- The MicroCo JV is a studio and platform dedicated to microseries, where it sees big market opportunity in the U.S.
- Two areas it wants to improve for the short-form vertical video format: better quality storytelling and user experience
- Current early adopter microdrama economic models, while attractive, are not likely sustainable long-term.
- The company sees an opening to help build out a broader supporting ecosystem and social elements that don’t currently exist for microdramas.
MicroCo is getting in on the short-form episodic vertical video microdrama craze in a big way, where the Cineverse and Lloyd Braun-backed venture sees room to improve upon what’s currently available with better storytelling, expanded genres and a platform that puts more priority on the user experience and long-term relationships.
MicroCo formed in August as 50-50 joint venture between content distribution and technology company Cineverse and Lloyd Braun’s venture arm Banyan Ventures. The partners see major market opportunity to capitalize on and potential to monetize the addictive and bingeable, bite-sized serialized content format. It’s debuting of a dedicated studio for low-cost productions and plans to launch a yet-to-be-named AI-native direct-to-consumer microseries platform early next year.
StreamTV Insider sat down with Erick Opeka, president and chief strategy officer at Cineverse, to discuss MicroCo’s plans, including production and content strategies, expectations for monetization and a vision to play an anchor role to help build out a broader but not yet existent supporting ecosystem around the nascent format that already gained favor in China.
Before we get into MicroCo’s plans to enhance and brings its own flavor to the format, it’s worth taking a moment to mention of what’s currently available with popular microdrama apps, some of which have gotten their apparent hooks in U.S. users and climbed the entertainment app charts.
A gamification of content
As media cartographer Evan Shapiro contended on LinkedIn, instead of comparing microdramas to former short-form video efforts like Quibi, the current experience – while yes, offering short-form serialized storylines – is more akin to a gamified version of content than traditional media or streaming service entertainment.
The idea and model behind some existing microdramas (like those found on Chinese-backed U.S. app ReelShort, for example) are super-soapy, almost so bad they’re good type storylines and production. Anecdotally, quality storytelling and user experience – while in the eye of the beholder – appear to rank low as an afterthought let alone a priority.
Generally speaking, microdramas are served up via vertical video on mobile, think a span of 60 (or more) episodes roughly 1-3 minute each, that usually end on a big cliffhanger or high-intensity moment. Early episodes can be free and once a user is quickly hooked, the format encourages bingeing and entices users to pay to purchase things like coin packs or passes, or watch incentivized ads, to swipe and get to the next moment or episode or moment in a series.
These in-app payments or microtransactions can add up and, as Opeka shared and we’ll get to later, has resulted in some of these early users paying far more on average (to the tune of up to $200 per year in the case of some super-user early adopters) than many are willing to shell out for full-fledged streaming subscriptions.
In terms of the seemingly addictive nature of the microdrama craze, Opeka explained this may be a result of the current space’s gaming heritage, as many of the companies operating apps are gaming-focused players that got into microdramas.
“They’re not media companies that are trying a new format,” he said. “This is gamification of content to some degree.”
And he acknowledged there’s “almost a gambling dynamic to some of these.”
“Today, most of the apps I see in the market, with very few exception, are not really designed to be a great experience for users. If anything, they’re designed to make a lot of money, but at the expense of some users,” Opeka said.
But it’s those factors, coupled with others, where Cineverse and the MicroCo JV see the chance to qualitatively improve the level of writing and storytelling while expanding from the current romance-focused genre, and to build out an app that puts more focus on the user experience.
Opeka isn’t saying all current microdrama players are just making a money-grab, but MicroCo intends to emphasize features that help build a long-term relationship with users, something he sees as lacking today.
Of course, money is still part of the picture. Opeka doesn’t think current economic models are sustainable long-term, but MicroCo still sees plenty of opportunity to monetize microseries globally and will try out different methods.
“It’s a new format that I think is a multi-million-dollar format,” he said of microseries.
Microdrama market to rival the home entertainment ecosystem?
Cineverse isn’t a stranger to tracking and getting in early on trends. It started launching free streaming channels before the term FAST (free ad-supported streaming TV) was even coined and was quick to distribute FAST titles on Spotify, for example.
It’s also early on microserie s in the U.S., which does count a bevy of available apps already but the format hasn’t seen a major dedicated domestic platform or studio at this point. Other streaming players are trying their hand at incorporating short-form and vertical video in different ways, but TelevisaUnivision stands out as one major U.S. media company already testing the microdrama format on its broader Spanish-language subscription streaming platform ViX.
First gaining popularity in China, Opeka told StreamTV Insider that prior to launching MicroCo Cineverse and team had been tracking microdramas for about a year and a half. It knows the format is a real business in China where it initially emerged (an estimated $7 billion market) but wanted to see if it was also real business in the U.S.
