When Wang (a pseudonym) arrived in Xi'an this year expecting to start as a production manager on a short‑form drama, the job he had won before the Lunar New Year evaporated within weeks. The commissioning company paused the project, then cancelled it outright in favour of AI‑generated drama; the on‑set role he had been hired for no longer exists. Across Xi'an and Zhengzhou former hubs of the so‑called “short‑drama” boom, once‑busy studio floors and props warehouses are suddenly quiet.
The emptiness is visible at facilities such as the Dream Factory real‑set base in Xi'an, which was converted from a derelict factory into a compact filming town with an inventory of hundreds of thousands of props. Last year the base updated its incoming production schedule almost weekly; this March it had barely half a board of bookings. Managers report discounting and special annual deals to retain a diminished roster of returning clients.
The industry's rapid rise helps explain why the fall‑off has been so jarring. Micro‑short dramas exploded from a niche in 2020 into a mainstream business by 2024. Industry figures show China’s short‑drama market expanding from under 10 billion yuan in 2020 to more than 100 billion by 2022, and reaching 504.4 billion yuan in 2024 — a year‑on‑year gain of 34.9% that, for the first time, eclipsed movie box office receipts. The sector supported large numbers of jobs: roughly 219,000 direct positions and 428,000 indirect roles, creating some 647,000 opportunities in total.
The technological shock is straightforward and brutal: AI substitutes labour, time and location with compute. Producers estimate that an eighty‑episode short drama shot on location once required actor fees of roughly 300,000 yuan and, counting staff, sets and props, cost at least 400,000 yuan to produce at acceptable quality. An AI‑generated equivalent, industry insiders say, can now be produced for a bit more than 100,000 yuan. Actors, extra crew, location rentals and most prop costs disappear; a studio room is replaced by access to servers and algorithms.
The commercial consequences follow. Bases that grew by monetising cheap local labour, low rents and extensive prop libraries now face demand destruction. Managers who once hosted seven or eight crews a day report only one or two. Some facilities have quietly cut listed prices for preferred annual clients from roughly 300 yuan an hour to below 200 yuan, while higher‑cost downtown bases face existential risk if work dries up for even a few months. Companies with large fixed overheads and thin margins are the likeliest casualties.
Film‑service firms and production houses are already reshaping themselves. Some have pivoted to AI‑first production, recruiting technical staff for generative video workflows; others are moving from salaried employment to partnership models or dissolving entirely. The shift is altering the employment profile of the sector — from carpenters, costume makers and extras to prompt engineers, model trainers and compute managers — and accelerating concentration in firms that control both creative IP and the necessary technical stack.
The transformation raises broader questions beyond local vacancy rates. AI‑generated content poses legal and ethical issues around likeness, copyright and misinformation; it may erode craft skills and the distinctive texture that real locations and performers bring. But it could also lower entry barriers for new storytellers and create new, higher‑skilled roles. How policymakers, platforms and the industry manage retraining, standards and intellectual property rights will shape whether this transition is a short, painful correction or a long‑term reordering of China’s fast‑maturing content economy.