From micro-dramas to video games, Chinese entertainment is booming

Artsy film critics are unlikely to be impressed by China’s micro-dramas. Even so, the roughly two-minute episodes, which cram soap-opera plots into a short-video format, are wildly popular. Watched almost exclusively on mobile devices, viewers can scroll mindlessly through episodes as they would clips on TikTok. Revenue in China from micro-dramas is projected to nearly double this year, to 90bn yuan ($12.7bn)—exceeding sales of cinema tickets. Chinese studios shot 40,000 of them in the first eight months of the year (a typical series has 90 episodes).

The micro-drama craze is but one example of the creative surge under way in China. Earlier this year “Ne Zha 2”, produced by a Chinese studio, became the best-performing animated film of all time at the worldwide box office. “Black Myth: Wukong”, a video game, similarly captivated players when it was released a year ago. This presents a quandary for the Communist Party, which is waking up to the value of exporting Chinese culture abroad but wary of unshackling artistic types from tight censorship.

The government has long tended to prioritise science and technology ahead of entertainment, discouraging investment in areas such as gaming and short videos. Tight controls on content have not just dissuaded investors but also redirected talent to other industries.

Nonetheless, the country’s tech giants have continued to pour money into entertainment. Take “Black Myth: Wukong”. Tencent, an internet conglomerate, helped to bankroll the company behind the game, which was founded by Feng Ji, a former executive. Those funds gave Mr Feng more time to develop the game, and the ability to launch a marketing campaign four years before its release. The studio behind “Ne Zha 2” was backed by the boss of Meituan, another tech company.

Such support has been vital for a new generation of creative talent. Many, including Mr Feng and Yang Yu, the director of “Ne Zha 2”, were born in the 1980s, just as China was opening to the world. They came of age in the early 2000s, when internet censorship was nascent and access to foreign websites and culture was much freer than it is today. University enrolment also surged during that period, including in the humanities.

The influence of tech giants can also be seen in the business models that have emerged around Chinese entertainment. Much of it is mobile-based. iQiyi, China’s version of Netflix, is viewed more on mobile devices than it is on TV sets and computers. Games are primarily played on phones and tablets. Then there are China’s popular short-video mobile apps, including Douyin, the local version of TikTok, and Bilibili, which is similar to YouTube.

Cashing in on content often means focusing on e-commerce, rather than (as in the West) ads or subscriptions. Popular creators on Douyin hawk merchandise on live-stream channels. Bilibili has created membership communities that give users exclusive access to products and live performances. Micro-dramas may move in that direction, too. Chen Ou, the founder of Jumei Film Base, a leading micro-drama studio in Zhengzhou, says his company is starting to monetise its star power with live-streaming sales. AliFish, a platform run by Alibaba, China’s biggest e-commerce company, lets the owners of creative content pair up with businesses that will manufacture and sell merchandise for them, as well as marketers eager to put their characters to work.

The centrality of local tech giants to the entertainment industry is only growing. ByteDance, the owner of Douyin, often invests in content creators who have become popular on its short-video apps. Tencent has bought stakes in hundreds of gaming, film and TV studios, and holds stakes in content distributors such as Bilibili and Xiaohongshu, China’s answer to Instagram. And nearly all large tech companies in China are snapping up rights to micro-dramas—even those with little experience in entertainment, such as Baidu, a search giant, and Pinduoduo, another e-commerce firm.

Whether all this will result in the type of enduring intellectual property that powers the Western entertainment industry—think James Bond or Star Wars—is unclear. Franchises that resonate across generations are costly and slow to develop, notes Ivy Ng of DWS, a German asset manager. They require original narratives and significant continuing investment. Many of China’s recent cultural successes have relied more on celebrity endorsements than on creative brilliance. The country’s entertainment industry remains “focused on virtual, code-based and asset-light operations”, says Ms Ng.

An even bigger uncertainty is how much freedom the Communist Party will give creators. Censorship in China remains harsh. The government demands that films and TV shows adhere to socialist values and bans the most salacious content, such as sex, superstition and excessive violence. Topics as anodyne as divorce are sometimes censored. The result has been widespread risk aversion. For example, when companies license content from studios, their agreements often stipulate that the creator must pay back any damages resulting from censorship. Rather than thriving on edginess and controversy, creators thus survive by removing anything that could irk the censors. The government has also railed against “over-entertainment”, or excessively stimulating content.

Yet there are signs of change. The Communist Party seems impressed by the recent success of Chinese entertainment and, in a break with the past, is promoting more of it. It has created at least seven “animation industrial parks” across the country, much as it has built special zones for factories in recent decades. Some cities now promise tax relief for content producers. Many local governments are investing in micro-drama studios.

Some burdensome restrictions on the industry are also being eased. In August the TV regulator altered its rules to remove an arbitrary 40-episode cap on series, streamline the review process for content and allow local adaptations of foreign shows. Policies on video games have also been relaxed and the government has become more supportive of developers, according to Cui Chenyu of Omdia, a research firm.

As for micro-dramas, which are chock-full of the kinds of taboo topics and comedic violence that usually irk censors, industry insiders say the sheer volume of content has resulted in looser or fewer checks. Perhaps the addictive clips have also found some fans in the halls of power in Beijing. ■