ByteDance's Hongguo leverages 400 million viewers to drive commerce via "flywheel" strategy

Short dramas, which once occupied viewers' time with provocative subject matter, are now targeting their wallets. At the center of this shift is Hongguo, a Chinese short-drama app operated by ByteDance, the parent company of TikTok. Comprised of short episodes lasting approximately 1 to 2 minutes, these dramas use highly immersive themes such as chaebol romances, reincarnation, and revenge to keep users tied to the platform, naturally leading them toward a new commerce model.

Combining 'Free Strategy' with 400 million users and real-time shopping

Hongguo's growth has been steep. Monthly active users (MAU) surged from 168 million in the first quarter of 2025 to 403 million in the second quarter of 2026. The average daily usage time per user exceeds 151 minutes, or more than 2 hours and 30 minutes. Unlike other platforms, Hongguo employs a strategy of providing content for free. Instead of paying to watch the next episode, users watch advertisements. In this process, content, advertising, and commerce are intricately intertwined.

The most notable feature is "View Products." AI automatically recognizes clothing, accessories, or cosmetics worn by characters in the dramas and provides purchase links. For example, if a viewer likes a female protagonist's dress, they can click a "Find the same dress" button appearing on the screen to be immediately redirected to a commerce page on Douyin, the Chinese version of TikTok. The design is intended to lead directly to a purchase without interrupting the viewing flow.

Utilizing drama storylines through "ad spin-offs" and integration with live commerce also serves as a powerful revenue model. According to a case reported by T Times TV, the recently popular "18-Year-Old Great-Grandmother" series collaborated with the cosmetics brand MARUBI to produce an advertising spin-off that maintained the original drama's setting and characters. Products were sold through live broadcasts featuring the actual protagonists from the drama, and 38% of the total transaction value for those live broadcasts was generated by drama fans. Milk brand Dulce Tendi and certain formula brands are also utilizing the drama's narrative as a core tool for product promotion to convert viewers into buyers.

The 'Flywheel' strategy created by the ByteDance ecosystem

The reason Hongguo can possess such powerful commerce capabilities lies in the massive ecosystem of its parent company, ByteDance, known as a "flywheel." ByteDance uses intellectual property (IP) from Fanqie Novel, a web novel platform that serves as the source of content, as material for dramas, which are then distributed through Hongguo. Subsequently, the secured viewers are directed to product pages or brand live broadcasts on Douyin to maximize revenue.

Connectivity between platforms is very high. 88.7% of Hongguo users use Douyin, and 56.9% of Fanqie Novel users use the Hongguo app. A single successful web novel IP spreads across multiple business units within the group, creating a virtuous cycle. ByteDance does not stop at mere distribution; it also acts as an online business platform that connects writers, production companies, and investors through its "Short Drama Creator Center," thereby controlling the overall ecosystem.

Lowering production barriers and cost innovation with AI technology

The introduction of AI technology to increase production efficiency is also accelerating. ByteDance provides Seedance (a technology in a similar technical context to Sora) as a production tool. This technology generates both video and sound when text descriptions and reference materials are input. This can drastically reduce production costs and duration.

Typically, the cost to produce a 60-episode live-action short drama is around 600,000 yuan (approximately 120 million won), but by utilizing AI, this cost can be lowered to less than 40 million won, which is about one-third of the original amount. The production period can also be shortened from the usual two months to within two weeks. Ultimately, Hongguo is building a perfect revenue structure: attracting people with free content, increasing production efficiency with AI, and opening wallets through Douyin's sales network. The technology that once occupied viewers' time is now penetrating into the stage of purchasing decisions.

Source: original video (YouTube)