China’s Newborn Town targets global viewers with AI-made short dramas
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Though based in the mainland, almost all of Newborn Town’s businesses are entirely outside of China.
PHOTO: NEWBORNTOWN/X
BEIJING – Chinese social networking and entertainment provider Newborn Town is doubling down on artificial intelligence to create short dramas in a bet the technology can slash costs while fuelling growth across emerging markets.
The Hong Kong-listed app company wants AI to generate most of the content 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,” she said.
Tailored to smartphone users, short dramas consist of episodes typically running from one to three minutes each.
The format has gained traction on major platforms such as Meta’s Instagram and ByteDance’s TikTok, and there are also dedicated standalone apps for viewers seeking such content directly.
Though based in the mainland, almost all of Newborn Town’s businesses are entirely outside of China, including in places such as the Middle East.
Still, its move further into AI-generated dramas mirrors that of other Chinese media giants like iQIYI, 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 a 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, this is expected to drive profits, with earnings for the current fiscal year set to top one billion yuan (S$191 million) for the first time ever, analysts’ estimates show.
Although increased investment in AI and new initiatives will likely weigh on profit margins in 2026, the financial impact from these developments – including short dramas – should remain contained at approximately 200 million yuan to 300 million yuan, according to Bloomberg Intelligence analyst Robin Leung.
While near-term revenue contributions will remain modest, Playlet should help Newborn Town penetrate high-monetisation markets and diversify its long-term monetisation base, Leung added.
Overseas opportunities
Almost 60 per cent of all Chinese netizens were watching micro-dramas as at 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 is significant untapped potential.
“The overseas market is still in an earlier stage than 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 per cent.
With short-form dramas and AI applications still in their early growth phase, revenue growth for the company’s innovative business segment is projected at 50 per cent in 2026, according to a late-May note from Zhongtai Securities.
Zhongtai is one of 19 analysts covering Newborn Town tracked by Bloomberg. All hold a buy or equivalent rating.
Beyond AI dramas, Newborn Town is also aggressively expanding across various parts of the world, with a multitude of entertainment and social networking apps in its portfolio.
Being able to localise its app offerings helps the company tailor them to different cultural preferences, Yu said.
One example is through its casual gaming app TopTop. While already popular in the Middle East, it has gained increasing traction in Japan.
Its social networking app SUGO, which is also popular in the Middle East, is gaining further headway 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 is a vast pool of users who are still exploring online social entertainment for the very first time,” Yu said. “So instead of just fighting for existing traffic, we think the real winner will be whoever truly understands local culture and delivers a tailored experience.” Bloomberg
