AI, Apps, and Addictive Stories: How Two-Minute Shows Became a $8 Billion Industry
Insights on the next wave of short-form storytelling
In this episode of The Media Room, Vanita Kohli-Khandekar speaks with Vivek Couto, Executive Director of Media Partners Asia, about the rise of microdramas — the two-minute serials that have become a $8 billion global phenomenon. Couto breaks down how China built the world’s largest microdrama market, with 830 million viewers and an ecosystem tightly woven across tech, payments, and storytelling. He explains why women in smaller cities are driving this boom, how AI is reshaping content creation, and what lessons platforms like Tencent, ByteDance, and Kuaishou hold for global media. The conversation explores whether India’s streaming giants — from JioHotstar to Amazon — can adapt this format for their vast mobile audiences, and how local language and ad-driven models might define its future. Tune in for insights on the next wave of short-form storytelling — and how it’s transforming the business of attention.
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TRANSCRIPT
Vanita Kohli-Khandekar (Host): You cross a web series with an Instagram reel, you'll get microdramas. Each season of a microdrama is about 30 to 50 episodes. Each episode will be two to three minutes long and the whole idea is to titillate you emotionally so there'll be revenge, action, murder, divorce, marriage, something or the other happening which makes you want to move to the next episode and the next.
It's become the, I mean microdramas are the rage currently across the world. There was no sizing of the market till recently. A Media Partners Asia report which came out last month has finally put a number to this and said that microdrama is at an eight billion dollar market globally and the action is in China.
That's where they originated in the first place 10 years back and China was already a seven billion dollar microdrama market. People pay money or advertise, ad support it but put it all together advertising and pay revenues and it's a seven billion. So a bulk of the global microdrama market is China.
830 million Chinese are watching all sorts of shows you know with names like Rain Kissed Fate, This Killer Is So Cute and so on. In India also microdramas have taken off but the scale is not at the same level as anywhere else. You know earlier this year in 2025 about half a dozen players raised some money anywhere between 15-25 crore to set up a flick TV, chai shots, all sorts of people.
Kuku TV actually already claims to have six million subscribers. To give me a sense and give us a sense of where this market is headed, what is its shape and texture, I had a chat with Vivek Couto who's the founder and executive director for Media Partners Asia. It is also one of the best firms as far as research on this sector is concerned in the APAC region.
So over to Vivek.
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Vanita Kohli-Khandekar: Hi Vivek, welcome to the media room. Wonderful to have you on the show again.
Vivek Couto: Thank you Vanita, it's great to be here and thanks for giving me the opportunity to speak to you and your viewers today.
Vanita Kohli-Khandekar: I think you guys have just, Media Partners Asia has just come out with this report on microdermabusiness. You've sized the market at eight billion dollars globally and the centre of this microderma universe seems to be China at seven billion dollars top line. Could you take us through some of the contours of the report?
I know it's a subscription-based report but just some sort of headlines if you could give us and also give us a sense of the texture of this market.
Vivek Couto: Sure, look I think just Vanita as you know well that YouTube and TikTok in many ways have become a proxy for modern television and all the viewers that have loved television and watch television particularly the younger generations have gravitated towards those platforms particularly YouTube and globally and TikTok in certain key markets particularly on mobile. One has to think of microdramas being a proxy for soap operas on steroids right, particularly for the younger generation and that's the way it began and you know we started with China just to give you the purpose of this report. There are a lot of numbers out there but really what we wanted to show was who's watching this, why are they watching this and how it will evolve.
Is there any differentiation in China, is there any quality levels in China and is there any differentiation outside China and what drives success in this space. So that was the qualitative questions that we were trying to answer and it really started with looking at the China market in a specific focus because as you know the China online video market is the leading online video market in the region and it's evolved I would say over almost a 20-year time frame. So it's evolved in three waves and I think a lot of other markets can look to it in that regard.
So it first started with user-generated AVOD just like India started with Hotstar and so forth. You had platforms like Youku and Tudor and then it became premium SVOD largely through Tencent Video with the Hollywood content and iQIYI and those players and then they took Korean content and Korean content was banned. Then they started to develop their own content at scale there was some regulation and then you had micro dramas at massive scale.
