Vertical Video Economy Worth $150B, Even Without China – Owl & Co Report
The global vertical video industry generated $150 billion in revenue across 2026, a 42-percent annual increase that establishes it as a major media category. The market encompasses advertising, subscriptions, and e-commerce across platforms including TikTok, Instagram, YouTube Shorts, and niche apps. Advertising comprises the dominant revenue stream at $131 billion, whilst three platforms—Meta, ByteDance, and YouTube—collectively capture approximately 94 percent of revenue outside China.
The microdrama segment, worth $4 billion this year, is experiencing substantial business model restructuring. Viewer consumption has shifted decisively from paid in-app purchases toward free, ad-supported formats, with such content rising from 15 percent to 83 percent of user engagement in five quarters. AI-assisted production tools have driven a more-than-fivefold increase in content releases since mid-2026, yet this output expansion has not resulted in proportional audience growth per title, suggesting potential market saturation.
- Vertical video market reached $150 billion in 2026, up 42% annually, excluding China
- Advertising dominates revenue ($131B); Meta, ByteDance, YouTube control 94% of non-China market
- Microdrama shifting from paid purchases to ad-supported models; AI production surges but per-title engagement declining
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Vertical videos are made to be watched on a phone screen held upright, and include short clips on apps such as TikTok, Instagram and YouTube. The business around them includes adverts, subscriptions and shopping, with much of the money going to the companies that own the platforms.
Microdramas are short, serialised stories released in episodes, often designed for mobile viewing. They have commonly earned money through viewers paying to unlock episodes, while free versions can earn revenue from adverts.
The spread of AI tools has made it quicker to produce and release videos, but more titles do not necessarily mean more viewers for each one. This matters to platforms and producers deciding how to attract audiences and earn money in a crowded market.