Hengdian Crews Down 70% as AI Short Dramas Reshape Industry
Hengdian World Studios, China’s largest film and television production base, saw the number of active short drama crews collapse from a peak of 70 in late 2025 to below 20 by April-May 2026, according to on-the-ground reporting from Jimu News. The dramatic contraction signals a profound transformation in China’s entertainment sector, driven primarily by the explosive rise of AI-generated short-form dramas.
The Boom That Preceded the Bust
Located in Zhejiang Province, Hengdian — often called “Chinawood” — became the epicenter of China’s short drama industry between 2023 and 2025. Vertical-screen short dramas designed for mobile consumption attracted thousands of production companies and aspiring actors, with studios operating at full capacity and crews competing for space and talent. A hit short drama could generate returns of 10x or more on investment, fueling a speculative frenzy that saw production costs averaging 500,000 yuan per series.
The AI Disruption
The turning point arrived when AI video generation technology reached commercial maturity. By the first quarter of 2026, the China Netcasting Services Association reported that of 128,000 micro-dramas launched nationally, a staggering 95% were AI-generated. The economics were decisive: an AI short drama could be produced for approximately 50,000 yuan, compared to 500,000 yuan for a live-action equivalent — a tenfold cost advantage that triggered an immediate capital reallocation from live-action to AI production.
As additional Jimu News reporting documented, the human toll has been severe. An estimated 80 to 90 percent of short drama performers have been affected. Actor Wu Weibin, known locally as the “Drama King,” saw his peak monthly income of 20,000 yuan evaporate. By spring 2026, he was working barely three to five days per month and could not afford to travel to his daughter’s birthday. Xu Peng, a Central Academy of Drama graduate, had two pre-booked projects canceled and returned to his hometown to sell vegetables from his grandfather’s cart. Xu Mengqiang, who appeared in over 100 shows in two years, now sells cold noodles on the streets of Hengdian.
Industry in Freefall
The crisis extended well beyond actors. According to industry analysis, director Yu Yang had four projects canceled at the start of 2026 as investors shifted en masse to AI. His output dropped from three to four shows per month to barely one or two. Senior producer Zhou Chi’s company saw production plunge from 12 shows per month at the peak to just two. Equipment rental orders collapsed, studio space stood empty, and the support ecosystem — transportation, catering, wardrobe — that had grown around the live-action short drama industry was decimated.
Platform policy changes compounded the crisis. Major short drama platforms canceled guaranteed minimum payments for mid-tier production companies, removing the safety net that had sustained smaller players. The result was a cascade of closures and consolidations.
Survival of the Fittest
Despite the devastation, some industry veterans see the shakeout as a necessary correction. “Last year’s frenzy was pathological,” said studio operator Zhu Wei, who noted that her facility once hosted over a dozen crews simultaneously. “How could there be more than ten crews in one studio every day?” She believes the crisis is weeding out speculative capital. “Those who stay are the ones who truly want to create content. Industry change is good — survival of the fittest.”
Director Ge Da offered a nuanced perspective on AI’s role. “AI is a gun, but having a gun doesn’t make everyone a sharpshooter — the key is the person using it.” He compared AI to mass-produced shoes and live-action to handmade footwear: efficient and cheap versus imperfect but full of emotional resonance.
Signs of Recovery
By July 2026, cautious signs of recovery had emerged. Studio bookings and equipment rentals showed modest improvement, and Hengdian Film City introduced support measures including free access to over 130 studios totaling 500,000 square meters of production space. Industry voices increasingly called for a return to quality content rather than volume.
Li Naiqing, Secretary-General of the Hengdian Freelance Professionals Association, predicts a tripartite future: pure live-action, pure AI, and hybrid AI-human productions. “AI short dramas have been running for half a year, and it’s clear audiences still crave the ‘living person’ feel,” he said. “Live-action short dramas will slowly recover.”
What Lies Ahead
The crisis at Hengdian represents more than a local industry contraction. It is a case study in how rapidly generative AI can disrupt a labor-intensive creative sector when cost advantages reach a tipping point. The path forward will likely involve a redefinition of value — where human storytelling, emotional authenticity, and artistic craft command a premium in an increasingly automated content landscape. For the thousands of actors, directors, and crew who built their livelihoods around the short drama boom, the question is whether they can adapt fast enough to survive the transition.