The recent remarks from iQiyi Inc. CEO Gong Yu have sparked intense debate across media platforms. He suggested that AI technology could digitize actors' likenesses, enabling them to participate in more content production without increasing filming demands. However, Gong Yu's prediction was particularly striking: traditional live-action filming might eventually become a "non-heritage" craft.
Public backlash stems from a combination of anxiety about AI replacing human roles and distaste for the assembly-line nature of content production. Yet, the encroachment of AI content into live-action production is not merely speculative. In the short drama sector, AI-generated animated series are already impacting and displacing live-action short dramas.
In February, Hongguo Platform eliminated the minimum revenue guarantee for small and medium-sized production teams, leading to a sharp decline in the number of short drama crews. Simultaneously, AI animated series captured nearly 30% of the short drama market during the Spring Festival period.
Over the past year, AI content has entered public consciousness almost through forced exposure. From AI animated series to hyper-realistic AI short dramas, and from platforms aggressively rolling out incentive policies to the continuous launch of dedicated apps and content sections, platforms are pushing AI content much faster than users are naturally accepting it. What is the urgency behind this push? What are platforms competing for?
The explosion of content supply raises the question: whose table is AI overturning? Behind iQiyi Inc.'s anxiety lies the increasing importance of "odds" in the content industry. The traditional business model of long-form video platforms is fundamentally B2B-oriented: platforms pay production studios for content, then monetize through user subscriptions and brand advertising.
Over the past decade, this model relied on "betting on blockbusters," investing huge capital in professional studios hoping to produce the next mega-hit like "The Knockout." iQiyi Inc. and similar platforms bore the highest financial risks and opportunity costs without truly controlling production efficiency, while supply remained constrained by industry capacity limits. A single failed top-tier series could mean billions in sunk costs.
More critically, audience attrition is making this high-stakes gamble increasingly difficult. According to QuestMobile, long-form video's share of total user screen time dropped from 17.8% in 2023 to 11.3% in 2025. Meanwhile, short dramas surged from 2.7% to 10.8%, nearly catching up in just two years. The free short drama business model has rapidly gained prominence.
With content itself being free, revenue comes from in-feed ads and paid unlocks. Platforms no longer fully fund content but instead provide distribution channels, taking a cut from each transaction. For producers, the key metric for short drama promotion is ROI—the ratio of ad spending to user payments. As long as ROI exceeds 1, promotion can continue indefinitely. The survival rule in the content industry is shifting from "spending big on content" to "gambling on volume for success rates."
Producers now bet not on whether a single work will succeed, but whether a few hits can emerge from low-cost productions to offset overall sunk costs. However, the specter of intense competition looms large. As supply increases and competition intensifies, the hit rate for individual projects inevitably declines. Under industrialized production logic, further cost reduction and scale expansion become an almost unstoppable trajectory.
Currently, AI animated series represent for short dramas what short dramas once did for long-form series—a new migration in the industry's pursuit of extreme ROI. According to Ocean Engine data, AI reduces average production costs by over 70% in animated series, increases efficiency by over 80%, and cuts production cycles by two-thirds. Traditional 2D animation can cost over 100,000 yuan per episode, while AI animated series have compressed costs to around 1,000 yuan per minute. Cases of "3 people completing 10 episodes in 10 days" have emerged, with discussions about "1 person producing 1 series per day" gaining traction.
AI animated series have delivered on market expectations with solid data. In Q1 2026, AI hyper-realistic series reached 75 billion views, with single AI series surpassing the combined viewership of all AI content and animated series from the previous year. When content supply grows exponentially beyond a critical point, platforms like iQiyi Inc. effectively have no choice. Once supply and audience attention begin shifting, any platform that doesn't adapt will lose them to competitors.
The AI revolution involves not just minor technological upgrades like face-swapping or special effects, but a complete overhaul of production systems. Platforms are competing not just for content, but for control over the entire content production value chain.
The first layer of competition involves land grabs on the supply side. As a new content category, animated series present a window for platforms to redraw market boundaries during the initial supply explosion. Platforms are racing to increase revenue shares and support measures to lock premium supply into their ecosystems. As early as October 2025, iQiyi Inc. announced its animated series partnership program, offering up to 100% revenue share for exclusive content. According to reports, Tencent Video elevated its successful AI animated series business to group level to prioritize profit goals. Youku updated its animation revenue rules in February, adding rewards up to 1 million yuan per premium project. China Literature opened 100,000 IPs for animated series adaptation while establishing a 100-million-yuan special creation fund.
The second layer focuses on controlling traffic distribution valves. Once supply floods the market, user attention becomes increasingly precious. Platforms that master user preferences, revenue sharing ratios, and traffic allocation gain stronger bargaining power. This creates a snowball effect: richer content supply attracts denser traffic, driving higher ad revenue; more concentrated traffic attracts the next wave of quality supply. ByteDance's ecosystem has particularly excelled in this approach. By December 2025, Douyin's daily spending on animated series promotion exceeded 20 million yuan; by March 2026, it surpassed 70 million yuan daily, overtaking live-action short drama promotions.
Even if platforms lose in traffic competition, they retain opportunities for IP testing. Beyond traffic battles, AI hyper-realistic series are becoming bridges between core animation fans and general entertainment audiences. Major companies have followed the "IP-led, comprehensive monetization" strategy for years with substantial web novel reserves—ByteDance owns Tomato Novel, Tencent controls China Literature, and Baidu holds 7cat. However, transforming online literature into true blockbuster IPs typically requires a lengthy relay process through novel, comic, animation, and live-action adaptations. Each subsequent stage requires more investment, longer timelines, and higher risks of complete failure.
Low-cost AI technology significantly shortens this lengthy relay race. It not only enables visualization of traditionally challenging genres like male-oriented fantasy fiction, but also gives numerous shelved IPs opportunities for market testing. Platforms are desperately trying to retain audiences who are always ready to leave. Whenever alternative content becomes denser or promotion more aggressive, this traffic can easily be lured away. QuestMobile data shows that by December 2025, average daily viewing time for mini-dramas reached 129 minutes per user, officially surpassing long-form video.
Despite public criticism about AI content being shallow and short dramas reducing intellectual engagement, traffic numbers don't lie. Platforms, caught in this transformative wave, are vigorously promoting AI content not to强行 convince users to accept new formats, but from fear of being left behind by the content supply tsunami if they fail to keep pace.
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