China's Newborn Town targets global viewers with AI-made short dramas

Newborn Town, a Chinese social networking and entertainment provider, is making a significant bet on artificial intelligence to revolutionize short drama production. The Hong Kong-listed company aims to use AI to generate the majority of content for its short drama app, Playlet, a move Vice President Gloria Yu believes will slash costs and fuel growth in emerging markets.

"We believe AI is simply a highly efficient production tool. It doesn’t dictate the storytelling quality," Yu stated, emphasizing the technology's role as a facilitator rather than a creative director. Short dramas, typically one to three minutes per episode, have gained substantial traction among smartphone users on platforms like Instagram and TikTok, and through dedicated apps.

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We believe AI is simply a highly efficient production tool. It doesn’t dictate the storytelling quality.

The company's strategy mirrors that of other Chinese media giants, such as iQiyi, which also anticipates AI generating the bulk of its future film and show output. Newborn Town's business operations are primarily outside of mainland China, with a strong presence in regions like the Middle East. This global focus positions the company to leverage AI-driven content creation for international expansion.

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AI-generated dramas also cost roughly one-tenth as much as live-action productions, she said, with turnaround times as short as half a month.

AI-generated dramas offer a compelling economic advantage, costing approximately one-tenth of live-action productions and requiring turnaround times as short as half a month. This efficiency is expected to drive Newborn Town's profits, with analysts projecting earnings to surpass 1 billion yuan for the first time in the current fiscal year. While investments in AI may impact profit margins in 2026, the overall financial impact is expected to be contained.

Newborn Town sees significant untapped potential in overseas markets for short-form dramas, despite lower current penetration rates compared to China. The company projects a long-term global market penetration rate of up to 30 percent. With both short-form dramas and AI applications in their early growth phases, revenue growth for Newborn Town's innovative business segment is projected at a robust 50 percent in 2026.

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So the overseas market is still in an earlier stage versus the China market, but the growth pattern will be very similar to the China market.