Microdrama boom: Why studios are betting despite shaky platform economics

India's microdrama audience is growing rapidly, but monetisation remains a work in progress

When director and producer Karan Kashyap started creating microdramas, he was betting on a new way of telling stories on the phone. The attraction was simple: Tell a story in a minute or two and give viewers a reason to watch the next episode. But after producing shows himself, he faced a more difficult question: Can the format actually make money?

 

“I don't see any major microdrama platform in India operating profitably right now,” Kashyap, who has worked on films such as Dil Chahta Hai, Lakshya, Don and Saathiya, told Business Standard.

 

Kashyap, founder of Karan Kashyap Films and Trii Play Entertainment, has made microdramas for platforms including Stage. His experience captures the contradiction emerging in India's microdrama market.

   

On the one hand, Yash Raj Films (YRF) has invested in Rusk Media to develop original vertical microdrama properties, while Red Chillies Entertainment has launched Shoonya, a division focused on vertical storytelling. On the other, Pocket FM, one of the leading audio entertainment platforms, shut down Pocket TV, its short-form video experiment, after about five months.

 

At first glance, these moves appear difficult to reconcile with Pocket FM's decision to close Pocket TV.  But they may not actually be contradictory, and the companies could simply be looking at different parts of the same opportunity.

How big is India's microdrama market?

Microdramas are short, serialised stories designed primarily for vertical mobile viewing. Episodes typically run from less than a minute to a few minutes and rely heavily on hooks, cliff-hangers and rapid episode-to-episode consumption.

 

The format fits India's young, mobile-first audience particularly well. India's microdrama market generated about $300 million in 2025 and had 100 million monthly active users, according to Lumikai's State of India Interactive Media Report 2025. The report estimates that the market could reach $4.5 billion by 2030.

 

Lumikai also estimates that India has 17 million paying microdrama users. Annual average revenue per paying user stands at about $15, compared with $35 for conventional over-the-top (OTT) platforms.

 

That's where the paradox emerges. On one hand, the audience is growing, but on the other, monetising that audience sustainably is a challenge.

 

Infographic created using ChatGPT

 

Why do studios and platforms face different economics?

According to Kashyap, a standalone microdrama platform has to continuously attract users, retain them and generate enough revenue to recover both content and acquisition costs.

 

For a film studio, the calculation can be different.

 

Sanghamitra Khatu, founder of The Tribal Box, says microdramas can provide studios with a relatively inexpensive way to experiment with a story, character or format before committing to a much larger investment. That difference may explain why the market is seeing both entries and exits at the same time.

 

She estimates that producing a microdrama series in India can cost around ₹20 lakh to ₹70 lakh, but the larger challenge comes from customer acquisition, payment commissions, monetisation and the need to keep producing fresh content.

Why is monetisation difficult for standalone platforms?

Customer acquisition cost, or CAC, is one of the key metrics determining whether the business can work. A platform needs a user to generate enough revenue over their lifetime to recover the cost of acquiring that user, along with the cost of producing and distributing content.

 

Kashyap argues that the industry often highlights downloads and user numbers while providing much less visibility into paying users, actual average revenue per user, 30-, 60- and 90-day retention, CAC and profitability.

 

According to him, conversion rates in the market can be around 3 to 5 per cent, though he stresses that this is not an industry estimate.

 

The challenge is compounded by the amount of free short-form video already available to Indian consumers.

 

“India already has an enormous free short-form ecosystem: social media, news platforms, YouTube Shorts, Instagram Reels, Facebook Reels and Snapchat. Consumers already spend hours consuming short-form video without paying a subscription. For them, the primary cost is their mobile data; the content itself is free,” Kashyap said.

 

Kashyap believes this also makes the success seen in China harder to replicate in India. He says China has developed a stronger paid-content culture, with users accustomed to paying to unlock episodes, while Indian consumers have different spending patterns and more limited disposable incomes.

What does Pocket TV's exit suggest?

Pocket FM said Pocket TV was a beta experiment and that it would focus its resources on its core audio business and international expansion. Reports at the time said Co-founder and Chief Executive Officer Rohan Nayak clarified that the video business was not a material contributor compared with its audio operations.

 

Microdramas were initially attractive partly because they could be produced cheaply, using compact crews, fewer locations and relatively simple production setups. But as larger studios enter the category, there is a risk that the cost advantage begins to erode.

 

Kashyap argues that the original economics of the format were built around mirrorless cameras, small crews, limited locations and new or emerging actors. Once producers begin using large crews, expensive locations, established actors and conventional television or film production infrastructure, the format becomes more expensive to sustain.

 

That leaves producers with another balancing act: Raising quality enough to attract and retain audiences without allowing production costs to undermine one of the format's biggest advantages.

Can advertising improve microdrama economics?

There are two broad routes to monetisation. The first is direct payment through subscriptions, episode unlocks or virtual coins. The second is to keep most content free and monetise through advertising, brand integrations or a hybrid of advertising and payments.

 

Khatu believes the second approach could be more important for India's mass market. She argues that platforms may need a combination of microtransactions, rewarded advertising and brand integrations rather than relying entirely on direct consumer payments.

 

Kashyap is even more cautious. He believes a predominantly free, advertising-led model may offer a better chance of working in India than a paid model, though it would still require considerable scale and cost discipline.

 

The challenge for such a model is whether advertising and other revenue streams can generate enough money to support the recurring cost of producing and distributing scripted content.

Can AI reset microdrama economics?

AI is increasingly being used in areas such as scripting, dubbing, translation, localisation, animation and post-production. ShareChat parent Mohalla Tech has said it plans to invest up to ₹100 crore in AI-led microdrama production in India and expects AI-generated dramas to account for 30 to 40 per cent of its content mix by the end of 2026. The company has also said AI could reduce production costs by as much as 70 per cent.

 

If those cost reductions materialise, production may become less of a constraint. However, according to the industry experts, that could create another problem. If every platform can produce hundreds of episodes more cheaply, the supply of content rises even faster, which makes attention and retention the scarce resource.

Will microdramas survive without standalone apps?

Kashyap believes most standalone microdrama apps will eventually disappear and that microdrama will become a content format rather than a standalone business category. He also argues that the industry still suffers from recycled stories and a lack of original storytelling.

 

Khatu is more bullish on the format's long-term prospects, but expects the market to move away from cheap, formula-driven "pulp" towards higher-quality short-form storytelling. She believes the winners will be companies with deep pockets, strong IP and the ability to keep content fresh.

 

Their views differ on how the market will evolve, but point towards the same distinction: Microdramas may have a future even if dedicated microdrama platforms do not dominate it.