Cathay Pacific Haitong: AI-restructured video industry tool vendors are expected to benefit from growing creative demand

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that according to data, the domestic short drama market is expected to exceed 121 billion yuan in 2026, an increase of 21% over the previous year. As the capabilities of large multi-modal models such as Seedance improve, AI dramas expand rapidly to boutique and long videos. Platforms, IP and content production companies are expected to benefit from increased content supply and improved production efficiency, and AI video tool manufacturers are expected to benefit from increased creative demand.

Cathay Pacific Haitong's main views are as follows:

AI video accelerates penetration, driving the continuous growth of the skit market

According to DataEye, the domestic short drama market is expected to exceed 121 billion yuan in 2026, an increase of 21% over the previous year; according to Dianzhong Technology's forecast, the market size is expected to reach 400 billion yuan in 2034, with a CAGR of about 16.1% in 2027-2034. Among them, the AI drama and comic market is expected to reach 40 billion yuan, accounting for about 33.1% of the overall market. As video models continue to be upgraded, production costs decline, and the supply of high-quality content increases, the bank expects the AI drama and comic market to reach 260 billion yuan in 2034, with a CAGR of about 24.2% in 2027-2034. AI video is expanding from short dramas to high quality long dramas and movies, and the supply of content is expected to continue to expand.

AI restructures the film and television production process, highlighting the value of IP and platforms

The AI video model promotes the transformation of film and television production from traditional real shooting to generative production, significantly reducing production costs and shortening the production cycle. The overall production cost of the industry has dropped from 300,000 yuan/department to 50,000 yuan/unit in the past. With the rapid increase in content supply, the value of the industrial chain is expected to shift to IP and platform side. On the IP side, 2026H1 Reading Group's copyright operation and other business revenue was 1,691 billion yuan, with a year-on-year increase of 40.3%, of which the total revenue of skits and AI comics exceeded 430 million yuan, an increase of 230% over the previous year; in terms of production, 89% of the top 100 domestic short dramas came from genuine text IP adaptations, highlighting the importance of high-quality IP; in terms of tools, AI video generation mainly uses subscription systems and API billing models. On the platform side, the average generation cost of Hongguo skits relied on traffic recommendations, content division and accounting. Monetize and continue to expand the supply of AI comic content.

Skit going overseas to maintain its boom, and AI opens up room for overseas growth

According to DataEye, the overseas short drama market is expected to reach 6 billion US dollars in 2026, an increase of 50% over the previous year; according to Dianzhong Technology's forecast, the market size is expected to reach 150 billion US dollars in 2034, and the CAGR is about 48.5% in 2027-2034. Among them, the overseas AI drama market is expected to increase from 100 million US dollars in 2025 to 650 million US dollars in 2026, an increase of 550% over the previous year, and the revenue penetration rate will increase from 2.5% to 10.8%; the bank expects a penetration rate of 45% in 2034, corresponding to a market size of 67.5 billion US dollars. As AI reduces video production and localization costs, and business models such as superimposed membership subscriptions and single episode payments gradually mature, Chinese short drama manufacturers are expected to speed up the supply and localized distribution of overseas content.

Risk warning: User demand falls short of expectations, AI video industry growth falls short of expectations, AI video production quality improvement falls short of expectations.