AI video industry hopefuls in China no longer have to go looking for a home. The homes are coming to them. Zhu Zhili, an AI filmmaker who set up his studio in Shenzhen two years ago, told Reuters this week that officials from cities and industrial parks across the country now call him with the same pitch: bring your AI film business here. “I am approached every day by a range of cities, from major metropolitan areas to smaller localities,” he said, “hoping we can establish either technology or the company there.”
Those calls are the visible edge of a national push to embed artificial intelligence into every corner of the economy, including the films on cinema screens and the one-minute dramas on phone screens. Local governments are promising tech clusters, rent waivers, living allowances and subsidised computing power. It is the same industrial policy playbook China used to build electric vehicles, solar panels and robotics into globally competitive industries, now pointed at AI-generated content.
The result is a fast-growing AI video industry of filmmakers, studios and streaming platforms racing for an early lead in production and distribution. The same data that shows its growth also shows the risk. In the first half of 2026, 221,900 new AI shows launched on Douyin, and only 1,055 of them reached 100 million views. This article sets out who is paying for the AI video industry, what it now costs to make, which platforms are betting on it, how regulators are responding, and what the rush means for businesses outside China that buy or make video.
Table of contents
- What Reuters Found About China’s AI Video Industry
- The Subsidy Map Behind the AI Video Industry
- How Cheap AI Video Production Has Become
- The Platforms Betting on the AI Video Industry
- Signs of Overcapacity in the AI Video Industry
- From Phone Screens to Cinemas: The AI Video Industry Grows Up
- The Backlash Against China’s AI Video Industry
- How Beijing Is Regulating the AI Video Industry
- Is the AI Video Industry Repeating the EV and Solar Story?
- China’s AI Video Industry Heads Abroad
- What the AI Video Industry Means for Businesses
- What to Watch Next in the AI Video Industry
- Frequently Asked Questions About China’s AI Video Industry
- References and Further Reading
What Reuters Found About China's AI Video Industry
The Reuters report, by Ellen Zhang and Alessandro Diviggiano in Beijing and Shenzhen, is built on interviews with filmmakers, a film student, a festival director and a fan, plus figures from DataEye and state broadcaster CCTV. Its central claim is simple: China is treating the AI video industry as an industry in the full policy sense, not as a novelty.
Officials calling filmmakers every day
Zhu picked Shenzhen two years ago because of its tech ecosystem. At the time, he said, it was the one clear choice. This year the competition for his business has become national. Zhu also heads the AI-Generated Content (AIGC) department at China Wit Media in Shenzhen, and he runs his personal studio from a shared workspace backed by the city government and Hong Kong Polytechnic University.
He described China as the “best environment” for AI filmmakers, citing “cheap rent, living allowance and computing support”. That list matters, because it shows what the AI video industry needs from the state: somewhere cheap to work, a way for small teams to survive, and access to graphics processors that would otherwise be the biggest line in the budget.
An industrial policy playbook, applied to content
China’s approach to new industries has a familiar shape. Central government signals a priority, provinces and cities compete to host it, and subsidies, land and cheap finance pull in a crowd of new entrants. That produced world-leading EV and solar manufacturers. It also produced overcapacity, falling prices and a race to the bottom that Beijing has spent the past year trying to calm.
The central signal here is the State Council’s “AI+” initiative, published in August 2025, which calls for AI to be integrated across the economy and sets a target for intelligent terminals and agents to exceed 70% penetration by 2027 and 90% by 2030. The AI video industry is one of the most visible places where that ambition has turned into local spending.
Why the AI video industry matters beyond China
For businesses elsewhere, this is not only a story about Chinese entertainment. Where Chinese manufacturing capacity goes, global prices follow. If the AI video industry scales the way solar did, the cost of short-form video, advertising creative and localised content will keep falling everywhere, and the tools, formats and apps built for China’s domestic market will keep arriving abroad.
The Subsidy Map Behind the AI Video Industry
Reuters named four places competing for the AI video industry. Each is offering a slightly different package, and together they show how city governments think about the sector: as a compute problem first, and a talent and rent problem second.