About a year ago he starting to see microseries apps, like China-backed ReelShort for example, usurp the likes of Netflix, Amazon and Disney in the entertainment app stores in the U.S. – which are typically based on revenue rather than downloads.
According to Opeka, that means the top players in microdrama apps today are generating annualized revenue between $300 million to $500 million, “which is significant business.”
The team also saw the evolution in China go from a niche product taken up by early adopters in the romance genre to a more broadly consumed product and audience.
“We think that demonstration shows that this isn’t just sort of a niche play that works for romance. It works broadly across fantasy, sci-fi, action and other buckets,” he told StreamTV Insider.
Those two factors had Opeka saying, “Hey, this is really the time for us to lean into it here domestically.”
Cineverse and Bruan (who is former Chairman of ABC Entertainment and WME, and has been behind iconic TV series like The Sopranos, Lost, Desperate Housewives, and Grey’s Anatomy, among others) teamed up to form MicroCo and brought on heavy hitting entertainment executive leaders including former president of Entertainment for Showtime Networks Jana Winograde as CEO and former NBCUniversal and Warner Bros. executive Susan Rovner as chief content officer for MicroCo.
And while already generating hundreds of millions of views for existing players, MicroCo anticipates room for microseries to grow.
According to Opeka, estimates currently peg microdramas as a $1 billion or more market in the U.S. after just a couple of years.
Realistically, if microdramas follow the traditional breakdown, he said, “the U.S. could be a $10 billion market when it’s fully mature.”
Whether that maturity is three or 10 years away is anyone’s guess, but the executive thinks given the pace of adoption it’ll probably be somewhere around five years. If achieved, that would make the microdrama market “bigger than the entire home entertainment ecosystem is today,” Opeka said.
And even if it achieves just half of that, he said microdramas would still be rivaling the entertainment rental and sales market, which is substantial studio revenue.
“So I just think it’s going to be an unavoidable part of everybody’s media strategy,” Opeka explained.
Investment in better storytelling
One part of the appeal of the microdrama business is that they’re low-cost to produce – a model MicoCo intends to stick with.
To Opeka, production value isn’t necessarily the issue with what’s available in the market today, noting there’s only so much that can be done in a vertical format that’s very tightly focused and doesn’t rely on elements like big scenic vistas.
Where the opportunity to improve then becomes about the storytelling, dialog and writing.
“I think there’s huge room for huge strides in professionalizing it more so than it is today,” he said.
Some may believe part of the charm of microdramas is that storylines are so bad they’re good ( by way of example look at a few of the titles promoted on existing apps in the U.S. DramaBox and ReelShort like Her Double, His Trouble , Runaway Billionaire Becomes My Groom , and Doormat No More: Toxic Ex Lick My Feet – titles don’t always say it all, but these subjectively appear to be about what one might expect . But speaking to the apparent popularity, that last title came with an in-app alert saying "351K users are binge-watching now").
MicroCo doesn’t plan to reinvent the format but wants to leverage guilty-pleasure-type content while upping the storytelling quality.
To that end, it has content led by Rovner, who has made traditional TV guilty pleasures a big part of her career, with fan favorites like Shameless, Gossip Girl and Riverdale, to name a few. Those might fall into the “guilty pleasure” category, Opeka noted, but it “doesn’t mean qualitatively, they’ve skimped.”
Anecdotally, he said he’s heard a lot of microdrama scripts today are AI-generated. While Opeka’s all for AI tools to improve production and other aspects, believes “quality writing isn’t quite at a level where AI can take it over.”
Applying industry best practices, containing costs for microdramas
Today, in terms of overall budgets of microdrama services, Opkea said far more goes to marketing and acquiring customers than it does to content itself. But he thinks there’s a way to “balance the blend a little bit more.”
To be clear, MicroCo won’t suddenly ramp up to produce TV levels of content spending, as the vertical video format by nature should have far lower production values than broadcast, cable or streaming services.
What’s the typical cost to produce a microdrama?
The space is still relatively new but Opeka cited a wide range from “low-to-mid $100,000s” on one end depending on the complexity of production, to some low-cost players making microdramas for “mid-five figures”. There are also people in the AI space looking to test and get in on microdramas. As this NYT article pointed out, animation is one genre MicroCo has stated and one Banyan Ventures-backed animation started Intelligent Animation has developed an AI-assisted process that lowers TV animation costs to as low as $1,500 per minute.
Right now on the higher end, Opeka noted many are doing an outsourced model, where high market demand for shows is artificially driving up prices as there are only so many microdrama actors and people producing them at quality and scale.
As for MicroCo, he doesn’t expect to double or triple the cost of microdrama production but will try out different avenues and levels of spending.
