached scale, valuation weight should be significantly reduced.

More noteworthy is the divergence, concentrated on the discussion of "who the money flows to"

Guojin Securities' most distinctive view is that "shovel sellers" may benefit first. Guojin Securities believes that as the number of creators and works surges, demand for model invocation, Agent workflows and asset management will grow in tandem, and tools that can string together script breakdown, storyboarding, video generation, voiceover, editing and asset management are more likely to charge money than a single text-to-video entry point; it is also bullish on upstream IP and downstream channels, as "the more abundant supply becomes, the scarcer validated stories and the right to allocate traffic become."

Huafu Securities understands the industry as a redistribution of the value chain. AI lowers the threshold for midstream production, yet strengthens the relative bargaining power of upstream IP, downstream platforms and model tools. Huafu Securities regards ByteDance's "Fanqie IP—Seedance/Jimeng models—Hongguo/Douyin distribution" as the first-tier closed loop.

Huaxi Securities believes that the scale of AI dramas has exploded, but profits have been squeezed. It is estimated that in 2026, the broad-market size of AI dramas and comic dramas may exceed 40 billion yuan (roughly +138% year-on-year), but the supply surge has not brought improvement in the hit rate. In the first half of 2026, among the newly added AI dramas on Douyin, only 1,055 works had over 100 million plays, a hit rate of about 0.48%; revenue per 10,000 plays fell from about 30–100 yuan to 5–10 yuan, while traffic buying may account for about 70% of full-chain costs. Lower production costs do not necessarily translate into higher profit margins.

Several other brokerages each take a side. Zheshang Securities stresses that "one should not look only at comic dramas, but at the entire AI film and television production system"; Caixin Securities recommends focusing on two main lines: mature IP and platform distribution; AVIC Securities prefers "platform builders and asset-light IP providers"; Soochow Securities and Everbright Securities judge that the valuation focus will shift from the number of works to deliverability, IP assets and tool invocation volume.

Beyond short dramas, can medium- and long-form dramas and films take over?

Zheshang Securities extends its observation scope to medium- and long-form dramas, films and interactive content. Zheshang Securities believes that traditional long-form content requires higher investment and longer production cycles; if AI can improve character consistency, long-form narrative and image quality, the value of cost reduction will extend to more film and television projects.

China Merchants Securities is also explicitly bullish on the AI film and television industry chain, listing computing power foundations, video tool iteration, industry chain participation and user acceptance as joint supports, and paying attention to follow-up opportunities brought by medium- and long-form dramas, films and interactive dramas. China Merchants Securities' bullish scope covers platforms, multimodal tools, IP, film and television, and marketing and promotion companies.

Guosheng Securities observes the expansion of AI content from four links: IP, tools, production and channels, and watches for comic dramas and simulated-human short dramas extending to longer content. Everbright Securities categorizes the beneficiary directions as content production, IP reserves and film and television tools.

However, the play data of short dramas is not yet sufficient to prove the returns of long-form content. Medium- and long-form dramas and films require more sustained character development and narrative, and must also withstand the test of user payment and distribution results. Soochow Securities proposes that the tool model forms cash flow relatively quickly, while the content model has a higher revenue ceiling and IP value, and the two may combine.

There are also several risks hanging over this "hottest theme"

The faster it rises, the more question marks hang overhead. These are the major risks mentioned by the sell side:

First, stock prices may be overpriced ahead of performance. Recently, many A-share companies have hit consecutive daily limit-ups in a very short period, while some companies' related businesses have not yet generated revenue or are still loss-making. What the market is trading is future space and merger expectations, not current profits. Once the third-quarter reports and annual reports fail to prove revenue realization, valuations will quickly revert.

Second, oversupply leads to a decline in unit monetization. Huafu Securities says that AI has lowered the threshold for midstream production, yet strengthened the relative bargaining power of upstream IP, downstream platforms and model tools. The number of works grows faster than user time, which inevitably brings declines in average plays, advertising revenue and revenue sharing, and the production side may see "revenue growth with gross profit falling instead of rising."

Third, platform rules and traffic costs highly affect profits. Huaxi Securities' research shows that the scale of AI short dramas has exploded, but profits are squeezed by traffic buying and platform rules. Under the domestic free model, platforms control recommendation, advertising and revenue-sharing rules; under the overseas model, app store commissions, user acquisition costs and localized operations likewise eat into profits.

(Source: Cailian Press) Mid-body of the article: embedded advertisement