Six months ago, I sat in a room with micro-drama producers celebrating what felt like the next great frontier of entertainment, maybe even Hollywood’s comeback, with funding flowing, jobs opening up after the strikes and studios finally showing up.

In LA, it felt like we're back, baby.

A few months later, I talked to those same people again. The industry was already losing steam, and the jobs disappearing weren't going to a bigger studio or a smarter competitor. They were going to the AI tools inside their own format.

But you might not get this story from the headlines right now.

Reuters reported last week that NBCUniversal has been running verticals on Peacock since early 2025 and recently released two unscripted micro dramas featuring Bravo personalities.

Fox cut a deal with Holywater, the Ukrainian company behind My Drama, for more than 200 vertical titles in exchange for equity. Former Miramax CEO Bill Block launched an app called GammaTime. Lloyd Braun is backing aTwist, where former Showtime president Jana Winograde and ex-NBCU exec Susan Rovner say the quiet part out loud. They're not chasing Emmys, they're chasing the People's Choice Awards.

That’s good and probably the most self-aware thing a studio exec has said in years.

And the money backs them up. Omdia projects the U.S. micro-drama business at roughly $1.5 billion this year, climbing toward $2 billion by 2027. Deloitte forecasts global in app microseries revenue to more than double to about $7.8 billion in 2026. These aren't experiment numbers. They're line-of-business numbers.

Outside China alone, the overseas micro drama market hit $1.525 billion in the first eight months of 2025, up 195% year over year, according to one market map tracking the format's global spread.

So why does the whole thing already feel like yesterday's headline?

Because the cost advantage that made micro-dramas interesting to Hollywood in the first place got eaten by AI while everyone was busy signing deals and debating the future of Hollywood.

TheWrap reported in June that international players are pushing out fully AI-generated microseries, and some are already attracting meaningful audiences.

Dashverse says its DashReels platform holds 68% retention on AI content with 10 million monthly active users. TikTok launched a dedicated short-drama app, PineDrama, earlier this year. One Korean studio finished an AI-generated vertical title in six weeks and cut costs by about 90%.

Reuters reports that traditional micro drama series can cost between $100,000 and $300,000, while AI productions can be completed in three to four weeks for $60,000 or less. At that price and pace, AI is not necessarily competing with Hollywood on quality.

It’s competing on volume, and volume is how this format wins.

Los Angeles shoot days fell from 36,792 in 2022 to just 19,694 in 2025, while roughly 41,000 industry workers left between 2022 and 2024, according to FilmLA data reported by the Washington Times.

A vertical series made under SAG-AFTRA’s Verticals Agreement, which covers productions budgeted below $300,000, is not replacing that lost work.

It’s a much smaller, cheaper category filling empty stage time. For every vertical shoot booking a soundstage, there are far more union crew members sitting idle who used to work on multimillion dollar episodic productions.

I don't think that means Hollywood loses. I think it means Hollywood bought into the wrong part of the business. Studios showed up with what they're best at, production capacity, taste, famous faces, right as production capacity stopped being scarce. What actually stayed scarce is story architecture, the thing everyone keeps calling soft. Knowing which cliffhanger lands and when a viewer taps out.

The AI studios know this too, which is why the honest ones keep saying the same thing. The tech is great at spectacle and still shaky at anything emotionally complicated.

Producers working in China have been open that live action still outperforms on the human stuff, which suggests the two versions of this format might drift apart rather than merge.

There's a regulatory piece here too, and it belongs on the pile of things Hollywood didn't price in when it showed up late. China's broadcast regulator has introduced tiered standards for AI micro dramas while enforcing broader rules around AI labeling and synthetic content.

More than 50,000 AI-native titles hit Douyin in a single month this spring, at roughly a tenth the cost of live-action production, according to reporting on China's micro drama industry. AI-generated content moved from about 7 percent to 38 percent of China’s top 100 micro drama titles within a single year, per one industry guide tracking the format.

