Red Fruit's Closed Loop: How High Turnover Dominates the Whole Field
In July 2026, a landmark change occurred in the mobile video market.
According to Nomura Securities' China Internet Monthly Tracking Report and QuestMobile monitoring data, the daily active users of the standalone app Hongguo Short Drama reached 168 million, a year-on-year increase of 107%, exceeding the simple sum of approximately 155 million users of the four apps iQiyi, Tencent Video, Youku, and Mango TV.
This metric measures the number of users who open the app on mobile devices every day, and it also points to the place where this round of changes first occurred: Red Fruit is becoming a daily video portal.
This change occurs on two levels.
On the user side, Hongguo puts TV series into a short video-like information stream, offering free viewing and continuous recommendations, shifting users from "opening the platform for a TV series" to "opening the platform first and then looking for TV series".
On the supply side, ByteDance integrates IP, external production, generation tools, distribution, and settlement into a single system, allowing more works to enter the market in a shorter cycle.
The former explains why daily active users have risen rapidly, while the latter determines whether this growth can be sustained.
The difference between Hongguo and long-form video platforms lies not only in the length of the content, but also in how the content is produced, how users access it, and how the platform assumes project risks.
01 From "Finding Shows" to "Browsing Shows"
Hongguo first capitalized on the user base of the short drama market expansion.
According to QuestMobile data, in February 2026, the monthly active users of the short drama industry reached 718 million, while Hongguo's monthly active users were 304 million; in May, the number of unique users of short dramas covering independent apps and WeChat and Douyin mini programs increased to 851 million; in June, Hongguo's monthly active users further increased to 368 million, a year-on-year increase of 73.7%.
Short dramas have transformed from an emerging category into mass entertainment, while Hongguo has centralized the demands scattered across mini-programs and news feeds into a single independent app.
The free model changes the cost for users to access the storyline.
According to a report released by the China Netcasting Association, in 2024, the market share of IAA free short dramas rose from 11% in January to 50% in October.
Previously, paid short dramas on mini-programs often required users to recharge at plot twists, with revenue depending on whether users paid for the next episode. Hongguo, on the other hand, uses advertising to earn free viewing, and the platform is more concerned with how long users watch today and whether they return tomorrow. Check-ins, coins, and continuous viewing rewards are designed around this goal, turning single viewings into continuous usage.
More significant changes have occurred in content selection.
Hongguo transplanted the Douyin-style consumption mechanism to TV series, with automatic playback and algorithm recommendations constantly providing the next episode, so users don't need to check the title every time they open the app.
Long-form videos are more like a content destination, where users often enter the platform because of a certain drama, variety show, or IP, and their searches, favorites, and scheduling revolve around specific projects; Hongguo is more like a time portal, where the objects of viewing can be changed, but the act of binge-watching can continue.
Therefore, Hongguo combines the "scrolling" of short videos with the "following" of long videos.
The recommendation feed is responsible for discovering content, the continuous storyline is responsible for creating suspense and retention, and the sign-in and reward system further reinforces usage habits.
One animation industry professional bluntly described this feeling to Wall Street Insights: "Users didn't choose to watch short dramas over long dramas, but rather they chose to watch short dramas over scrolling through videos."
The length and pacing of short dramas provide the conditions for this usage.
Each episode is usually only a few minutes long, with conflicts occurring earlier, allowing users to watch it at any time during their commute, lunch break, or before bed, resulting in multiple viewings within the same day.
QuestMobile's nighttime consumption report shows that in May 2026, Red Fruit's user activity rate during the 6 PM to 8 PM time slots both increased by 0.9 percentage points compared to the same period last year. Short dramas are moving from fragmented free time to evening leisure time, thus expanding the window for daily use.
The activity curve of long-form videos is more shaped by the key scheduling.
When top-tier dramas or variety shows are launched, exclusive content quickly boosts platform activity; as projects conclude or there's a gap in programming, user activity declines. Hongguo leverages continuous recommendations to distribute this pressure across a larger library of shows: if one show's performance falters, another can immediately follow.
The fact that the daily active users of long-form video apps have surpassed those of the four major long-form video apps reflects the difference between the two user retention methods: long-form video apps mainly use content to retain users, while Apple Video can also retain users based on user habits.
02 Content begins to have a high turnover rate
With "binge-watching" becoming a daily routine, the key issue for platforms has shifted from the quantity of content to the streaming speed.
The turnaround time here isn't just about faster filming; it's also about compressing the time it takes for a project to go from IP acquisition, matching with production companies, going online, generating viewership and advertising revenue, and then bringing the results back to the next round of project approval. Hongguo operates a cycle of simultaneous entry, exit, and reordering of a batch of projects.
This cycle was already established during the live-action short drama phase.
Hongguo acquires IPs and scripts from channels such as Tomato Novels, and promotes projects through copyright purchases, customization, or co-production, while external companies are responsible for casting, filming, and post-production.
The platform connects demand and production capacity, with production companies allocating personnel and funds according to project scale. Once a team completes filming, they can move on to the next project, ensuring that Redfruit continuously acquires new content, with supply not limited by its own production scale.
In April 2026, Hongguo Short Drama Creation Service Platform and Douyin Group's Short Drama Copyright Center were integrated into the "Short Drama Creator Center," shortening the time for projects to find resources.
IP selection, submission, production contracting, project matching, finished product management, data review, and settlement all enter into a single portal, allowing various creators and investors to be matched based on their needs. The platform thus gains control over broadcast traffic and the main interface for projects from initiation to payment.