Shenzhen: rent, compute and a university partner
Shenzhen has the head start. It is offering AI filmmakers technical support for video production, visual effects and content generation, along with subsidised rent. Zhu’s own set-up, a shared workspace backed by the city and Hong Kong Polytechnic University, is the model: public money lowers the fixed costs, and the university supplies talent and research links.
Shanghai: computing power and overseas distribution
In May, Shanghai introduced measures to accelerate AI-powered micro-drama production. According to Reuters, the package offers computing power and cloud-based models to cut production costs, and support for overseas distribution. That last element is telling. Shanghai is treating the AI video industry as an export sector from the start, not only as domestic entertainment.
Beijing and Huairou: a fund and compute vouchers
Beijing has a 260 million yuan fund to support audiovisual technology, about $39 million at the exchange rate Reuters used. Its Huairou district, a hub of China’s film industry, gives producers of short AI dramas vouchers to reduce computing costs. Vouchers are a direct subsidy on the single largest variable cost in the AI video industry.
Hainan: rent waivers for a film student
The incentives reach individuals, too. Pan Xiaojun, a postgraduate film-directing student in Hainan, told Reuters that subsidies and rent waivers from a local government let him push his computing costs down further. When a student can get state help to make AI films, the AI video industry has moved well past a handful of funded start-ups.
| Place or backer | What is on offer | Main cost it targets |
|---|---|---|
| Shenzhen | Technical support for video, visual effects and content generation; subsidised rent | Workspace and skills |
| Shanghai (May 2026) | Computing power and cloud-hosted models for micro-dramas; help with overseas distribution | Compute and export |
| Beijing | 260 million yuan audiovisual technology fund | Capital |
| Huairou district, Beijing | Vouchers for producers of short AI dramas | Compute |
| Hainan (local government) | Subsidies and rent waivers, including for students | Rent and compute |
| iQIYI | Subsidies for some creators whose AI content streams on the platform | Creator income |
The pattern mirrors earlier cycles. Compute is to the AI video industry what land and power were to solar factories. Cheap compute depends on cheap data centres, which is why China’s inland build-out, such as the data centre boom in Inner Mongolia, is part of the same national picture.
How Cheap AI Video Production Has Become
Filmmakers told Reuters that low production cost is what draws them to AI. The numbers explain why the AI video industry grew so fast in 2026, and why so many new entrants arrived at once.
From 5,000 yuan a minute to a few hundred
According to CCTV, the cost of producing AI short dramas fell during the first half of 2026 from 5,000 yuan ($747) per minute to just a few hundred yuan. Other reports put numbers on the new range. A 36Kr analysis in August put AI short drama production at 800 to 1,500 yuan per minute, or roughly 100,000 yuan for a 100-minute series, against 400,000 to 500,000 yuan or more for a live-action equivalent.
At the very low end, a Chinese state news agency profile of one-person studios in September described computing costs below 200 yuan per minute and a 50-minute production for around 10,000 yuan ($1,500). Work that took a month of conventional filming and editing was finished in about a week, and a single creator could turn out one or two episodes of three to five minutes each day.
The wedding scene arithmetic
Pan Xiaojun gave Reuters the clearest single comparison. “A normal wedding scene might cost me 60,000 yuan to shoot conventionally,” he said. “But with AI, I can bring the same surreal scene to life for just 1,400 yuan.” That is 2.3% of the conventional cost, a saving of about 98%, or roughly 43 times cheaper. Numbers like that explain why the AI video industry attracts students as well as studios.
What the video models charge
The engines behind these savings are mostly domestic video models. ByteDance’s cloud arm, Volcano Engine, priced Seedance 2.0 in March at 46 yuan per million tokens for pure video generation, with a 15-second clip consuming about 308,880 tokens. That works out at 14.2 yuan per clip, or about 0.95 yuan per second, which is roughly 57 yuan for each minute of raw footage before any retakes. (We covered the model’s longer-form successor in our piece on Dreamina Seedance 2.5.)
Raw generation is not the whole bill. Creators discard many takes, pay for editing, sound and scripts, and, as the next sections show, spend heavily to be seen. But the direction is clear: the marginal cost of a minute of footage in the AI video industry is now tens of yuan, not thousands.
