Microdramas boom in a shrinking Hollywood as studios chase a TikTok audience

When Craig Williams opened his production facility in downtown Los Angeles two years ago, he thought he would rent out the converted furniture warehouse for the occasional music video to sustain his fledgling film business.

Williams was blindsided by a phenomenon that quickly overtook his production space: microdramas, vertically shot serials delivered in two-minute episodes, played on phones.

“It started getting booked — and continued to get booked — with microdramas,” said Williams, 65, a former music producer for Death Row Records. “After a year, I was booked all the time. I said, 'I've got to build another one.’”

Williams now operates three production facilities, rebranded as Vertical World Studios, catering to the soapy, fast-paced world of vertical shorts. They’re filled with standing sets – hospital room, police station, courtroom, nightclub – he bought at liquidation prices from major Hollywood studios like Sony Pictures and Paramount.

It's not a surprise. Hollywood is shrinking. Pending mergers threaten to further reduce production of films and shows. Actors fear AI extinction. Streaming companies are losing ground to YouTube.

The format is expected to generate $1.5 billion in revenue in the U.S. this year and jump to nearly $2 billion next year, according to research firm Omdia. While traditional TV business in the U.S. is massive, at about $125 billion, it’s projected to shrink by as much as $15 billion annually in the coming years because of continued cord-cutting, according to PriceWaterhouseCoopers.

It’s also a sign of China’s rising soft power. The format originated there, and its rapid ascent has given Chinese-backed apps, such as ReelShort and GoodShort, a Hollywood foothold.

Vertical videos altogether, which includes TikTok, have surged, projected to reach $150 billion in global revenue this year, excluding China, researcher Owl & Co. said.

It’s creating work for actors, writers, directors and craftspeople, and attracting investment from studios, media companies and technology platforms.

“It has completely changed my circumstances financially,” said actor Robert Palmer Watkins who found regular work again after the production drought that followed the pandemic and the Hollywood strikes. “I am so grateful.”

Still, there are some signs of life in old Hollywood. Spending on U.S. film productions rose 4% in the most recent quarter, thanks in part to tax incentives, according to research firm ProdPro. But globally it is still down.

Microdramas are succeeding because they apply a centuries-old formula — the cliffhanger — to the ubiquitous smart phone that Emarketer estimates accounts for 99 minutes of video viewing each day for the average American. Episodes range from 45 seconds to two minutes long, leaving little time for lengthy plot set-ups.

"You're dropped right into the middle of the story, so it grabs your attention right away," said Lily Darragh Harty, director of production at Inkitt CandyJar, a platform for romance microdramas.

Some 66 million monthly active users watched microdramas last year in the U.S., more than double the 26 million in 2024, according to research firm Omdia.