Red Fruit's minimum guarantee policy collapse pushes animated dramas into survival mode

A surge in traffic around "AI-generated live-action short dramas" is set to trigger a major market shake-up in May 2026.

Recently, the news that Hongguo Short Drama has ended its guaranteed revenue policy for AI-generated live-action dramas has sent shockwaves through the industry. Several industry insiders confirm that Hongguo has shifted its AI short drama cooperation model from "guaranteed minimum plus revenue sharing" to "pure revenue sharing (around 20%)." This means the "guaranteed milk" that once enabled many small studios to thrive is no longer available.

The real story behind the market data: the trend is shifting from "rapid growth" to "loss control"

This shift in the short drama market was hardly surprising. The evolution of market data clearly traces the journey from capital-driven growth to a return to rationality:

Peak traffic consumption: Since 2026, the market share of AI short dramas has surged. In January, AI-generated live-action performances made up only 5% of the total, but by May that figure had exceeded 70%.

Supply-side reversal: In stark contrast to the surge in short drama consumption, the number of new live-action short dramas has been cut in half: from 17,000 in October 2025 to just over 1,000 in May this year.

Inevitable platform considerations: Although daily spending on AI short dramas once exceeded 100 million yuan, their hit rate has remained below 1% for a long time. Having completed the strategic goals of traffic acquisition and ecosystem building, platforms now face high subsidy costs and low conversion efficiency. Cutting losses and refocusing on profitability has become unavoidable.

A shift in direction: from "AI-driven volume growth" to "high-quality live-action production"

If Hongguo's cancellation of guarantees signals a cooldown for AI short dramas, then the National Radio and Television Administration's actions have charted a course for the entire industry.

At the work deployment and promotion meeting for the "Excellent Micro-Short Drama Creation and Dissemination Plan" held on May 14, officials clearly stated that 1,000 outstanding micro-short dramas would be launched in 2026. To support this transformation, six platforms — Douyin (Hongguo Short Drama), Tencent Video, Mango TV, Migu, Kuaishou, and Dianzhong — have committed to investing at least 6 billion yuan to support high-quality live-action short dramas.

Specifically, Douyin Group announced it would invest over 1.5 billion yuan in supporting live-action short dramas this year, with the average guaranteed amount per project rising about 60% compared to last year.

New industry landscape: eliminating inferior capacity, high quality becomes the "only ticket"

The short drama industry is currently undergoing a painful transition from "wild growth" to "high-quality industrialization":

Smaller studios face squeezed survival space: With platform bargaining power diminishing and traffic concentrating among top players, small production companies lacking core content creation capabilities will face restructuring.

Differentiated content competition: Giants like Tencent are investing heavily — for example, through exclusive cooperation agreements worth tens of millions — to lock in top producers, aiming for differentiated breakthroughs with premium content.

High quality is the only survival logic: Industry insiders widely believe that short dramas are not ending, but rather the era of "low-quality traffic dramas" is coming to an end. Going forward, only content that deeply integrates technological innovation with compelling storytelling and resonates strongly with audiences will achieve sustained returns under the new traffic rules.

In summary, the AI short drama boom is cooling down, and the industry is officially entering a deep development phase centered on content and high-quality production. For professionals, the era of low entry barriers enabled by AI cost reduction and efficiency gains is now a thing of the past.