Part of that reason was also the kind of a different consumption pattern evolved and consumers and users much like in India outside the urban markets became very important to these platforms and what happened is the market for SVOD or what we call premium video on demand it started to saturate in China in the urban markets and read quite a significant level of penetration. So people wanted stuff more particularly in tier two, tier three cities and rural areas and as SVOD saturated into those tier one cities you had Douyin which is owned by ByteDance, KuaShou which is a different platform and WeChat which is owned by Tencent pushed micro dramas into the mainstream. Now a lot of that really led to the growth of this medium in China of this category and by 2024 became so popular that micro dramas even overtook theatrical box office in China.
So effectively the market grew from half a billion dollars in 21 to seven billion dollars in 24. It's going to touch around nine and a half billion dollars this year and then by 2030 you're looking at 16 to 17 billion dollars and it's key four drivers. Number one, big consumer demand amongst women in age approximately 25 to 50 in tier two, tier three cities.
A lot of innovation on monetization, subscription of course, in-app purchases, advertising and then e-commerce integration, a lot of capital investment and a clear regulatory framework around it. Secondly, the studio system for this micro drama phenomenon is fairly vertically integrated in China. You have China literature which is owned by Tencent, they do a lot of IP call which is owned by various players including Tencent and tomato novel which is owned by ByteDance.
So they provide the fuel for endless stories and you know production houses basically turn these things into one to two minutes TV series. AI has become very important for turning it around and a lot of the distribution and volume is owned by these players. So I think the learning is that China is rooted in control and integration.
The same tech giants that dominate social media are dominating payments, are dominating advertising and are also dominating this category, namely ByteDance, Tencent and Quasho and they also own content, they also own the distribution pipes. So it kind of creates a very nice closed self-funding loop, drives traffic, drives engagement and everything sort of stays in the ecosystem. Outside China, it's a lot more fragmented and we've seen different platforms emerge but without that sort of social integration that we've seen in China and hence their customer acquisition costs are very very high and so you know when you look at the United States and the rest of the world, there's two platforms that really come to mind.
One is Dramabox and whose top market is the U.S. but it's present in India, present in Southeast Asia, present in Latin America, Japan and Korea and Realshot which is own 49% by call which is that production studio and also has an affiliation with Crazy Maple Studio that I talked about and there in the U.S., most of the people that are watching this content, 70% are female. Remember China's come through the female side but it's also going more and more now towards male and more advertising as well. It's been predominantly subscription to date and in the U.S., it's largely subscription, 70% women, largely urban, typically 30 to 60 demographic and about watching this content about 25 to 30 minutes per session. Very hit driven, it's relying heavily on social media advertising and user acquisition on TikTok, YouTube, Meta and so they really need to unlock the ad revenue stream. As I said, Dramabox is doing last year, they did about totally $325 million in revenue and they had about a 10% profit margin on that. Realshot was bigger at $400 million in revenue but it remains loss making due to high customer acquisition costs.
Very interestingly, Vanita, the conversion from free user to pay user, whether they unlock subscription payments, coins, virtual currency after the 10th episode or whenever, that conversion rate is in excess of 50% in China, 20 to 30% in the United States but in Asia and I'm not sure about India but certainly in Southeast Asia, it's small. In Japan and Korea, it's about 10% and in Southeast Asia, it's 1 to 2%, very low at this point. In India, we've been impressed by some of the platforms that are emerging in the marketplace and I'm sure you cover them more than we do but we can talk about that during the course.
I've said a lot but I think in India, the market is just starting and I think one of the big learnings that we've seen in China and also in the U.S. that success is being driven a lot by dedicated separate apps, right? So if you look at Tencent, they have and continue to have and operate a long-form dedicated premium streaming video app, S4 driven with some ads which has about 120 million subscribers but they have a separate short-form app and I think that's the way to go for many players whereas I think integrating it into your long-form premium VOD funnel, it's a bit distracting, it's a bit different. Yeah, you can use it for retention but I think doing the dedicated app, particularly if you have volume and distribution is the way to go.