“We’ll try some low cost, we’ll try some third-party produced” and give partners a cut of revenue and ad sales, he noted. Still, some it will “commission at the mid-to-higher range and everything in between.”
Cineverse itself has proven success turning low-budget content efforts into big money makers.
That was seen with Terrifier 3, a unrated film that opened to $18.9 million at the box office on a roughly $500,000 paid media budget (eventually grossing more than $54 million at the domestic box office and more than $8.5 million in ancillary distribution revenues). It was a result achieved in part thanks to Cineverse’s approach leveraging its multiple distribution arms and media assets to drum up high interest and fan engagement for the niche title.
Playing into the economics of the microdrama space, unlike TV shows or streaming there’s not really any ancillary business on the format today (with Opeka noting maybe someday there will be a licensing model), meaning “you have to make a profit on the platform” and rein in costs.
“I think where you invest is in the storytelling, potentially IP and you find a way to really focus on keeping production costs constrained and realistic, given the format and the economics of the space,” Opeka said.
He believes one can likely match what’s being spent today on microdramas simply by applying industry best practices alongside better writing and leveraging technology, including post-production for things like visual effects.
The executive has been privy to what some of the existing platforms are spending and even at current levels, thinks “there’s a lot of waste” to make microdramas.
By figuring out how to make them more efficiently and in-line with industry best practices, “there's an opportunity to put more on screen and have better stories…and that's part of the reason why we've taken the team that we've taken here to do that,” Opeka said.
Expanding beyond romance
When it comes to genres, today microdramas are heavily dependent on storylines of the romance variety.
In MicroCo’s view, to be mass market genres need to expand beyond romance or risk cutting out a large swath of men as well as women that aren’t into the category.
MicroCo intends to diversify the genre type and Opeka called out horror, action, thriller as well as police procedurals and detective-type storylines among those it sees as a good fit.
Opeka sees horror working great for the microseries format in part because of the structure that requires cliffhangers every couple of minutes – something that could be well suited and deliver high-intensity in a horror storyline.
Not every type of horror would be a fit (like a slow burn, Opeka said no so much), but he sees it working particularly well for classic slashers or ghost stories, which could ramp up the action.
Action and thriller would similarly be good fits, as MicroCo aims to get users coming back one minute after the next, rather than next week.
Procedurals and mysteries also provide the addictive hook needed for microseries, like detective storylines that reveal clues – but unveiled at a much more rapid and regular pace than traditional long-form series.
“It’s about adapting to the format,” he noted. “If people do that then I think we’re going to see a much faster adoption on this.”
Leveraging IP, making microdramas part of the media mix
Cineverse distributes more than 71,000 premium films, series and podcasts and has built up an IP base in the horror space specifically. MicroCo also gets a potential boost from entertainment heavy-hitter Braun’s business, which has its own base of audio IP and makes features films.
But MicroCo’s use of existing IP won’t involve splicing up existing films or TV shows into microseries.
Per Opeka, attempts to take existing shows and cut them down to fit the format “doesn’t work. It has to be natively produced.”
So any existing IP MicroCo uses for microdramas would be reimagined specifically for the format.
Today when Cineverse partners to make a movie, Opeka noted they’re also making an audio book, eBook, podcast series, merchandise and so on. MicroCo envisions a universe where “microdrama will be a format that will be part of the mix” and where the format could help support other types of entertainment and releases.
That could include the bite-sized format serving as part of the canon of storytelling for a long-form TV show or film, acting as a marketing vehicle that gets viewers excited about a new theatrical release coming a year or two later, or remaining as a standalone microseries that adds another viewing option to fit consumers’ consumption habits.
“I think it's going to be an essential agreement ingredient for anybody who's in the who's in the media space to include microdrama as part of the diversified media,” Opeka commented.
Monetizing microcontent, current model not long-term sustainable
Opeka categorized the economic model for microdramas as “a double-edged sword today.”
On the one hand, it’s incredibly attractive, because as mentioned, the gamification of content and in-app purchases mean super-user early adopters have been willing to pay equal to about $200 a year for the top services, per Opeka.
As he noted, “that’s far and above what most Americans are willing to pay for a big scale streamer” while acknowledging it’s “probably not a sustainable long-term economic model.”
In terms of why consumers seem willing to drop more than they would a full blown SVOD, it goes back to that gamified, almost gambling-like behavior. Opeka also pointed to scrolling social video platforms like TikTok as “sort of dopamine machines” – designed to trigger humans’ innate desire for novelty and tapping into anticipation of what’s next, where that answer is just one swipe away with microdramas.
“It’s like binge watching on steroids, where every two to three minutes something crazy is happening,” he said, likening it to being in Las Vegas and “putting another coin in the slot machine.”
