A company has reported cumulative losses exceeding 3 billion yuan over eight years.
A cryptic greeting, "Have you raised your lobster yet?", has recently gained quiet popularity within tech, venture capital, and short drama circles. The term "lobster" refers to an AI agent named "Open Claw." Applied to the short drama industry, it allows users to input instructions for the AI to automatically complete the entire process from script generation and storyboard design to video rendering, significantly lowering the barrier to entry for short drama production.
The topic was truly ignited by an AI-generated short drama titled "Huo Qubing." Although rumors that its production cost was only 3,000 yuan were quickly debunked, discussions about a fundamental shift in the short drama landscape still trended online. The reshaping of content creation by AI is prompting a re-evaluation of companies holding substantial intellectual property (IP) portfolios.
As a long-standing player in A-share digital publishing, Col Group Co.,Ltd. recently submitted an application to list on the Hong Kong Stock Exchange, aiming for a dual primary listing on both the A-share and H-share markets. The company has been navigating capital markets for over a decade and holds a library of 5.6 million online literature IPs, having capitalized on nearly every major content trend. It has been involved behind the scenes in hit productions such as "My Sunshine," "In the Name of the People," and "Ode to Joy."
The company is now presenting a new narrative centered on "AI + IP + Global Expansion." Its overseas short drama platform, Flare Flow, reportedly covers over 200 countries and regions, with cumulative registered users exceeding 33 million. As the synergy between AI and IP accelerates, this "lobster" game is just beginning.
However, this vessel heading for international markets encountered obstacles before even setting sail—copyright risks, combined with the company's persistent losses, are emerging as the most significant uncertainties on its path to a Hong Kong IPO. As of March 12th, Col Group's stock closed at 28.26 yuan per share, with a total market capitalization of 20.587 billion yuan.
Chasing Trends: Generating 1.2 Billion Yuan Annually from Titles Like "Empresses in the Palace" and "The God of Asura"
If you have followed the original novel of "Empresses in the Palace," serialized "The God of Asura" on the 17K小说网 platform, or purchased a ticket for the animated film "The Legend of Hei," you might be unaware that these works are all connected to the same company: Col Group Co.,Ltd.
Meanwhile, overseas, a vertical short drama titled "Raising His Mistress's Child" is gaining viral popularity among female audiences, with total views exceeding 194 million and single-series recharge revenue reaching 15.5 million US dollars. The producer is also Col Group.
According to its prospectus, Col Group was founded in 2000, starting with digital publishing. It established "17K小说网" in 2006 and went public on the Shenzhen Stock Exchange's ChiNext board in 2015. From online literature to anime IP, from the metaverse to overseas short dramas, the company has rarely missed a trend. It has now accumulated over 5.6 million digital content resources and collaborates with more than 4 million writers.
Col Group's revenue model revolves around two main segments. Online literature and related businesses form the company's foundation. Content primarily comes from its owned platforms like 17K小说网, April Sky Story Network, Beaver Stories, and Rocnovel, with representative works including "The God of Asura," "Nine Star Hegemon Body Art," and "The Ninth Special Zone."
These platforms operate on a "freemium" model, where initial chapters are free, and subsequent content requires payment to unlock; subscription packages are also available, ranging from 15 to 298 yuan domestically and 9.99 to 179.99 US dollars internationally. Beyond its own platforms, the company distributes content to third-party platforms like Tomato Novel, Seven Cats, QQ Reading, Ximalaya, and iQiyi, earning revenue shares and advertising income.
Additionally, short dramas and IP derivatives are viewed as new growth engines. The company began producing short dramas in 2021 and expanded overseas in 2022. Monetization occurs through pay-per-episode, subscriptions (ranging from 19.99 to 199.99 US dollars), and advertising.
Currently, Col Group has released over 800 short dramas domestically, including titles like "First-Class Clothier" and "Did the Crown Prince Break His Vow Today?". In overseas markets, its short drama platforms include Reelshort, FlareFlow, and Sereal+. FlareFlow, launched just three months ago, reportedly neared 10 million downloads, generated nearly 20 million US dollars in recharge revenue, and hosts approximately 5,200 short dramas.
