Chinese social networking and entertainment provider Newborn Town Inc is doubling down on artificial intelligence (AI) to create short dramas in a bet that the technology can slash costs while fuelling growth across emerging markets.
The Hong Kong-listed app company wants AI to generate the majority of output on its short drama app Playlet, said Vice President Gloria Yu. "We believe AI is simply a highly efficient production tool. It doesn’t dictate the storytelling quality.”
Tailored to smartphone users, short dramas consist of episodes typically running one to three minutes each. The format has gained traction on major platforms like Meta Platforms Inc’s Instagram or ByteDance Ltd’s TikTok, while there are also dedicated standalone apps for viewers seeking the content directly.
Though based in the mainland, almost all of Newborn Town’s businesses are entirely outside of China, such as in the Middle East. Still, its move to venture further into AI-created dramas has mirrored other Chinese media giants like iQiyi Inc, which also expects AI to create the bulk of its films and shows in the next five years.
Chinese users have found their way to AI-generated content, with advertising spending on AI short dramas already on par with traditional live-action shows, according to Yu.
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.
For Newborn Town, that’s seen driving profits, with earnings for the current fiscal year set to top 1bil yuan (US$148mil/RM605mil) for the first time ever, analysts estimates show.
Overseas opportunities
Almost 60% of all Chinese netizens are watching micro-dramas as of December 2024, according to data from the China Internet Network Information Center. While the penetration rate in overseas markets is much lower, Yu said there’s significant untapped potential.
"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,” she said. While global adoption may not yet match China’s high baseline, the firm still projects a longer-term global market penetration rate of up to 30%.
Beyond AI dramas, Newborn Town is also aggressively expanding in various parts of the world with a multitude of entertainment and social networking apps in its portfolio.
Being able to localise their app offerings helps the company to tailor to different cultural preferences better, Yu said. One example is through casual gaming app Top Top. While already popular in the Middle East, it has gained increasing traction in Japan.
Its social networking app SUGO, which is already popular in the Middle East, is gaining further traction in Latin America. Scaling across Latin American markets has become a primary focus for the company, placing it at the forefront of a major wave of Chinese tech firms expanding into the region.
"There are a vast pool of users who are still exploring online social entertainment for the very first time,” she said. "So instead of just fighting for the existing traffic, we think the real winner will be whoever truly understands local culture and delivers a tailored experience.” – Bloomberg