Each bar below shows a reported cost per minute of AI video, scaled against CCTV’s starting point of 5,000 yuan.
| Comparison | Before | After | Source |
|---|---|---|---|
| AI short drama, cost per minute | 5,000 yuan at the start of 2026 | A few hundred yuan by mid-2026 | CCTV, via Reuters |
| One wedding scene | 60,000 yuan | 1,400 yuan | Pan Xiaojun, via Reuters |
| A full series | 400,000 to 500,000+ yuan live action | About 100,000 yuan for 100 minutes | 36Kr |
| A 50-minute drama | About a month to film and edit | About a week, around 10,000 yuan | China News Service |
| Streaming production at iQIYI | Baseline | 70% to 90% less cost and time | iQIYI Q2 2026 call |
The Platforms Betting on the AI Video Industry
Cheap production would matter less if nobody distributed the output. China’s largest video platforms are doing the opposite of holding back. They are building their own tools, paying creators and restructuring around the AI video industry.
iQIYI goes “all-in”
Streaming platform iQIYI is “all-in” on AI, chief executive Gong Yu said in August. The company’s second-quarter results show why it needs a new cost base. Revenue fell 5% year on year to 6.29 billion yuan, membership revenue slipped 2% to 4.01 billion yuan, and the non-GAAP operating loss was 30.3 million yuan. Content distribution revenue was the bright spot, up 56% to 681.5 million yuan.
Gong said the company’s short-form dramas “claimed the top domestic market share for the first time in June” and that its “all-in approach to AI” was “yielding encouraging initial results”. On the earnings call, the company said AIGC production cut cost and timelines by 70% to 90%, and that 16 AIGC short-form dramas had launched under revenue sharing. Reuters added that iQIYI now subsidises some creators whose AI content streams on the platform.
Douyin and Hongguo
ByteDance sits on both sides of the AI video industry: it makes the Seedance models and runs the biggest distribution channels. According to 36Kr, Douyin offers incentives of 10,000 to 30,000 yuan per minute for high-quality AI dramas while capping creators at 30 uploads a day. ByteDance’s free short-drama app Hongguo reached 368 million monthly active users in June, 36Kr reported, up 73.7% from a year earlier.
Hongguo has also moved to rebalance its catalogue. It tightened review standards from 7 April, built an AI detection tool that analysed 15,000 works, removed 670 non-compliant productions, and set aside a 500 million yuan fund for human-acted content. That is a platform subsidising people as a counterweight to its own AI video industry supply.
Kuaishou and Kling
Kuaishou’s Kling is the clearest sign that the tools behind the AI video industry make money. Kling generated more than 850 million yuan of revenue in the second quarter, up more than 200% year on year, according to Kuaishou’s interim results. First-half Kling revenue reached 1.5 billion yuan, TechNode reported, which implies about 650 million yuan in the first quarter.
Kling is still small against Kuaishou’s total quarterly revenue of 35.5 billion yuan, about 2.4%. But it is growing while the core advertising and livestreaming businesses are under pressure. Kuaishou also launched Kling 3.0 Turbo with native 4K output, plus Kling MCP and a command-line tool so that AI agents can orchestrate batch video creation.
The chart below uses Kuaishou’s reported quarter and the growth rates it and TechNode gave. The first two bars are derived, not reported.
Bona and ByteDance’s Jimeng
The film studios are moving too. Bona Film Group co-developed Sanxingdui: Future Memories with ByteDance’s Jimeng AI, using AI to synthesise characters’ expressions from human performances. The next section of the AI video industry story, feature films in cinemas, runs through that partnership.
| Company | Role | Latest move |
|---|---|---|
| iQIYI | Streaming platform | “All-in” on AI; 16 AIGC dramas under revenue sharing; creator subsidies |
| ByteDance (Douyin, Hongguo) | Models and distribution | Per-minute incentives for quality AI dramas; 500 million yuan fund for human-acted content |
| ByteDance (Volcano Engine) | Model provider | Seedance 2.0 at about 1 yuan per second of generated video |
| Kuaishou (Kling) | Model provider and platform | Over 850 million yuan of Q2 revenue; Kling 3.0 Turbo with native 4K |
| Bona Film Group | Film studio | First major-studio AI film licensed for Chinese cinemas |
Signs of Overcapacity in the AI Video Industry
Reuters’ sharpest point is that the AI video industry faces the risks familiar to other sectors showered with state support. When production is subsidised and domestic demand is limited, supply outruns buyers and prices fall. There are signs that AI video may already be approaching that point.