These interfaces determine the three speeds of turnover.
First, there's the project speed; more works can be produced and released simultaneously during the same period.
Secondly, it's about judging speed. The completion, follow-up updates, and revenue sharing of a series can quickly influence the next batch of topics and budgets.
Finally, there's the speed of capital flow. After advertising revenue is distributed to the copyright holders and producers, it can be reinvested in new projects. While individual works can still succeed or fail, platforms can diversify their risk across a range of content by expanding their project portfolio.
This turnover has already been transmitted to the production site.
An AI short drama producer in Zhengzhou told Wall Street Insights that his company has two teams, each producing a short drama of more than 60 episodes every week.
This production rhythm means that the company no longer waits for a series to be completely completed before starting the next one, but instead allows the setting, generation, selection, and release of different projects to proceed simultaneously.
AI continues to amplify this parallel capability.
Tools like Seedance and Imagination can complete character design, scenes, storyboards, and sample footage before filming begins. They can also generate partial shots, exposing problems that would otherwise only be discovered after filming.
The same budget allows for testing more themes and visual schemes, and decisions about whether to continue filming, add production, or discontinue investment can be made earlier. Models reduce the cost of each experiment, and Redfruit's project system can absorb the increased workload.
The core of Hongguo's closed loop is to ensure the continuous circulation of projects, judgments, and funding. Tomato Novels expands the selection of stories, external companies provide flexible production capacity, AI adds testing solutions, Douyin and Hongguo complete the reach and monetization, and the results are then returned to the project initiation process.
Compared to betting on a single hit, this model places more emphasis on the average efficiency of a batch of projects: enough testing, fast enough feedback, and the ability to reinvest revenue, so that the library can be continuously updated.
However, according to the aforementioned industry insiders, because of the rapid turnover, companies often move to the next stage before they can even catch up with a wildly popular trend. Many companies that fail to grasp the hottest trends are easily left behind during this transition period.
His company has also been focusing on overseas markets in recent years. "The turnover rate overseas is not as fast as in China. For example, the vampire genre that they are interested in can be popular for a long time."
03 Bestselling Product Accounts and Working Capital Accounts
The differences in user access and production methods are ultimately reflected in two sets of ledgers.
Based on advertising revenue and user time, Hongguo first expands the scale of free viewing, and then recovers through ad load, fill rate, and price. Long-form video focuses on membership subscriptions, using scarce dramas and variety shows to drive new user acquisition, renewals, and upgrades. Hongguo calculates the traffic output of the entire drama library, and for long-form video, it first calculates the driving force of top projects on paid subscriptions.
The financial data reveals the basic structure of the long-form video format.
iQiyi's total revenue in the second quarter of 2026 was 6.29 billion yuan, with membership service revenue of 4.01 billion yuan, accounting for nearly 64%, while content costs were 3.82 billion yuan during the same period.
Mango TV's internet video business revenue reached 4.462 billion yuan in the first half of the year, with membership, advertising and operator business revenues of 1.933 billion yuan, 1.684 billion yuan and 845 million yuan respectively.
Top-tier works can drive subscriptions, brand advertising, copyright distribution, and IP derivatives, while failures can create concentrated cost pressures.
Hongguo adopts a combined management approach, with a large number of works of varying costs entering its drama library, and a small number of high-performing content contributing the main broadcast and advertising revenue.
While the lifecycle of a single project may be short, the update of the drama library cannot be interrupted; the platform improves the overall hit rate through continuous feedback. With the reduction in costs for character design, storyboarding, sample episodes, and comic book production, AI allows the platform to expand its testing pool and select solutions more quickly.
The two sets of ledgers also correspond to different scenarios.
QuestMobile points out that short dramas have directly entered the competition for user time; long dramas still maintain a large number of views, and unique top content can boost activity, while OTT big screens continue to support in-depth family viewing.
Hongguo continuously provides content to cover fragmented time during commutes, lunch breaks, and evenings, with long-form videos occupying the space for extended narratives, high-quality productions, and large-screen viewing at home. As user time is redistributed between these two approaches, the value behind daily active users also becomes fragmented.
Platform strategies are beginning to intersect. iQiyi is expanding its revenue-sharing model for micro-dramas and comics, as well as its AIGC content ecosystem. Youku is attracting horizontal short dramas with membership and advertising revenue sharing. Mango TV is building AIGC tools and launching "Guoguo Theater" with Hongguo. Hongguo is also increasing its membership and long-form video copyrights.
Both sides absorbed each other's product mechanisms, and the competition shifted to content efficiency and user value.
The changes will first squeeze the middle ground: production costs are close to those of long-running dramas, but not enough to attract members; updates are close to those of traditional projects, but difficult to adapt to the high-frequency distribution of short dramas.
The industry may see two clearer directions emerge in the future: one is the availability of scarce, high-quality content supporting subscriptions and IP development, and the other is high-frequency supply relying on combined returns. Platforms need to establish stable payback methods for their respective choices.
Hongguo's 168 million daily active users validate that a high-turnover model can acquire a large user base. The next round of metrics will shift to traffic quality, such as ad density, content differentiation, and returns for producers. AI is lowering the barrier to entry for "making a show," while story judgment, user distribution, and commercial returns are becoming increasingly scarce.
The next phase of differentiation between Red Fruit and long-form video platforms will also revolve around these capabilities.
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