The U.S. still lacks a comprehensive framework addressing disclosure, likeness rights, consent and labor displacement in AI entertainment. Meanwhile, hundreds of micro drama apps are competing for a market whose revenue is already concentrated among a small group of leaders.

That regulatory gap raises a related question. Does the U.S. eventually crack down on these AI studios the way it went after TikTok? I don't think so, and it's not really a regulation question anyway. U.S. social platforms have their own incentive not to flood themselves with AI slop. It's still in their business interest to keep people trusting what they see, which puts real pressure on quality even without anyone forcing it. That means there's an incentive to build human-based channels and series on the platforms people already use. But the standalone microdrama apps aren't going anywhere either. AI micro-dramas become the new reality TV, a guilty pleasure, the thing you watch at 1am and don't bring up at dinner, one more indulgence tucked inside the creator economy.

Here's the part that's harder to sit with. Everyone wants a villain in this story, and right now that villain is the AI studios, the platforms, the executives who greenlit it.

But the reality is that nobody is forcing 10 million people to open these apps every night.

We did the same thing with fast fashion, fast food or even Amazon. Nobody forced anyone to buy a five-dollar shirt instead of a hand-tailored one; we just kept choosing convenience and price until the market rebuilt itself around that choice. A smaller premium tier survived for people willing to pay more for the slower, human-made and ethical version, and the middle got hollowed out.

That's happening to entertainment now, and the people absorbing the shock are the ones who usually absorb it everywhere else: the workers in the middle and those who push back against disruption.

One 2026 survey found 93% of viewers still say they prefer human actors, per the same report, even as producers keep swapping in synthetic performers to cut costs. Stated preference and actual behavior aren't the same thing, and the gap between them is where this format lives.

What audiences say they value and what their behavior ultimately rewards may still be different, and the gap between those two things is where this format will be decided.

So if you're making things, here's my hot take. Stop thinking of vertical as a smaller version of TV. That framing is what made the studios late.

The people winning this format are running it like mobile gaming with actors attached, and the ones still standing in 2028 will be the ones who own an audience relationship rather than a soundstage.

It's worth noting the deals already happening on the creator side. Fox partnered with Dhar Mann this year on a slate of 40 original vertical shows. Issa Rae's Hoorae Media partnered with TikTok on the same format: her debut project, Screen Time, hit nearly 75 million views in its first week and has since crossed 150 million, the best watch time TikTok has seen for any series. "What attracts me to micro dramas specifically is the ability to still experiment online, tell stories, get an audience around them and own the IP," Rae said. Those deals point to something different than the AI story.

The moral of this story is that micro-dramas as a format aren't going anywhere.

What's still an open question is whether the survivors end up looking like AI content mills or creator-led studios, and that won't come down to who has better tech. It'll come down to who already has people showing up. Hollywood spent a year deciding whether micro-dramas were serious. The real mistake was buying the soundstage instead of the audience, and the producers I sat with six months ago now know exactly what it feels like to be on the wrong side of that math.

I'm so excited to co-host Build Your Branding with AI Agents alongside Tal Navarro and Aisha Corpas Wynn! Join them on Thursday, August 27 from 6:00 PM to 9:00 PM PDT at The KINN in Venice.

They will be running a hands-on workshop to help women use AI to streamline content, save hours every week, and keep their personal brand working automatically. Bring your laptop and your questions, and get ready to leave with practical tools you can start using right away!

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This is a BIG EVENT I’ve been workin on for a year…

My company, What’s Trending and TheWrap will be co-hosting AI Creator Day on Tuesday, September 29, 2026, in Los Angeles. AI is completely rewriting entertainment, and creators are rapidly becoming the new studios. We're bringing together digital storytellers, marketers, brands and tech leaders to explore where the creator economy and AI are heading next.

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Remember, I'm Bullish on you! With gratitude,