221,900 shows and 1,055 hits
In the first half of 2026, 221,900 new AI shows launched on Douyin, according to DataEye, but only 1,055 drew more than 100 million views, the usual benchmark for success. That is one hit for about every 210 launches, a success rate below half of one per cent. Averaged over the 181 days of the half-year, it is about 1,226 new AI shows a day, or one every 70 seconds. A 36Kr analysis of the same data said monthly launches rose from 655 to more than 74,000 over a year.
The same analysis set break-even at around 50 million views and said fewer than 1.3% of the AI dramas crossed it. Applied to 221,900 launches, that is fewer than about 2,900 titles. The rest, more than 98% of the AI video industry’s Douyin output for the half, did not recover their costs on that measure.
The first bar below is every AI show launched on Douyin in the half-year. The other two are drawn to the same scale.
367,000 micro-dramas in six months
The industry association’s figures show the same flood across all platforms. The China Netcasting Services Association (CNSA) counted about 128,000 micro-dramas released in the first quarter of 2026, more than 95% of them AI-generated, and 239,000 in the second quarter, of which 153,000, or 64%, were AI-generated. Across the half, 367,000 micro-dramas were released and more than 74% were AI-made, an average of more than 1,500 new AI dramas a day.
Those numbers hide a striking shift. On CNSA’s figures, live-action releases went from at most about 6,400 in the first quarter to 86,000 in the second. The AI video industry’s share of releases fell from more than 95% to 64% in three months, as platforms and regulators pushed for quality and human-acted work.
Revenue per view is collapsing
Oversupply shows up in prices. 36Kr reported that revenue per 10,000 views for AI dramas fell from 30 to 100 yuan a year earlier to 5 to 10 yuan, a drop of up to 90%. It summed up the squeeze as production costs down about 90%, traffic costs up more than 100% year on year and revenue down more than 50%. One creator’s 11 AI comic dramas earned 9.6 yuan in total.
Distribution now costs more than production
The money has moved from making video to getting it seen. 36Kr estimated that paid traffic makes up about 70% of costs across the AI video industry’s production chain. Ashley Dudarenok, founder of the consultancy ChoZan, told CNBC that the cost of 1,000 promotional ad impressions rose from 50 to 80 yuan in 2023 to around 150 to 200 yuan in 2025, sometimes more than 300 yuan in busy periods. Making a drama is now cheap, she said, but “making the right audience see it can cost far more.”
From Phone Screens to Cinemas: The AI Video Industry Grows Up
The AI video industry began with one-minute vertical dramas, but it is now reaching the formats with the most prestige: television and the cinema.
Sanxingdui: Future Memories
China’s National Film Administration has granted a public-screening licence to Sanxingdui: Future Memories, a 90-minute science-fiction epic. It is the first AI film produced by a major Chinese studio to receive approval for theatrical release. Caixin reported the approval on 28 April and said the film was classified as an animated feature because regulators have yet to create a separate category for AI-generated content. Producer Bona Film Group told Reuters it is due for release this year.
AI drama on broadcast television
In July, Anhui TV aired Taohuatanji (Peach Blossom Pond Chronicle), a 20-episode historical fantasy of about 10 minutes an episode, described by the Global Times as China’s first fully AI-produced short drama about intangible cultural heritage. Its credits listed an “AIGC director”, and the production team said it avoided using real actors’ faces or copyrighted works. Reaction split between praise for the technique and complaints about stiff, mechanical expressions.
A market bigger than the box office
The scale explains why studios are paying attention. CNSA estimated China’s micro-drama and animated-drama market at about 100 billion yuan ($15 billion) in 2025, and the National Radio and Television Administration said the micro-drama market had doubled on 2024 with nearly 700 million domestic viewers. China’s total cinema box office in 2025 was 51.8 billion yuan, according to the China Film Administration. The short-form market that the AI video industry is now flooding is almost twice the size of the cinema market.
