The Zhitong Finance app learned that Huajin Securities published a research report saying that on December 13, the Douyin Open Platform released the “Content Review Requirements for Short Drama Mini Programs”, and that the short drama review can only be broadcast before it can be uploaded. The continuous improvement of regulatory standards by various short video platforms will help the formal development of the micro-drama industry and help leading companies expand their markets. It is recommended to focus on relevant targets: Chinese Online (300364.SZ), Huace Film and Television (300133.SZ), Shanghai Film (601595.SH), Jebsen (300182.SZ), Zhidu Co., Ltd. (000676.SZ), Tianxia Show (600556.SH), etc.

The main views of Huajin Securities are as follows:

With the review of Douyin skits and the release of listing rules, it helps the healthy and orderly development of the industry to the benefit of leading companies.

As the most important short drama broadcasting platform in China, formulating uniform review requirements will play an important role in the supervision of short drama content. In terms of content, it is stipulated that in the Douyin applet, short dramas that have not been stored, have not issued review results, and review results are “unplayable” will be restricted. The standards refer to the “General Rules for the Review of Online Audiovisual Program Content”, the latter of which was issued and implemented by the China Internet Audiovisual Program Service Association on July 1, 2017. The “General Rules” stipulate in detail the review principles, guidance requirements, program content review standards, and penalties for online audiovisual program content. In particular, the program content review section details the review standards for all dimensions of detail. In terms of advertising, Douyin stipulates that short dramas published on Douyin, Douyin Express, and Douyin Volcano editions and that are viewed on other platforms are all required to be submitted for review through the short drama mini-program content library. Short dramas that have not been stored, have no review results, and review results are “unplayable” will be restricted from advertising plans.

Supervisory authorities and platforms work together to help gradually improve the micro-drama ecosystem.

Since November 15, when the one-month special rectification work for the online miniseries industry began, various online platforms have successively carried out the investigation and disposal of illegal micro-dramas and related accounts. On December 8, WeChat issued a notice on the disposal of illegal micro-skit mini-programs (Issue 12), removed some of the illegal mini-programs, and dealt with the relevant illegal mini-programs. On December 11, Douyin issued a notice on cracking down on illegal miniseries (5), removed 598 illegal mini-dramas, and disposed of 93 Douyin accounts that posted illegal mini-dramas. On December 12, Kuaishou issued a governance notice on illegal mini-programs in the micro-skit drama category (Issue 15). In total, more than 20 illegal micro-dramas were removed and reported to the “black list” of online micro-skits. At the same time, 11 accounts that posted illegal content were punished accordingly according to the extent of the violation. Against the backdrop of the continuous strengthening of these regulations, the skit industry is still developing strongly. According to data from Ai Media Consulting, the size of China's online short drama market is on the rise. In 2023, the size of China's online short drama market will reach 37.39 billion yuan, an increase of 267.65% over the previous year; it is estimated that in 2027, China's online short drama market will exceed 100 billion yuan. In the third quarter of 2023 alone, the number of online short dramas distributed in China reached 150, nearly double the total for the whole of 2022.

Risk warning: policy uncertainty related to micro short dramas, uncertainty about micro short drama content category requirements, uncertainty about user feedback on short drama content, etc.