1.2.2 The Operational Logic of Vertical Screen Microdramas------Why the Heavy Payment Model Succeeds

ROI and Conversion Rate: The Core Drivers of Operations

Why has this model taken off? Because it’s heavy on payments, involving ROI and conversion rates. Since it’s payment-heavy, there’s budget for placing ads to acquire leads—that is, to get users. With funding secured, as long as the numbers hold up, it can keep running. If ROI hits 1.2 or 1.3, they can continuously place ads, gather leads, and convert them. When you hear about revenue reaching 200 million, it’s not pure profit—the actual profit might be around 50 to 60 million, with gross profit in that range. After deducting personnel costs across the process, net profit might settle around 40 million. Still, it’s very attractive—especially when the initial investment was only 400,000.

Screening Heavy Payment Users vs. Free Models

So, you can see why mini-programs are leading the way. They filter out heavy payment users who can sustain the ad placements. In contrast, free vertical microdramas are mostly made by influencers because they rely on their own traffic and don’t need to spend on ads. But those influencers aren’t cheap either—top ones with millions of followers can charge 500,000 for a single ad, depending on the niche. For example, in the car niche, it’s even pricier. That’s why free models haven’t taken off yet—they depend on organic traffic and public domain flow. Will they catch up in the future? I’m optimistic. I think all types of vertical microdramas will thrive eventually. We might even see mini-programs shift to lighter payment or free models once the model is proven. But that’s for later. Remember, it’s key to understand the current state and adapt to changes. Whether my prediction is accurate doesn’t matter—focus on seizing today’s opportunities, and we’ll adjust as things evolve.

Historical Origins: From Novel Platforms to Microdrama Evolution

So, that’s the operational logic behind heavy payment mini-program microdramas. Many of you might wonder, who came up with this? Well, let me tell you—it emerged just over a year ago and has already scaled up. This year, I estimate the market will reach around 30 billion, since it started gaining traction in the second half of last year. Last year’s volume was smaller, around 10 to 20 billion, but this year it could hit 30 billion, and next year, 50 to 100 billion wouldn’t be surprising, with so many players entering and expanding the market.

How did the microdrama market start?

It was pioneered by novel platforms. Many of you might not be familiar with online novels, but their scale is massive. We often think of movies and TV as mainstream art, but that’s a bit biased. Take movies—box office revenue only surpassed 50 billion recently, and that’s with ticket prices soaring. But online novel payments alone (excluding secondary conversions) hit 100 billion annually—several times the movie market. So, the novel top-up market is huge. These companies had a brainstorm: why not promote our novels on short video platforms?

How did they do it?

Initially, they used simulated reading—you’ve probably scrolled past those slowly rolling text simulations, right? Then they moved to audio, narrating excerpts to grab attention and redirect users to top up on their platforms. Later, someone thought, since it’s a short video platform, why not shoot short videos? That’s how the earliest vertical microdramas were born. They adapted parts of novels into low-budget videos, placed them on short video platforms to advertise their online novels. That was the origin.

Then something happened: they found users preferred the video versions, so they decided to shoot full series—100 to 200 episodes. Surprisingly, the top-up results outperformed novels, and that’s how heavy payment vertical microdramas accidentally came into being.