Inside the $9.7B Short-Form Drama Market: Why Viewers Are Paying More

Did you know that there's an OTT service pricier than Netflix yet gaining incredible traction lately?

Despite the cheeky cost—around 0.4 USD per a minute-long drama episode and 22 to 30 USD per series—it seems consumers can't resist opening their wallets. This high-priced, dopamine-inducing OTT platform is none other than a ‘short-form drama platform’.

While some may recall the failure of Quibi in the US market, the situation has now changed drastically. The global short-form drama market has grown to 9.7 billion USD, with the Korean market alone estimated at 490 million USD, according to our internal figures.

The popular platform ReelShort has even surpassed TikTok in downloads in North America, and the short-form drama platform Dramabox ranks 6th in the domestic App Store.

In this article, we delve deep into the essence of this flourishing short-form drama market and uncover its formula for success.

Why Are Short-Form Dramas Thriving?

Short-form dramas refer to brief drama episodes in the style of YouTube Shorts, typically consisting of around 50 to 150 episodes per series. These shorts are known for their fast-paced and provocative plots that leave viewers craving the next episode.

Interestingly, it's not those higher-quality, well-crafted stories that are gaining traction but rather simple, sensational content. Popular hits like "Boss, You’ve Got the Wrong Madam" and "I Am the Supreme" are typical examples, often revolving around themes of illicit love affairs and revenge—the hallmarks of "makjang" dramas, a term used to describe highly provocative, often exaggerated storylines seen in many K-drama series.

The Secret Behind the Success of Simple and Sensational Dramas

Why do these simple and sensational dramas work?

The answer lies in current consumer trends. As people increasingly prefer "instant consumption"—evidenced by trends like "1.5x speed watching," "summary highlights," and "spoiler-included endings"—there's a growing preference for fast-paced content that comes at a 1-minute format and concludes within 50 episodes equivalent to 50 minutes. Tables are turned and plots twisted every minute; gone are the days of slow-building suspense.

But there is no time to be nostalgic. The popularity of short-form dramas has even led to the emergence of new stars who demand our attention. Kasey Esser, a gym instructor turned actor, reportedly received a massive amount of fan mail after starring in the ReelShort drama "Fated to My Forbidden Alpha." Just as YouTube and TikTok gave rise to countless new stars, short-form drama platforms are now creating their own celebrities.

Why Short-Form Dramas Are Highly Profitable for Platforms

For companies, short-form dramas are also highly attractive due to their profitability. Despite the high cost of 0.4 to 0.75 USD per episode, consumers readily pay for the content.

The CEO of ReelShort succinctly and rather directly stated, "Some people make movies for dreams. But our purpose in storytelling is solely to sell. A story that doesn't sell is garbage."

This statement underscores ReelShort's belief in the profitability of short-form dramas. And indeed ReelShort has proven its point by generating over $10 million (about 14 billion KRW) in monthly revenue, demonstrating the financial viability of short-form dramas.

Top Players in the Short-Form Drama Market: ReelShort and Dramabox

The leading global players in the short-form drama platform market include ReelShort, Dramabox, Flex TV, and MoboReels. A common trait among these is that they are services launched by Chinese web novel/webtoon platforms and intended for the international market.

By examining the strategies of the two most popular platforms, ReelShort and Dramabox, one may be able to identify the key success factors in the short-form drama market.

Reel Short

• A short-form drama service aimed at the North American market, ranking 13th in the North American App Store's entertainment category.

• Over 13.3 million downloads and approximately 53 million USD in revenue in the first quarter of 2024. Cumulative downloads exceed 30 million (as of late April).

• Main revenue model: B2C content payments. Price per episode is set at 0.60 to 0.75 USD, with a weekly subscription priced at around 22 USD.

• The parent company, COL Group, owns over 5 million web novel IPs in China and operates the web novel platform 17K.

• To expand into North America, it established a subsidiary in Silicon Valley and launched Scream (a suspense web novel platform) and Kiss (a romance web novel platform) to explore IPs preferred in the North American market.

• Additionally, they are known to employ a professional team of writers to script the dramas.

• They built a studio in LA, managing the entire process in-house, from IP acquisition to filming, editing, and release.

Dramabox

• A short-form drama service focused on the Greater China and Southeast Asia regions, ranking 7th in the entertainment category in Singapore/Malaysia App Store.

• Over 7 million downloads and approximately 48 billion KRW in revenue in the first quarter of 2024

• Main revenue model: B2C content payments. The price per episode ranges from 0.5 to 0.9 USD, with a weekly subscription at 16.5 USD and an annual subscription at 225 USD.

