New content types are needed to meet the demands of a changing marketplace
The significant changes that the market is experiencing are also encouraging new types of content to better exploit the changes. Vertical video formats created for mobile viewing have, for example, successfully driven the growth of short-form video, especially in the mobile-first region of Asia.
Omdia data shows that Oceania, Eastern & South-Eastern Asia is the subregion with the highest mobile data connection penetration, with an average of one person having 2.7 mobile data connections, followed by North America with an average of one person having 1.9 mobile data connections. The short-form video trend has evolved into the introduction of the micro-drama format, which is available via micro-drama apps and social media platforms.
The micro-drama trend first started in China in 2018, but its popularity only surged around 2023. Micro-drama content rights holders and distributors are mostly online literature platforms from China. These platforms took the opportunity to launch micro-drama apps internationally to monetize their library of literature, targeting audiences outside China. The international launch of micro-drama apps started around 2023–24. Notable micro-drama apps include DramaBox, DramaWave, ShortMax, ReelShort, and GoodShort.
In terms of revenue, micro-dramas appear to offer an extremely lucrative video product opportunity compared to traditional films and dramas, with significantly lower production costs and shorter production cycles. In addition, artificial intelligence (AI) further facilitates the production of micro-dramas in terms of cost efficiency.
Riding on the growing micro-drama trend wave, market players in the media industry – including content holders, advertisers, and online video services – have started to see this as an opportunity to diversify their revenue streams. Including micro-dramas on online video platforms will help to diversify video product offerings, generate new revenue streams, and act as a distribution platform for both long-form and short-form content.
The first few episodes of a micro-drama are usually offered for free, and these episodes tend to finish on a cliffhanger to keep viewers hooked. Viewers will then need to pay a fee to unlock the remaining episodes. Depending on the app, users can opt to continue viewing by watching ads, paying for a subscription, or paying per episode via virtual coins.
The monetization model for micro-drama apps is more flexible than traditional online streaming services for consumers. While high subscription fees can lead to increased churn rates, providing this as an option helps maximize revenue for these platforms. Additionally, the sale of virtual coins –often only available for a limited time – encourages viewers to make purchases to take advantage of exclusive deals, effectively driving in-app purchase revenue growth for the micro-drama apps.
Omdia predicts that the micro-drama trend will continue to grow globally, especially in Asia and the Americas. Apart from a growing number of micro-drama apps, major streaming companies will also follow the lead to introduce vertical-format short drama as an additional video product within their existing platform. Given their low market entry point, micro-dramas present valuable business opportunities for companies across various sectors, including short and long-video platforms, traditional film and TV companies, online literature platforms, advertisers, and gaming platforms.
Beyond China, the micro-drama market has seen exponential growth and Omdia anticipates disruption in the video market as more video platforms will experiment with the short-video format by capitalizing on the micro-drama trend.