The Backlash Against China's AI Video Industry
Chinese audiences have taken to AI content quickly, but Reuters found a backlash growing alongside the AI video industry.
Actors, likenesses and voice work
Chinese actors have raised concerns over the use of their likenesses in AI films, feeding worries about copyright infringement and job losses, especially for voice actors. It is the same fear running through the global film business, where a recent film summit declaration on AI drew only four signatures, and where AI dubbing tools such as Prime Video’s lip-sync feature are already changing how voice work is done. Worries about displacement are not limited to film: workers across China fear being replaced by AI in many occupations.
Plagiarism and originality
Consumers also complain about plagiarism and a lack of originality. “Some people directly blend other people’s original characters or dance clips into AI-generated content without any credit. I think that behaviour is completely unacceptable,” Wen, a 22-year-old AI content fan, told Reuters. When the AI video industry produces more than a thousand new shows a day, copying is the fastest way to ride a trend, and the hardest to police.
Niu Lai and the appeal of handmade
The strongest signal came from the cinema. Niu Lai, a crudely animated, conventionally produced film made over five years by a self-taught mother and son on a home computer, earned just 7,169 yuan from 236 viewers in its first nine days after opening on 5 August. Then social media mockery turned it into a sleeper hit. Official China Film Box Office figures cited by CNBC put its takings at 45.5 million yuan after three weeks.
Some saw its success as a backlash against AI content: audiences choosing something clumsy but human over something polished but generated. For the AI video industry, that is a warning that cost is not the only thing audiences are buying.
How Beijing Is Regulating the AI Video Industry
Unlike solar panels, video is content, and in China content is tightly regulated. Rules for the AI video industry have arrived in three layers over the past year.
Labelling rules since September 2025
The Cyberspace Administration of China’s Measures for Labeling AI-Generated Synthetic Content took effect on 1 September 2025. They require explicit labels that people can see on AI-generated text, images, audio and video, and implicit labels in file metadata. Reuters noted that China requires explicit labelling for AIGC but has yet to introduce clear copyright rules for it.
Tiered review from 1 July 2026
In June the National Radio and Television Administration (NRTA) issued classification standards for AI micro-dramas, effective 1 July 2026. They sort productions by budget and subject, and the tier decides who reviews them. According to 36Kr, AI micro-dramas must also carry metadata recording the production company, a work ID and the share of AI involvement.
| Tier | Budget or theme | Who reviews it |
|---|---|---|
| Key | 800,000 yuan or more, or sensitive themes such as politics, military, diplomacy, ethnicity, religion or security | NRTA; needs an online drama distribution licence before launch |
| Ordinary | 300,000 to 800,000 yuan, general themes | Filed with and reviewed by provincial authorities |
| Other | Under 300,000 yuan, general themes | Platform self-review, with regular reports to local authorities |
Most of the AI video industry’s output sits in the bottom tier. At 800 to 1,500 yuan a minute, a 100-minute AI series costs around 100,000 yuan, well under the 300,000 yuan threshold. That puts the platforms, not the state, in charge of reviewing most AI dramas.
The micro-drama measures of 1 September 2026
On 1 September, the NRTA’s Administrative Measures for the Development of Micro-Dramas took effect, covering all dramas with episodes under 20 minutes. TechNode reported that they require prominent AI disclosure labels in every episode of AI-generated micro-dramas, and bar platforms from using recommendation algorithms designed to encourage excessive viewing or addiction. The measures also require respect for originality, copyright and people’s lawful rights, with a greater emphasis on quality.
Platforms clean house
Platforms moved before the deadlines. Besides Hongguo’s review drive, Kuaishou inspected more than 8,000 AI animated dramas and removed more than 900 non-compliant works, according to 36Kr. The effect shows up in the CNSA data: the share of AI-made releases fell sharply between the first and second quarters.
The copyright gap
What is still missing is a clear rule on who owns AI-generated video and what can be used to make it. Until then, the AI video industry runs on labels without settled ownership. Director Cao Yiwen told Reuters that Europe is watching and waiting to see whether China will introduce clear laws.
Is the AI Video Industry Repeating the EV and Solar Story?