Regarding revenue structure, in 2024, online literature contributed 686 million yuan, accounting for 59.2% of revenue, while short dramas and IP derivatives brought in 398 million yuan, representing 34.4%. In the first nine months of 2025, short drama revenue surged to 474 million yuan, constituting 46.9% of revenue, nearly equaling the 480 million yuan (47.5%) from online literature, indicating the emergence of two nearly equal revenue pillars.
However, this revenue growth is set against a backdrop of years of cumulative losses. In 2018, Col Group reported its first major loss of 1.509 billion yuan. Over the following eight years, it only recorded small profits in 2020 and 2021, with losses in all other years. Net profit attributable to shareholders from 2019 to 2024 was -603 million yuan, 49 million yuan, 99 million yuan, -362 million yuan, 89 million yuan, and -243 million yuan, respectively. Combined with an estimated loss of 580 to 700 million yuan for 2025, the cumulative net loss exceeds 3.06 billion yuan.
In 2024, the company's revenue declined by 17.7% to 1.159 billion yuan. Although revenue for the first nine months of 2025 grew 25.1% year-on-year to 1.011 billion yuan, the increase came almost entirely from the short drama business, while online literature revenue saw a slight decrease of 1.4%. Regarding profitability, the company turned to a loss of 243 million yuan in 2024, and the loss for the first nine months of 2025 expanded sharply to 517 million yuan.
The root of the losses lies in sales and marketing expenses. In the first nine months of 2025, these expenses reached 660 million yuan, accounting for 65.3% of revenue, nearly doubling year-on-year. The company explained this was primarily for aggressive promotion of FlareFlow. This implies that for every 100 yuan earned, over 65 yuan is spent on marketing.
Industry analysts suggest that Col Group's repeated losses over 11 years as a listed company stem from a business model characterized by "high variable costs + high promotion expenses," where scaling revenue necessitates scaling user acquisition spending simultaneously. The company's tendency to "chase trends"—heavily investing in cycles like anime, the metaverse, AIGC, and short dramas—is also cited, as these trends shift quickly and monetize slowly, leading to front-loaded costs and delayed profits, resulting in perennial financial shortfalls.
The Dual Nature of Copyright: Asserting Rights While Facing Infringement Allegations
Despite being mired in losses, Col Group's IP assets remain its core competitive barrier. The company consistently emphasizes the principle of "authorization first, dissemination second" and has built a comprehensive IP protection system involving technical, administrative, and judicial measures. The company's president has publicly advocated for strengthened digital copyright protection, and Col Group is a founding member of a committee focused on short drama copyright in China.
However, a short drama overseas platform in which Col Group holds a stake has become embroiled in plagiarism controversies. In August 2025, several domestic short drama companies accused the platform Reel Short of copyright infringement. Reel Short is operated by Crazy Maple Studio, launched for the North American market in 2022, and reported net revenue of 207 million US dollars (approximately 1.5 billion yuan) in the first half of 2025. Col Group holds a 49.16% stake in Crazy Maple Studio, making it the largest shareholder.
One company alleged that Reel Short released several infringing series without permission, including works whose titles were localized and renamed for the platform, with one reportedly garnering over 70 million views on Reel Short. Another producer accused Reel Short of direct, one-to-one copying of its plots and character setups. Another media company claimed Reel Short had previously streamed its content without authorization and breached a subsequent commitment to stop.
Following the outcry, Crazy Maple Studio reportedly removed some of the accused content, but not all. The founders of the accusing companies expressed determination to defend their rights, with one preparing to file a lawsuit in the United States.
Interestingly, Col Group itself is a frequent plaintiff in copyright enforcement cases. Public legal records show the company has been involved in thousands of judicial cases, with the vast majority being lawsuits initiated by Col Group against others for infringement of information network dissemination rights related to its works. Judgments have ordered defendants to pay compensation for unauthorized distribution of works for which Col Group held digital rights.