Vanita Kohli-Khandekar: But you know, from what you tell me and China seems to be like the hub as far as I can make out, it's like 90% of the global market is China and the U.S. is what? 819 million dollars, if I remember the numbers you said correctly. Is it just an accident of history that this thing because I don't see other markets scaling up as much as China.
I mean, the thing so this is 7 billion, that's 800 odd million and the rest might be a few million here and there. So do you see that kind of scale happening in other markets?
Vivek Couto: Well, I think to be fair, the U.S. is a billion dollars already but the key question, no but you're absolutely right to ask you, the key question is it sustainable, right? And what happens in the U.S. because TikTok, YouTube and Reels are currently the discovery engine for microdramas in the U.S. and they serve as big funnels, attracting users, attracting people like you and me or younger people to dedicated apps. However, if these platforms decide to enable this content with direct payments or direct commerce, then microdrama apps could be in for a tricky time.
They could become suppliers rather than owners of that audience and that's the biggest significant disruption risk outside China, particularly on what TikTok does, right? A few years ago or not a few years ago or a year ago, TikTok I think was trying to work this out but they couldn't quite work out a formula with the creators and studios but if they turn that tap on in China, sorry in China, in the United States, in Europe, in Southeast Asia, then they would really soon stand to benefit. I'm not so sure YouTube is going to go that way and we'll see what happens with Reels but to your point, because it's been a subscription-based business predominantly outside China, you're not necessarily seeing it come into watch time or into generating a huge amount of monthly active users, right?
It doesn't have that reach scale but what's really interesting is the time spent on it and the conversion into real subscription revenues and people paying for the product or people unlocking the value in the product is growing. Where it's unclear, Vanita, is the differentiation because everyone seems to have the same type of content outside China, everyone seems to have the same types of libraries outside China, there are some differentiators and everyone's also syndicating to each other, right? So, Drama World is syndicating to India, Call is syndicating to India, whereas in China it's very clear where you could say there's a new class of category that's coming in with S-class dramas which is slightly more expensive, Microdrama is in China, Quashio is clearly positioned for the rural areas, ByteDance has a dedicated app called Red Fruit and Tencent has a dedicated app that is maybe a little bit more urban-centric, a little bit more upscale-centric, so elements of differentiation coming in.
So, I think to answer your question, I think which is what you're trying to get at, is there value in the content or is it really the value in the platform and the discovery and the algorithms that are driving that? I think definitely the trend so far has been in the platform and how they unlock discovery, unlock viewing and so forth, but it's an evolving category and there is real money being spent by the consumer on this category and even, you know, something like Google TV in India, you know, to have, it has a lot of MEUs, but to have something like five and a half million paying subscribers in India at a reasonable size APU, it's pretty decent for a small team that's just come out of nowhere.
Vanita Kohli-Khandekar: But you know what, when you look at a ByteDance or a Tencent or a TikTok, we're talking about platforms at a scale of a, you know, which can take on a meta or Google in that sense. I don't see those, unless you look at a JioHotstar or an Amazon, Amazon's MX player, I don't see platforms at that scale. In India is a scale market, as you know, even if microdramas go pay, it'll be at smaller subscription, smaller pops, maybe 20, 30 rupee kind of, it'll be an ad driven market.
I don't see that scale and I don't know if it's true only for the India market or other markets also. Are there platforms at that scale in other markets?
Vivek Couto: That's a great question and I think that comes back to the next part, is what do the big local players and regional players do about this? So how does a JioHotstar evolve in its next three to five years? How does an Amazon evolve in that market in India that you mentioned?
Do they create separate apps? You mentioned quite rightly Amazon as MX player, they are testing, they're doing micro dramas. How does that scale?
The same thing with JioHotstar, the opportunity is, can you build a large subscription funnel for the next journey to penetrate tier two, tier three, different types of audiences in India with this kind of content, right? So let's start at a high level. The first thing we're seeing quite predominantly, and of course theatrical still has value, of course television still has value, but predominantly the narrative on any consumer exercise is that the Gen Z audiences and the younger audiences and even the 2030 demographic is just going to the theatre less, less engaged with entertainment content that they used to be before on television and even arguably premium watch streaming and they want shorter form vertical content and the mobile device is becoming very, very important for that.
