AI-Generated Content Dominates China's Microdrama Market as Major Studios Integrate AI Into Production

More than 95% of China's new microdramas in Q1 2026 were AI-generated, up from near zero a year earlier, according to a CNA report from Shanghai. Streaming giants iQiyi and Tencent Video are embedding AI into their production pipelines, with iQiyi's CEO predicting that purely AI-generated feature films could arrive as early as this summer and that over half of leading film and television works could be AI-generated within five years. The first AI feature film has already been licensed for cinema release, marking a significant threshold for the technology's mainstream acceptance.

The shift is reshaping creative workflows across the industry — from 90-second vertical dramas to long-form content — while also disrupting jobs and raising fundamental questions about creative authorship. The 28th Shanghai International Film Festival spotlighted the trend with its new "AI Backlot" programme, pairing traditional filmmakers with AI-native creators to co-produce AI-generated shorts. Industry observers note that AI is enabling small teams to produce work that once required large crews, intensifying competition and blurring the line between AI-assisted and human-driven storytelling.