The comparison with electric vehicles and solar is Reuters’ framing, and it holds in several places. It also breaks down in a few that matter.
Where the playbook fits
The inputs are the same: national priority, city competition, subsidised capacity and a flood of entrants. The early outcome is also familiar: production costs fall fast, output multiplies and prices collapse. The drop in revenue per view looks like the price wars that followed China’s solar build-out.
Where content is different
A solar panel is a commodity, and cheaper is simply better. A drama is not. Audiences reward originality, and Niu Lai suggests that some will pay extra for proof of human effort. Content also cannot be exported the way hardware is. It needs translation, cultural fit and approval from each market’s regulators. And the scarce resource is attention, which subsidies cannot manufacture.
The “involution” problem
Beijing has spent the past year campaigning against “involution”, the term officials use for destructive, low-price competition in over-built industries. The AI video industry is a textbook candidate: near-zero marginal cost, easy entry and a fixed pool of viewer hours. The tiered review system and the push for quality look partly designed to stop that happening in content.
| Factor | EVs and solar | AI video |
|---|---|---|
| State support | Subsidies, land and cheap finance | Rent, living allowances, compute vouchers and funds |
| Main input subsidised | Factories and power | Graphics processors and cloud models |
| Product | Largely interchangeable | Every title is different; originality counts |
| Export route | Ship the hardware | Translate, localise and pass each market’s rules |
| Scarce resource | Demand and trade access | Viewer attention and paid traffic |
| Sign of overcapacity | Falling unit prices | Falling revenue per view; under 0.5% of shows reach 100 million views |
China's AI Video Industry Heads Abroad
Reuters found Chinese AI film content “surging, and even going abroad”. The export route runs through festivals, apps and platforms.
Cannes and the World AI Film Festival
Director Cao Yiwen premiered her AI-animated film at the World AI Film Festival in Cannes in April and told Reuters she thought China was taking the lead. “France and the rest of Europe are still watching and waiting to see whether China will introduce clear laws,” she said. “We fell behind in the first two industrial revolutions, so perhaps this is the Third Industrial Revolution.”
Short-drama apps overseas
The commercial export channel is the short-drama app. According to Sensor Tower, short-drama apps earned about $750 million of in-app revenue worldwide in the first quarter of 2026, up 20% year on year, from more than 850 million downloads. DramaBox and ReelShort each took close to $140 million. TechNode reported that TikTok paid $110 million in short-drama revenue sharing from January to July 2026. As production costs in the AI video industry fall, these apps can test far more titles in far more languages.
Europe’s labelling rules
Chinese AI content going abroad meets its own rules. The EU’s labelling obligations for authentic-looking AI content, which started on 2 August 2026, mean that the explicit labels China already requires will look familiar. Europe’s open question is copyright, which is the same one China has yet to settle.
What the AI Video Industry Means for Businesses
Most businesses reading this do not make micro-dramas. But nearly all of them buy video, in marketing, training, product demos and customer support. China’s AI video industry is resetting the price of that work, and the lessons carry over.
Video budgets are being reset
When a scene that cost 60,000 yuan can be made for 1,400 yuan, the old per-minute price of video stops being a sensible benchmark. Expect suppliers, including those outside China, to quote on AI-assisted workflows. Ask for itemised quotes that separate generation, editing, voice and licensing.
Labels are becoming the norm
China and the EU now both require AI-generated video to be labelled. If you publish synthetic video, build disclosure into your process now, including metadata, rather than retrofitting it later.
Distribution is the scarce asset
The clearest lesson from the AI video industry is that cheap production moves the cost to distribution. The 70% traffic share 36Kr estimated for AI dramas will look familiar to any marketer. More content does not mean more reach, and a flood of low-cost video, like the AI slop channels now appearing on smart TVs, can erode trust in the whole format. Budget for audience, not just output.
Questions to ask a video supplier
Before commissioning AI-made video, ask:
- Which video models do you use, and where is the footage generated and stored?
- Do you hold the rights to every character, voice and likeness in the output?
- How is AI use disclosed, both on screen and in file metadata?
- What human review happens before delivery?
- What does a revision cost, and how many takes are included?