And so how do you play to that audience? And then secondly, this micro drama side, which brings in AI at scale, right? And admittedly you can argue about the quality of it, particularly outside China, but how do you incorporate that into your strategy?
So you have leading platforms in Latin America like Globo and Televisa, they're experimenting with it and have actually launched it at scale, either syndicated it or done some volume experiments on it from their own and they're putting it into their existing streaming service. I'm not sure that's the right strategy, but that's more used as a user retention strategy. And then you've got players like Amazon looking at it, Netflix looking at it, and of course some of the big local players that you mentioned.
So that journey is going to evolve. The second question is does what happens to a drama short or what happens to a real short or a drama boxer or a real short or any of these other players or even some of these new players? I think that story is going to be interesting if one of the big giants or a different kind of company or a consortium acquires these companies and consolidates them into one or a one platform.
That for me is another interesting story to look at over the next couple of years, because I think that's going to be very, very interesting to see how that evolves. You've seen what's happened with TikTok in the US, the deal hasn't been done yet, of course, given the geopolitical situation, but that's happening. The other thing is does a consumer brand get into this space?
We've seen this in South Korea, right, where one or two of the big consumer brands now, as part of their e-commerce funnel, as part of what they're doing with their brand activation and engagement in those markets, are launching their own immersive experiences, their own microdrama site. So I just think the whole story of content creation, where you're having episodic series, big, nice, tempo movies, that's great, that's going to continue. But I think a new generation of customers is looking for different premium experiences and microdramas is part of that.
On the sports funnel, there's a different part of that. So I think the whole ecosystem is being shaken up by this and I think it's giving opportunities for different players. Of course, in the US, it's led to more jobs for people who've in the last two years been displaced.
So if you talk to some of these creators that are feeding these platforms, they're quite happy. They're all employed and they're all doing stuff. Admittedly, they work 18 out of 24 hours a day, particularly with these platforms.
But it's a different form of content and I think it's definitely something that unlocks a billion dollars in subscription fees plus plus in the US. It needs to be looked at quite seriously because it's sustainable. And I agree, China has its own ecosystem, so one shouldn't get too carried away.
But I completely agree with you that the bigger platforms, particularly in India and Southeast Asia, can start to take advantage of this and start producing it obviously in their own languages and their own formats that work for their own customers.
Vanita Kohli-Khandekar: So I suppose models, different models will evolve in different markets, but what really boggles my mind is a deluge and especially if you throw AI into the mix, the deluge this is going to and what it will do to the economics of the business is a question which I think you will probably be able to answer five years later.
Vivek Couto: No, I agree and look, that's a deeper question on AI and how that alters the economics of a lot of businesses going forward, both from a content and technology standpoint. But I think in microdrama it obviously serves a purpose of accelerating volume and at steroid levels as I said earlier and also just leading to output being very very different, you know, going forward. But I think as you said quite rightfully, Manita, right now we're in the land grab.
The top six platforms in the world today, outside of China, include people like Dramabox, RealShort, Flareflow, which is at number five and I'll tell you that for a reason, and then you got people like Shortmax and a few others. And you say, okay, so what was it like two years ago? And there were two others, but what happened to those two others?
No one knows, right? So the thing is you come to this year and you say, okay, so what is this platform Flareflow? So Flareflow is a really interesting platform because its team has migrated from another competitor and it's on 100% by call, that owns 49% of RealShort.
And so that's an interesting story because you have this big studio in China that also has two short formats and is also producing this at scale and syndicating into the rest of the world. So I think the story is starting to consolidate now across two or three key players. And they have production hubs in different markets of the world.
And it's going to be very interesting to see how they evolve and will someone consolidate them in the US and for outside China distribution? Will it be TikTok? Will it be an American investor?
Will it be Meta? You know, it'll be interesting to see going forward.
Vanita Kohli-Khandekar: Good, lovely. On that note, it's a space we need to watch and it's a space I need to come back to you and talk to you again for. Thank you so much, Vivek, for being on the media room and thank you for sharing parts of the support with us.
Vivek Couto: Thank you, Vanita. Pleasure. Thank you.
