Revenue Doubles, Profits Plummet: China's Short-Drama Export Boom Hits Its Darkest Hour

Surge in top-line, collapse in profits

China’s short-drama export rush is showing a stark contradiction: booming revenue but worsening losses. Sensor Tower data shows global in‑app spending on short‑form drama apps jumped to $2.8 billion in 2025, a 116% year‑on‑year rise, and Chinese firms reportedly account for more than 95% of that market. Yet it has been reported that several early movers are deep in the red — for example, Zhongwen Online (中文在线) has seen cumulative losses since 2018 balloon into the tens of millions of dollars and reportedly expects a 2025 adjusted net loss in the range of RMB 579–699 million; iReader (掌阅) posted fast revenue growth from its derivative short‑drama business but swung to a large consolidated loss in recent quarters.

Why scale isn't solving the problem

Why do bigger audiences not translate to profit? Industry insiders say the economics hinge on two brutal realities: overseas ARPU and retention are lower than domestic levels, and customer‑acquisition costs are soaring. DataEye reportedly estimates the overseas short‑drama market at roughly RMB 28 billion—only about a quarter of China’s domestic short‑drama ecosystem—while seven‑day retention and per‑user spend in mature Western markets remain weaker than at home. The result: producers are burning vast sums on paid promotion (some claim up to 80% of budgets go to acquisition), and an oft‑cited industry rule of thumb is that 80–90% of exported titles never recoup investment.

AI, localisation costs and geopolitics: no easy fixes

Many hope AI will cut production costs. Seedance 2.0 has been credited with improving AI‑generated video quality and speeding content creation, and it has been reported that AI can now produce thousands of short clips a day — but that does not solve rising marketing spend, localisation costs, or limited paying audiences abroad. Add to that geopolitical friction, tighter content and data controls in major Western markets, and the need to hire local talent and services in Los Angeles or London — all forces that raise the break‑even point. The short‑drama export playbook that looked like a cross‑border extension of China’s domestic traffic model is now facing a reckoning: can the industry consolidate and find sustainable unit economics, or will scale only deepen the losses?