• The parent company, Dianzhongkeji, operates the largest short-form drama platform in China, "Hamath Theater," and the global web novel platform "Webfic," utilizing their original IPs for drama production.

• Unlike ReelShort, which creates original content for the global market, Dramabox translates already popular Chinese short-form dramas for international audiences.

• Their competitive advantage lies in faster production times and lower costs, reportedly saving up to 10 times more on production costs compared to ReelShort.

Opportunities for Startups in the Short-Form OTT Market

ReelShort and Dramabox highlight the success strategies in the short-form drama market:

1. Quickly identifying and capitalizing on preferred IPs by leveraging their experience in mass-producing and distributing webtoons/web novels, and

2. Internalizing the entire process from scriptwriting to filming and editing, enabling fast and high-volume production.

In short, they've managed to catch both "speed and quantity."

However, this conclusion might feel daunting for startups. Both mass IP production/purchase and internalizing the entire production value chain require significant entry costs, which can be challenging for startups to achieve in a short time.

Does that mean there is no room for startups in this market?

Not necessarily. The market is still in its early stages; there appears to be significant opportunities for startups.

Which ones stand a chance?

1. Players who can quickly and affordably acquire second-hand IPs

The short-form drama market closely resembles the webtoon market in terms of business models, value chains, and content characteristics. In the webtoon market, it's common to "re-serialize" content from other platforms. For example, TopToon, as a latecomer, re-serialized popular works from a competitor, Lezhin Comics, on its own platform to quickly attract users.

By bringing in proven second-hand IPs at relatively low costs, TopToon quickly captured the leading position in the adult webtoon market.

This strategy could also be effective in the short-form drama market. In this early-stage market, players who excel at negotiating for second-hand IPs can quickly and affordably produce dramas, gaining a competitive edge.

2. Players who can use AI to cheaply and quickly edit and produce videos

In a market where speed and volume are crucial, AI can be used in so many ways. It can facilitate rapid cut editing and even generate typical "makjang" drama scripts. Additionally, when exporting content abroad, deepfake technology can be used to modify actors' appearances to match local preferences.

This AI technology is expected to be commercialized in China by next year. By using AI to replace editors or local actors, companies can significantly reduce production costs. Players who can supply or effectively utilize such technology could seize significant opportunities in the short-form drama market.

3. Players who can curate fragmented dramas

As the number and variety of short-form dramas multiply exponentially, the demand for content discovery will grow.

Currently, there isn't a prominent aggregator in the short-form drama market. Since short-form drama platforms are more expensive than traditional OTT services, consumers will want to find content that is "worth the money."

However, many short-form dramas are still being illegally distributed on platforms like TikTok and YouTube. For aggregators to thrive, first the market needs to mature, creating an environment where paying for short-form drama becomes the norm.

But not everything is rose-tinted.

Challenges Ahead for the Short-Form Drama Industry

The short-form market is indeed highly attractive, considering its profitability, growth potential, and room for startups to explore. Yet challenges remain.

1. Can short-form dramas become mainstream?

Unlike China, skepticism about "short-form platforms" persists in the English-speaking world.

According to reactions from Americans on social media, short-form dramas are still viewed as a niche culture primarily consumed by Chinese audiences. The question remains whether these dopamine-loaded, provocative stories can become widely accepted mainstream content.

2. Can OSMU be achieved?

Another challenge arises from the nature of the content itself—namely, the difficulty in achieving One Source Multi-Use (OSMU). In the webtoon market, which is a similar industry, ‘adult-oriented’ webtoons characterized by high stimulation and fast pacing have shown limited potential for secondary revenue through OSMU.

Of the 45 webtoon-based dramas aired on TV and Netflix from 2020 to March this year, only one had been adapted from an adult-oriented webtoon platform like Toptoon, Lezhin, or Toomics. As the importance of secondary revenue in the IP industry continues to grow, the difficulty of achieving OSMU may become a significant weakness for short-form drama platforms that feature a large amount of adult-oriented content.

3. Can “K-content” shine through with its unique appeal?

The strengths of K-content, such as well-crafted and original stories not to mention outstanding cinematography—highlighted in the film, drama, webtoon, and music industries—are physically challenging to fully manifest in the short-form drama market, where high stimulation, low costs, and rapid progression are key.

However, given that "makjang" (over-the-top, sensationalist dramas) is a significant element of K-content, there is potential for highly engaging short-form dramas if popular K-makjang dramas are adapted for this format.

We have now taken an in-depth look at the "short-form drama market." We hope this information has been valuable for those curious about this emerging market. With that, we conclude this article.