Among the cases where Col Group is the defendant, the proportion is relatively small. A review suggests many of these involve Col Group being the appellee in appeals filed by parties it initially sued. Genuine infringement cases directly targeting Col Group appear few, with several having been withdrawn or with outcomes not yet publicized.
This situation creates a contradictory image: frequently acting as a plaintiff to protect its copyrights while its invested platform faces multiple accusations of plagiarism from other companies. This contradiction makes the company's stance on copyright protection appear particularly awkward.
Legal experts explain that determining copyright infringement typically involves assessing "access + substantial similarity." For film and drama, substantial similarity can manifest in character settings, relationships, specific plots, and narrative structures. Observers note that the rapid expansion of the short drama industry, coupled with a lag in copyright compliance awareness and mechanisms, are significant reasons for frequent disputes. Weak copyright awareness and profit motivation are cited as key factors, especially if rights enforcement is difficult or potential gains from infringement outweigh the costs.
Short Drama Costs Slashed by AI; What's Next for Col Group's IPO?
For Col Group, currently pursuing a Hong Kong listing, the copyright issue is far from a simple public relations crisis.
Financial analysts indicate that the Hong Kong Exchange conducts extremely rigorous reviews of intellectual property compliance for listing applicants, particularly concerning infringement disputes related to core business operations. The infringement incidents involving Reel Short, a core platform in Col Group's "short drama出海" strategy, are likely to be a key focus of the IPO review. Regulators may demand detailed explanations of the situation's progress and could potentially suspend or reject the listing application.
The impact on brand reputation is potentially more challenging. The infringement allegations have raised market doubts about Col Group's overseas short drama model, potentially shaking investor confidence in its core "IP-driven" competitive advantage. Widespread media coverage of the accusations could damage the company's brand image, possibly affecting IPO subscription rates and valuation.
From a legal entity perspective, Col Group might be able to distance itself partially from liability. Legal scholars note that if Col Group merely holds shares in the accused entity, and they are separate legal persons, Col Group itself may not be the direct target of litigation for the infringement actions.
However, the deep commercial entanglement is difficult to ignore. In its Hong Kong prospectus, Reel Short remains a crucial component of the "AI + IP + Global Expansion" narrative. The company's leadership has heavily emphasized the global expansion strategy. Although Crazy Maple Studio's financials are reportedly not consolidated, they are deeply intertwined in the company's capital market story.
Furthermore, intellectual property protection is robust in European and American markets. Once labeled a "copycat platform," user backlash based on ethical concerns could accelerate user loss and significantly increase new user acquisition costs.
Beyond the copyright storm, another force is reshaping the short drama industry. The rise of AI agents like "Open Claw" in early 2026 is reportedly slashing short drama production costs from hundreds of thousands of yuan to under tens of thousands. While the cited 3,000 yuan cost for "Huo Qubing" might only cover computing power, the trend is clear: production timelines are collapsing from months, requiring dozens of people, to potentially days.
For a platform company like Col Group, this presents both opportunities and threats.
The core benefit of AI is seen as efficiency gains and enhanced monetization. Lower costs could enable rapid expansion of content libraries across more genres. Lower experimentation costs might support bolder exploration of new themes and AI-simulated actor dramas, allowing steady validation of user preferences.
Analysts also suggest the business model may shift from "selling content" to "selling an ecosystem." User attention could concentrate less on individual series consumption and more on emotional connection to entire IP universes. In an era where almost anything can be AI-generated, only IP with deep cultural底蕴 and strong emotional resonance might endure, avoiding being淹没 by algorithmically generated content.
However, as production门槛 are leveled, whether Col Group's accumulated scriptwriting capabilities, production experience, and traffic operations expertise can translate into a competitive advantage in the AI era remains to be seen. If copyright issues remain unresolved, AI tools could potentially act as accelerators amplifying these risks.
The short drama industry may be undergoing a profound transformation. The question remains whether Col Group will be left behind by the wave or continue to ride its crest.
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