If you are deciding where AI video fits in your own marketing or operations, our AI strategy team can help you weigh the costs, risks and rules.
What to Watch Next in the AI Video Industry
Four developments will show whether China’s AI video industry consolidates into a durable business or tips into a subsidy-driven glut.
Sanxingdui’s release
The box office for Sanxingdui: Future Memories will be the first real test of whether audiences will pay cinema prices for an AI feature. A strong opening would pull more studios into the AI video industry. A weak one, set against Niu Lai‘s success, would strengthen the backlash.
Enforcement of the September rules
The micro-drama measures ban addiction-driven recommendation and demand labels in every episode. How strictly the NRTA and provincial regulators enforce them will decide how much of the current flood survives.
Third-quarter results
Kuaishou and iQIYI reported second-quarter results in mid-August, so third-quarter numbers should follow late in the year. Kling’s growth rate and iQIYI’s cost base will show whether the platforms are making money from the AI video industry or subsidising it.
Copyright rules
China has labelling but no clear copyright regime for AI-generated content. Whoever writes those rules, in Beijing or Brussels, will shape where the AI video industry’s next wave of studios chooses to set up.
Frequently Asked Questions About China's AI Video Industry
What is China’s AI video industry?
It is the fast-growing sector of filmmakers, studios, model makers and streaming platforms that produce video with generative models, mostly short vertical micro-dramas but increasingly television series and feature films. Local governments support it with rent, compute and cash subsidies.
How much does AI video cost to make in China?
CCTV said the cost of AI short dramas fell from 5,000 yuan per minute to a few hundred yuan during the first half of 2026. Reported costs now range from about 200 to 1,500 yuan per minute, with raw generation on models such as Seedance 2.0 at about 1 yuan per second.
Is the AI video industry in China oversupplied?
There are signs of overcapacity. Of 221,900 AI shows launched on Douyin in the first half of 2026, only 1,055 reached 100 million views, and revenue per view has fallen sharply while traffic costs have risen.
Which companies lead the AI video industry in China?
On the model side, ByteDance (Seedance and Jimeng) and Kuaishou (Kling) lead. On distribution, Douyin, Hongguo, Kuaishou and iQIYI dominate, and Bona Film Group has the first major-studio AI film licensed for cinemas.
How is AI video regulated in China?
AI-generated content must carry visible and metadata labels under rules in force since September 2025. AI micro-dramas have been reviewed in budget tiers since July 2026, and new micro-drama measures from September 2026 require labels in every episode.
Does the AI video industry affect businesses outside China?
Yes. It is pushing down the price of video production worldwide, spreading labelling norms, and moving costs from making video to distributing it. Businesses buying video should expect AI-assisted quotes and check rights and disclosure.
References and Further Reading
China fuels rush to turn AI video into an industry (Reuters)
Rampant AI-generated short dramas: 220,000 new titles in half a year (36Kr)
How major tech companies respond as AI-generated short dramas hit regulatory red lines (36Kr)
China’s short-drama producers flood the market with cheap bets (CNBC)
From wild growth to tech-driven growth in China’s AI short drama industry (TechNode)
AI fuels rise of one-person crew in micro-drama industry (China News Service)
First fully AI-generated drama airs on Chinese TV (Global Times)
Bona Film wins approval for China’s first AI movie in theaters (Caixin Global)
iQIYI announces second quarter 2026 financial results (iQIYI)
iQIYI Q2 2026 earnings call highlights (GuruFocus via Yahoo Finance)
Kuaishou Technology second quarter and interim 2026 results (Kuaishou)
Kuaishou’s Kling AI revenue tops RMB850 million in Q2 (TechNode)
ByteDance’s Seedance 2.0 video model costs about $0.14 per second (TechNode)
State of Short Drama Apps 2026 (Sensor Tower)
Measures for Labeling AI-Generated Synthetic Content (China Law Translate)
State Council opinions on the AI+ initiative (CSET)
China’s micro-drama market doubles in 2025 (Bastille Post)
China’s 2025 box office revenue exceeds 51.8 billion yuan (Bastille Post)
Niu Lai, Chinese animated film mocked as terrible, becomes a box-office hit (NBC News)
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