A screening for leading short-drama app ReelShort's 'Wings of Fire.' Tiffany Rose/Getty Images for ReelShort Soapy micro dramas gained popularity in the US but face a reckoning in 2026. Big questions lie ahead for the format about sustained profitability and whether it can extend to new genres. Hollywood, brands, and TikTok could define the format's next era. 2025 was the year Hollywood became obsessed with micro dramas, the love-em-or-hate-em mobile series that first became popular in China and have exploded in the US. Micros, also called "verticals," have been maligned by some industry critics as low quality and rife with problems, like depictions of violence against women and a lack of casting diversity. However, their popularity is undeniable, and their rise is providing work — albeit usually non-union — to a Hollywood that needs the gigs. With the format estimated to have generated $1.3 billion in the US in 2025, mostly from direct payments from viewers, according to the streaming consulting firm Owl & Co., Hollywood can't ignore it. Fox and Disney are among a handful of industry players that are already capitalizing, and others are in various exploratory phases. Still, there are plenty of questions about the sustainability of micro dramas. People who watch the space say 2026 will be a make-or-break year as the established apps and newcomers experiment with new genres and business models. Here are some of the biggest questions. SimilarWeb via Bernstein analysis Can they make money? Those who work in the space say that while micro series cost a fraction of what a traditional feature-length movie costs, typically in the $100,000 to $300,000 range, they often lose money because the high cost required to market them can far outstrip the actual production cost. "An app may boast of a show that makes $30 million, but $27 million of it will have gone to advertising," said Thom Woodley, a longtime verticals producer. Owl & Co. founder Hernan Lopez said apart from the market leaders ReelShort and DramaBox, much of the category is in "investment mode," like Netflix was 10 years ago. He recently reported that of 1,200 series, only 2% of vertical series crossed the 100 million views mark — a hit, in verticals terms — and only with spending on user acquisition (i.e. marketing). What's the way out? There's a lot of experimentation going on. Right now, most vertical watching is paid by consumers instead of ads, but some are exploring ad-supported models. Leading player DramaBox has been trying to interest advertisers in product placement. Fellow top app ReelShort has been offering free coupons on its app to encourage daily viewing. One big factor in all this is TikTok. It's trying to get people to watch verticals directly on its app, with a new section called TikTok Minis where you can binge on bite-sized series from producers with names like SnackShort and HoneyReels. If it works, the one-stop-shop approach could help emerging micro producers get discovered so they don't have to spend all that money on marketing. The tradeoff is that it could train viewers to do all their vertical-watching on TikTok instead of jumping over to short drama producers' own apps, where they can fully control the monetization and customer relationship. TikTok is also exploring the ad model. It's pitched producers on sharing full episodes on the platform for free to viewers in exchange for a cut of ad revenue. Where will brands fit in? Where people spend time, advertisers will often follow, and insiders say brands have been showing strong interest in the vertical format. Brands are eager to use entertainment to tell their stories, and unlike traditional film and TV, the quick-turn micro drama format aligns with the quarterly business cycle. Procter & Gamble, a top marketer, just put its stamp of approval on the space, announcing a micro-drama-style series, "The Golden Pear Affair," to promote its personal care products. The ad-holding company Dentsu invested in Japan's Emole, the company behind a micro drama app called Bump, as well as short-form anime content company KaKa Creation, through its venture capital arm, Dentsu Ventures. At least one producer is betting on brands. Filmmaker Jonas Barnes was behind the P&G series and founded his new production company, Pixie USA, on the idea that there would be a rush of brands into the space. He's met with ad-holding companies and said interest from brands is "through the roof." One issue will be convincing them that a category of entertainment best known for its trashy storylines can be adapted to suit brands that want to present a clean image. Sam Nejad has played the leading man in numerous vertical micro dramas. Frazer Harrison/Getty Images Can micro dramas move beyond the cheesy romance? Speaking of content … there's nothing wrong with vampire billionaire husband stories for those who like that sort of thing. But for Hollywood streamers, the key question is whether the model can work in other genres — and make money. New players like Fox, which invested in Holywater, the Ukrainian company behind short drama app My Drama, and MicroCo, a newly launched company backed by Lloyd Braun and other media veterans, are betting they can elevate the format and bring in new viewers with other genres like true crime and animation. Some also believe they can use AI to reduce costs. It remains to be seen if these experiments will be successful. Vertical fans overwhelmingly want romantic comedies and romantic dramas (favored by more than 80%), followed by mafia and forbidden love stories (about 70%), according to a recent survey by Jen Cooper, a UK-based vertical drama consultant. They did express a desire for better writing and production quality, as well as more diversity and humanity in storytelling, though. Leonid Ovdiienko is cofounder of Ukraine-based DramaShorts, a year-old app that has released 20 original films reaching 12 million viewers as of September, including "Blind Heiress" and "Santa Sent Me a Billionaire Husband." He said DramaShorts made a detective-themed title, "Mafia Boss," but it didn't perform well enough to justify more investment in the genre. Ovdiienko and other insiders said micro dramas are due for consolidation. Some winnowing might not be a bad thing. Appfigures recently counted some 215 apps just in the US. Cooper's survey found that fans feel overwhelmed by the number of apps as well as confusing pricing options, poor app design, and performance glitches. If TikTok's Minis feature succeeds, it could solve the biggest problems micro dramas face, Woodley said. It could give the apps a way to test out more shows using TikTok's vast audience and reduce the friction of micropayments, making them more accessible. Another factor to watch is talent. The Hollywood guilds are now allowing their members to work on these productions, and as A-listers and independent creators start to embrace the format and bring their fans along, higher-quality productions could follow. Verticals are a lower-cost business than TV, and talent may not be paid what they're used to, Fox Entertainment CEO Rob Wade recently told Business Insider. He described it as a "complicated conversation." Still, he said that with micro dramas, all studios should be embracing them because there was an opportunity to "tell stories that you otherwise couldn't sell or make." Read the original article on Business Insider