China Literature Pivots to AI and Short Dramas as Profits Dip

Total revenue for the six months ending June 30, 2026, rose 10.7% to RMB 3.53 billion. While the firm's traditional online reading business saw a 7.3% revenue decline to RMB 1.84 billion due to a shifting user mix toward free-to-read content, its intellectual property operations surged by 40.3%. This growth was anchored by a 2.3-fold increase in revenue from short dramas and AI-animated content, which now accounts for 27% of the IP segment's total intake.

CEO Hou Xiaonan attributed the strategic shift to the rise of fragmented content consumption and the disruptive influence of artificial intelligence. To capitalize on this, the company launched the Buddy series of AI agents—NovelBuddy, DramaBuddy, and IPBuddy—to integrate automation into the creative lifecycle. These tools have already supported the production of 46 AI-animated drama titles that surpassed 100 million views each. Simultaneously, the company’s IP merchandise business maintained momentum, recording a gross merchandise value of RMB 780 million, a 60% increase over the previous year.