AVIC Securities: AI Empowers Film and Television, Upgrading from "Cost Reduction and Efficiency Enhancement" to "Value Redistribution"

AVIC Securities released a research report stating that, taking into account the industry's stage of development and valuation position, it recommends a layout priority of: content and IP > platform channels > AI tools and overseas expansion. Content IP is the core lever for capturing a share of long-form content revenue, while platforms, AI tools, and the overseas expansion track provide traffic and performance elasticity. It suggests focusing on three types of targets: first, content parties with reusable IP, AI production capabilities, and the ability to participate in long-drama and theatrical revenue sharing; second, long-video platforms with review-while-broadcasting capabilities and more efficient payment collection; third, video models, AI production platforms, and overseas short-drama distribution channels, to capture opportunities in tool monetization and overseas incremental growth. The main views of AVIC Securities are as follows: Event On August 31, "Post-Journey to the West" "Flower Fruit Mountain Chapter" began airing at 18:00 on Mango TV and Hunan Satellite TV, making it the first AIGC long drama to be broadcast on satellite TV in China and the first implemented series under the "review-while-broadcasting" model; the production team numbered nearly 100 people and relied on the Mango Lingchuang AIGC platform to complete production; On October 23, "Sanxingdui: Future Past" was released nationwide with a runtime of 100 minutes, making it the first domestic theatrical feature film produced using AI technology and granted a public screening permit by the China Film Administration; Zhejiang Huace Film & TV's interim report shows that the AIGC premium projects "The Missing 500 Years" (the first work in the "Journey to the West" series) and "Zizhi Tongjian," the first domestic AI historical drama micro-short drama, have fully entered the production stage. The supply side has entered "scale-up," and AI has become a mainstream production paradigm The "2026 H1 AI Drama and Anime Drama Data Report" released by industry research institution DataEye shows that from January to May this year, the domestic AI drama and anime drama market size exceeded RMB22 billion, and for the full year is expected to approach the RMB40 billion mark, a sharp year-on-year increase of 138%. The user side is also exploding in tandem, with domestic AI short-drama users exceeding 600 million in the first half of this year. According to data from the National Radio and Television Administration, in the first eight months of 2026, 430,000 micro-short dramas were launched nationwide, equivalent to 13 times the full-year total of 2025, of which AI dramas accounted for more than 90%. As the supply curve steepens, the quality threshold is risingplatforms have begun cleaning up low-quality content and adjusting support structures, and the industry is shifting from "competing on quantity" to "competing on quality," which also means that production capacity relying solely on low-cost volume expansion is being cleared out. Rising demand firmly consolidates the foundation, and user time spent supports paid conversion The "China Online Audiovisual Development Research Report (2026)" shows that the user base for micro-short dramas is growing rapidly, with app usage time catching up to instant messaging. As of December last year, the user base for micro-short dramas reached 662 million, with a usage rate of 59.7%, up 7.3 percentage points from the first half of the year. On the demand side, the continuously expanding user base and steadily rising user time spent constitute solid support for the foundation of content payments. The industry regulatory framework has been implemented, moving from "special governance" to "institutionalization" The "Measures for the Administration of the Development of Micro-Short Dramas" (Order No. 16 of the National Radio and Television Administration) consists of eight chapters and 54 articles and takes effect on September 1, 2026. The regulatory framework has been clearly implemented, adopting tiered and precise management: micro-short dramas are classified into Category I, Category II, and Category III according to project investment amount and subject matter type, with differentiated implementation of filing disclosure and distribution licensing; classified filing and distribution licensing are implemented according to investment amount and subject matter, with 11 content red lines clearly defined that must not be crossed, prohibiting content that endangers national security, denigrates China's fine traditional culture, or infringes on the lawful rights and interests of minors; special rules are set for AI-produced micro-short dramas, requiring that series generated and produced by AI add a prominent notice in each episode, so that the application of new technology is identifiable and traceable, while safeguarding the content bottom line and adapting to the pace of industry technological iteration. In the long run, the policy environment is favorable to leading micro-short drama enterprises with sound compliance systems and stable capacity to supply premium content, and industry resources are expected to continue concentrating toward high-quality leading players. Risk disclosure: risks of technology investment and implementation capability falling short of expectations, intensifying industry competition, policy changes, and changes in the international environment.