And while that can be fun and the sums generated attractive, it’s not likely one that can scale for mass adoption or be maintained over time.
Although some early adopters appear to be ponying up big for coin or token packs, he thinks the model will migrate as initial monetization seen today “will far outstrip the average person in America’s willingness to do that in the long-term.”
“I think generally across America people are very stingy about what they’re going to pay for streaming services,” he said, and the universe of microdramas will have to adapt to the value proposition if wants to move from early to mass adoption.
“Nobody wants to pay $20 to $30 to watch a microdrama,” Opeka conceded – even if it’s a premium microseries based on IP.
Opeka expects that as the market evolves, some viewers might be willing to pay a few dollars for microdramas if they want to watch them early, while others would pay a monthly subscription in line with costs for a niche or specialty U.S. streamer (around $6-8 per month, which is around what Cineverse charges for its specialty services).
Then he expects some super users would pay for a pass that provides a full year, access to talent, special live streams and other benefits.
“You’re probably realistically looking at like $100 bucks a month…maybe even a little bit less that” in terms of where the market will eventually shake out if microdramas go mass domestically, he said.
“The ARPU per user will go down as the market gets bigger, but there’ll be a lot more people in it if you give them more affordable ways to access this content.”
Much of microdrama content today is either fully or partially ad-supported. MicroCo also intends to introduce advertising on its service, including ad-supported tiers, and expects to launch new ad formats specific to the microseries format next year as well . TVU’s ViX is another that’s exploring incentivized ads, along with microtransactions, as monetization mechanisms for microdramas.
Improving the user experience, building an ecosystem for microdramas
Aside from storytelling, improving the user experience and playing a central role to help build out and guide an ecosystem are areas where MicroCo sees a place to play and improve on what’s currently available.
It expects to debut an app early next year, and while not publicly stating a target number of users, Opeka said the goal is “not to limp out of the gate, test, and iterate.”
Instead, it wants to “come out with a splash”, offer quality programming and major reasons why it differentiates from the more than 40 other global apps already out there.
But it’s not the only one ramping up microdrama efforts. Chinese media conglomerate COL Group (of which ReelShort creator Crazy Maple Studio is a partially-owned subsidiary) last month announced the launch of its global content distribution division, which is seeking to become the world’s largest reseller of microdramas
How will MicroCo stand apart?
“Our philosophy is higher quality, better content from a team that knows how to build iconic IP and shows,” Opeka said.
That said, he acknowledged the team is still all humbled by the fact that “this is an entirely new ecosystem” – one with its own stars, structures and rules, which MicroCo will need to learn and adapt to itself.
According to Opeka, when talking users of the current microdrama ecosystem, some common complaints are all about the product, including an inability to discover and find content that’s trending, or keep track of what lives where.
From that perspective, he sees a need in the market for one to enter and serve as sort of an anchor tenant for the microdrama space in a proverbial mall that curates and collects various brands, shows and concepts.
“We think there's an opportunity for us to kind of play that role and provide just a better overall experience than kind of the Wild West that's going on right now,” he noted.
As for what it has planned, Opeka said a lot of surprises are brewing and shared a little preview.
As mentioned, the microdrama space is so new that it lacks an ecosystem that usually supports media, like movie review sites, networks for social media influencers, reddit communities and so on.
Since apps are mainly working in silos of separate services, today, without an extended ecosystem, there’s no way for consumers to tell who the top stars in the microdrama space are, or how to find new movies and shows that some 40+ apps are adding each week.
MicroCo sees a chance to “bring a more social element to this and to allow people to interact with the talent they love,” the strategy chief said.
Part of that could be helping to build communities and sharing information about the people and content in the microdrama space.
Cineverse itself also has technology used in streaming with tools and software (such as Matchpoint), including AI-powered capabilities, that it will bring to bear to build new features for the MicroCo platform.
“We think there's a way for us to not only have our prestige version of microdramas, appropriately scaled for the microdroma space, plus a lot of other fun, cool tools and social layer and other things that will allow people to explore a lot more than just our stuff.”
Microdramas eventually make their way to CTV
Mobile-first is the current nature of microdramas and initial plans for MicroCo, but Opeka affirmed that providing connected TV capability is part of the company’s roadmap.
As to whether the bite-sized and vertical format can replicate success on the home’s largest screen, he noted that no one thought TikTok could work in a CTV environment but that it’s scaling pretty fast.
It will be a little tougher to port the vertical video format to CTV, “but TikTok shows that’s not insurmountable,” Opeka said.
So while the microdrama market is still emerging and what ultimately comes to pass remains to be seen, MicroCo is playing its hand and has big expectations for the bite-sized serialized content format.