THESE DAYS MOST OF THE VIDEO ENTERTAINMENT WE WATCH IS NOT AT THE MOVIES OR TELEVISION OR COMPUTER.

IT IS ON A SMART PHONE.

TO CATER TO THESE CHANGING HABITS, MANY CHINESE COMPANIES ARE TURNING OUT THE SMALL SOAP OPERAS FOR PHONE VIEWING.

REPORTER: YOU MAY HAVE SEEN THE ADS ON TIKTOK OR FACEBOOK.

THERE IS ONE CLIFFHANGER AFTER ANOTHER.

IN THE FIRST QUARTER, THESE APPS RAKED IN MILLIONS OF DOLLARS IN GLOBAL REVENUE.

THANK YOU SO MUCH FOR JOINING AS FAIR AND WALK US THROUGH WHAT THESE ARE AND WHAT THE APPEAL IS.

>> THEY ARE CALLED VERTICAL SHORTS OR VERTICAL SERIES.

THERE IS ESSENTIALLY FEATURE-LENGTH BONES THAT ARE BROKEN DOWN INTO MINUTE LONG CHUNKS.

THE IDEA IS THAT THE VIEWER WILL SCROLL THROUGH THEM.

AND WATCH THE ENTIRE THING IN ONE SITTING.

THEY ARE NOT INTENDED FOR A LAPTOP OR A BIG-SCREEN TELEVISION.

REPORTER: TELL US ABOUT HOW POPULAR THIS IS IN CHINA.

HOW MUCH HAS THE INDUSTRY GROWN?

>> THEY ARE INCREDIBLY POPULAR IN CHINA.

THEY TOOK OFF IN THE PANDEMIC.

IT IS A COUNTRIES WHERE PEOPLE ARE MORE LIKELY TO CONSUME ENTERTAINMENT.

I SPOKE TO THE CEO OF ONE OF THESE COMPANIES.

HE SAID THEY ARE PULLING IN ABOUT $10 MILLION IN REVENUE EVERY MONTH.

REPORTER: THE CONTENT AND IS NOT EXACTLY, IT DOES NOT FEEL OSCAR WORTHY.

[LAUGHTER] IS THAT A TRADEMARK OF THIS GENRE?

IS THAT SOMETHING THAT IF IT BECOMES MORE MAINSTREAM WOULD HAVE TO CHANGE?

>> I WOULD SAY THAT IT'S A GOOD WAY OF PUTTING IT.

WHEN YOU TALK TO THE ACTORS AND PRODUCERS AND EVEN THE CEO ABOUT THIS, THEY SEE THAT AS AN ASSET.

THEY DON'T SEE IT AS BEING DETRIMENTAL TO THE SUCCESS OF THE PLATFORM BECAUSE THEY DO NOT SEE IT AS AN ART OR, REALLY.

THEY SEE IT AS WHAT IT IS, ALGORITHMICALLY GENERATED CONTENT THAT HAS MASS CROSS-CULTURAL APPEAL.

THE COMPARISON THAT THE CEO MADE TO ME WHEN I SPOKE WITH HIM IS IT IS LIKE READING USA TODAY THAT OF THE WALL STREET JOURNAL.

I THINK THAT IS A APT COMPARISON.

IF YOU ARE LOOKING FOR SOMETHING WELL DONE, YOU WILL NOT BE WATCHING THIS.

REPORTER: WHAT IS THE DIFFERENCES?

>> IT IS HARD TO ANSWER THAT.

THEY ARE NOT UNION.

THEY ARE ALMOST EXCLUSIVELY USING DIRECTORS THAT OUR RECENT FILM SCHOOL GRADUATES IN LOS ANGELES WHO WERE BORN IN CHINA.

THEY CAN SPEAK MANDARIN SO THEY CAN COMMUNICATE WITH THE CEO.

I HAVE GOTTEN MIXED ANSWERS ABOUT WHERE THE SCRIPTS COME FROM.

WHETHER OR NOT THEY ARE WRITTEN BY HUMANS.

IT IS VERY LOW-BUDGET.

THE PROCESS IS COMPLETELY DIFFERENT THAN WHAT IT IS IN HOLLYWOOD.

REPORTER: WHAT IS THE PAYMENT MODEL?

>> TYPICALLY SOMEONE WILL DOWNLOAD THE APP.

THEY ADVERTISE HEAVILY ON TIKTOK.

IF YOU WANT TO WATCH FIVE MORE MINUTES, YOU HAVE TO PAY MORE MONEY.

IN ORDER TO FINISH A SERIES, THE USER TYPICALLY HAS TO PAY UP TO $40.

REPORTER: DO YOU?

?

ANTICIPATE THAT THIS WILL CONTINUE TO GROW IS THIS WHAT AUDIENCES ARE LOOKING FOR THESE DAYS?

>> IT IS A GREAT QUESTION.

I GOT A LOT OF MIXED ANSWERS ON THAT.

A LOT OF PEOPLE THINK IT IS A FAD.

IT WILL NEVER GET TRACTION IN MAINSTREAM HOLLYWOOD.

I HAVE ALSO HEARD RUMORS THAT PEOPLE ARE INTERESTED IN GETTING INTO THIS GENRE.

WHAT WE HAVE LEARNED IS THAT HOLLYWOOD UNDERESTIMATES THIS TYPE OF DIGITAL CONTENT AT ITS OWN PERIL.

REPORTER: THANK YOU SO MUCH FOR YOUR INSIGHTS.

>> THANKS SO MUCH FOR HAVING ME.

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