TYGlobe

Business Model and Industrial Chain of Micro-Short Dramas

As the market size of online micro-short dramas continues to expand and the number of launched works surges, their quality and performance in terms of content, technology, operation and other aspects have been continuously improved and optimized. Copyright holders of novel IPs and original script owners entrust film and television production companies, MCN institutions and other organizations to undertake the production. Advertisers enter into commercial cooperation with the aforesaid entities. After the shooting is completed, the finished works are launched on mini-programs or long- and short-video platforms. Distributors carry out re-dissemination and promotion of micro-short dramas through various channels, and revenue sharing is finally conducted based on data such as clicks, views and payment status. The operation mode of micro-short dramas has gradually matured. At present, the business model of the micro-short drama industry is gradually transforming from an IAP (In-App Purchase) dominated model to a model that attaches equal importance to both IAP and IAA (In-App Advertisement monetization). Micro-short dramas have been continuously tapping the potential value of the B-end, actively exploring diversified monetization models focusing on advertising and marketing, and have become the "new favorite" of brand marketing.

The industrial chain of micro-short dramas can be subdivided into three links, namely the upper stream, the middle stream and the lower stream, each of which has its specific participants and functions.

Upstream segment: It refers to early-stage content production, where copyright owners and production contractors are the main participants. The work mainly covered in this segment includes copyright purchase, IP incubation, scriptwriting, team establishment, finished production shooting and other related matters. As the starting point of the entire industrial chain, this segment is also the core of content creation.

### Midstream Segment: refers to mid-stage content distribution, in which platform operators and distributors play a critical role. In this segment, the online micro-drama content produced in the upstream is disseminated to a wider range of audiences through such means as platform hosting and online micro-drama distribution. This segment acts as a bridge connecting upstream content production and downstream ecological support.

- Downstream segments: Mainly covering publicity, distribution and advertising placement, including relevant communication entities, agencies, advertising placement platforms, etc. Through traffic placement and other approaches, these entities provide online micro-dramas with more exposure opportunities to help expand their influence. Online micro-dramas are marked by low production costs, yet the cost of traffic placement is far from low. According to media reports, user acquisition costs account for 80% to 90% of the total box office. It is evident that channels constitute the most profitable segment of the online micro-drama industry, which renders the publicity, distribution and traffic placement for online micro-dramas particularly critical.