Citigroup: Optimistic about Reading Group (00772), Kuaishou-W (01024) and MiniMax-W (00100) due to a surge in the supply of AI skits in mainland China

The Zhitong Finance App learned that Citibank released a research report saying that AI is driving the explosion of content. The supply of short dramas in China surged 13 times in the first 8 months of 2026, serving more than 800 million users, and watching time for more than 50 minutes per person per day, seizing the share of time for long videos, online articles, and casual games. The bank believes that the surge in content supply is more beneficial to platforms, IP and AI video tools, and is optimistic about the leading IP Reading Group (00772), the platform and AI video tools Kuaishou-W (01024) and MiniMax-W (00100).

The bank pointed out that the skit boom was dominated by Red Fruit under ByteDance and intensified competition for content, leading to a deterioration in producers' profit margins. Even as production costs drop, producers are still facing fierce competition for content. Regarding the long video platforms IQ.US (IQ.US) and Mango TV, the bank believes that both have both production and platform roles, and that AI content has positive catalytic effects in the short term after launch, but it is cautious about the long-term comprehensive impact.

On the platform side, the bank said it has yet to see a strong second-place challenger able to challenge Red Fruit. According to experts in the skit industry, Hongguo has a market share of about 60% to 70% and is in a leading position. The bank believes that with its user base, Kuaishou, as the second largest short video drama platform, has the highest potential to further increase the short drama market share, which may be achieved by strengthening cooperation with Internet partners such as Tencent Holdings (00700) and Reading Group. The Tencent WeChat Mini Program is another important distribution channel for skits, and the bank is closely monitoring its progress.