This Week in Vertical Issue 2026-w31
This Week in Vertical — 27 July – 2 August 2026
19 reports on the vertical-drama business dated 27 July – 2 August 2026, each labelled with the basis it rests on and linked to its sources.
The lead
- Capital flows to Chinese AI video while Western microdrama rounds stay small
At least fifteen rounds closed between January and July 2026 across microdrama and adjacent AI video, led by Kling AI, Shengshu, PixVerse, Zhixiang and Fish Audio. Western vertical-drama rounds were far smaller or undisclosed.
- Kuaishou filing puts Kling AI round at about $3bn for 16.67%
An HKEX filing of 2 July 2026 caps the investment at ¥20.4471bn, roughly $3.0bn, implying a post-money valuation of about $18bn.
- Hongguo reaches 356m monthly users on a free, ad-supported model
ByteDance's Hongguo (红果短剧) was at 356m monthly active users by May 2026, up 79.1% year on year, per QuestMobile, against 304m in February.
More this week
Market data
- QuestMobile: Chinese short-drama viewing shifts to standalone apps
Standalone apps reached 402m users in May, up 77.1% year on year, against 508m on WeChat mini-programs, up 25.4%. Douyin mini-program users fell 83.3% to 14m.
- Three unrelated "150" figures circulate as microdrama market sizes
A $150bn vertical-video estimate, a $150bn analyst figure covering mostly ad formats, and a ¥150bn China projection use different currencies, scopes and bases. None is a microdrama market size.
- Austrian daily carries a $150bn vertical video claim as a market study
DerStandard reported a $150bn figure for vertical video outside China in 2026, up 41%. The number comes from an operator-authored report whose own microdrama sub-figure is about $4bn ex-China.
- DataEye puts China AI short drama at ¥40bn for 2026, up 138%
The figures were presented at WAIC on 20 July and had already appeared in a vendor column on 16 July. Of 221,900 AI and manga dramas launched in the first half, 1,055 passed 100m views.
Platforms
- Peacock commissions original vertical drama and licenses from ReelShort
Two Bravo-branded titles run to roughly 60 episodes of 60 to 90 seconds, exclusive to the app, and Peacock has licensed a package from ReelShort, per trade reports.
- HBO Max adds a vertical Shorts feed without commissioning verticals
Warner Bros. Discovery announced the test on 28 July. The feed recycles trailers, clips and bonus material from the existing library; there is no vertical original, no coin monetisation and no separate app.
- RisingJoy distributes its RJOY microdrama service inside TikTok Minis
The Singapore company launched in the United States and Japan without a standalone app, and has branded-service deals with Astro and Sooka in Malaysia and the IDN App in Indonesia.
Regulation news
- EU AI Act transparency duties apply, with about 190 code signatories
The Commission published its signatory list on 31 July, the last day of the month in which it had promised to publish. Section 1 carries 83 providers and Section 2 carries 152 deployers, with heavy overlap.
- EU sets two different cut-offs for AI marking: content and systems
Commission FAQ: outputs made available before 2 August 2026 need no retroactive marking, while systems already on the market have until 2 December 2026 to meet the machine-readable duty.
- China's Order No. 16 was signed on 30 July, and Article 52 is new
The promulgation header dates the order to 30 July and publication to 31 July. Article 52, on microdramas shot in China for overseas broadcast, does not appear in the June draft.
- China's microdrama rules become binding law from 1 September
NRTA Order No. 16 moves the sector to three-tier licensing, defines the format as episodes under 20 minutes, and mandates AI labelling, non-addictive recommenders and clear paid-content disclosure.
- Commission and AI Board confirm transparency code as adequate
A Commission Opinion published 9 July records the 8 July conclusion that the code adequately covers Article 50(2), (4) and (5). Adherence is expressly not conclusive evidence of compliance.
- China's microdrama rules stay in draft with a blank commencement date
Article 53 of the NRTA draft leaves the date it takes effect literally empty. The three provisions that would bite hardest on coin monetisation are not in force.
- Notice names all 16 projects in China's first microdrama support tranche
The National Radio and Television Administration's 28 July notice lists all 16 proposed projects in the first tranche of its premium microdrama programme, each with a theme and production company. Youku, MIGU and Shanghai Film Group are among those named.
Europe
- MIPCOM adds a microdrama summit and vertical matchmaking category
The Cannes market, 12-15 October 2026, has added an invitation-only Global Microdrama & Vertical Leaders' Summit and a vertical content matchmaking category. The announcement is dated 20 July.
Germany & DACH
- Germany names the Bundesnetzagentur as its AI Act enforcement authority
The KI-MIG entered into force on 29 July 2026, making the Bundesnetzagentur national coordinator, market surveillance authority, contact point and complaints body, with separate competences for BaFin.
Regulation tracker
China, NRTA Order No. 16 — Measures for the Administration of Micro Short Drama Development (微短剧发展管理办法)
- 27 July 2026The measures are approved at an NRTA executive meeting.
- 30 July 2026The order is signed by the NRTA head, Cao Shumin.
- 31 July 2026The order is posted on the NRTA site under its announcements column and carried in full by the state wire the same day.
EU AI Act, Article 50 (transparency obligations for AI-generated content)
- 27 July 2026Regulation (EU) 2026/1744, the Digital Omnibus on AI, dated 8 July 2026 and published in the Official Journal on 24 July, enters into force.
- 31 July 2026The Commission publishes the signatory list: about 190 organisations, of which 83 signed Section 1 (providers) and 152 Section 2 (deployers).
German supervision of AI Act transparency (KI-MIG; Bundesnetzagentur and the Landesmedienanstalten)
- 28 July 2026Promulgation in the Bundesgesetzblatt. Several third-party accounts give this date as the entry into force, which it is not.
- 29 July 2026The federal digital ministry announces in press release 47/2026 that the KI-MIG is in force and that the Bundesnetzagentur is national coordinator and market surveillance authority for the AI Act.
- 29 July 2026The Bundesnetzagentur sets out the hybrid supervision model, splitting oversight by subject-matter proximity and naming the state media authorities as the retained authorities in the media sector.
- 30 July 2026Medien.Bayern GmbH, a subsidiary of the Bavarian state media authority, publishes an Article 50 explainer and FAQ.
- 2 August 2026The AI Act's market surveillance provisions for Annex III systems begin to apply in Germany; those for Annex I follow on 2 August 2027.
Jugendmedienschutz-Staatsvertrag (JMStV), Germany's youth media protection treaty
- 31 July 2026The model trial reaches its stated end date, per the FSF.