On August 31st and September 1st, Mango Excellent Media Co.,Ltd. (300413.SZ) saw its share price hit the 20% daily limit for two consecutive trading days, lifting its total market capitalization to 38.1 billion yuan. The direct catalyst for this rally was the announcement that a 30-episode long drama, "Journey to the West: After Story," generated by AIGC (Artificial Intelligence Generated Content), was scheduled for the prime-time slot on Hunan Satellite TV. However, the fundamentals presented in its half-year report stand in stark contrast to the stock's performance. As the "King of Variety Shows," the company is at a crossroads, caught between the high costs of producing traditional entertainment and betting big on AI-driven short dramas.
As the key hosts of its flagship shows, part of the "Happy Family," age, the company's traditional variety programming maintains its industry-leading position but struggles to drive new member subscriptions. Meanwhile, the AI short drama segment is entrusted with the mission of fueling growth, yet a clear monetization path remains elusive. This dual-front strategy has laid bare the contradictions in resource allocation across its financial statements.
Member Growth Hits a Ceiling
The 2026 half-year report reveals that Mango Excellent Media, the former titan of variety shows, is finding it increasingly difficult to attract new users. On the viewership front, its moat in premium content has not collapsed. According to data from Yunhe, the cumulative effective play volume for variety shows on Mango TV during the reporting period firmly held the top spot in the industry, consolidating its leading advantage. Five of its exclusive new variety shows ranked in the top ten for effective plays, with "Ride the Wind 2026," "Who's the Murderer? Season 11," and "Hello, Saturday 2026" sweeping the top three positions.
However, this content heat did not translate into revenue growth. In the first half of 2026, the internet video business revenue for Mango TV fell by 8.61% year-on-year to 4.462 billion yuan. Of this, membership revenue dropped by a significant 22.6% to 1.933 billion yuan. The internet video segment comprises three main parts: memberships, advertising, and operator channels. In H1 2026, the performance of these segments diverged sharply: membership income contracted, advertising revenue remained broadly stable, and while the operator business revenue saw a positive year-on-year increase to 845 million yuan, its growth rate notably slowed compared to previous years, with the impact of external policies and channel adjustments still being felt.
The membership revenue of 1.933 billion yuan in H1 2026 represented a year-on-year decrease of 563 million yuan. The company attributes this decline to adjustments in cooperation models with certain distribution channels. This drop was only partially offset by growth in advertising income, which limited the overall decline in the internet video business to the aforementioned 8.61%. This indicates that the downturn is a combined result of shrinking membership and operator revenue. In prior years, Mango TV acquired a large number of "passive users" at a low cost by partnering with telecom operators like China Mobile Ltd (600941.SH/00941.HK) for co-branded memberships and bundling with e-commerce platforms. These users did not subscribe due to compelling content but rather through promotional offers tied to mobile plans or shopping perks.
As operators tightened spending on subsidized memberships, these low-engagement users churned quickly. Another factor is content supply; the scheduling pace of drama series affects user renewals. While variety shows are powerful, their ability to drive paid subscriptions is sporadic—spiking at a season's premiere and falling off at its end—unlike drama series which can sustain daily engagement over several months. During H1 2026, Mango TV launched 14 new long-form dramas. Though some topped popularity charts, none achieved the status of national blockbusters like "Meet Yourself" or "Go Ahead," which had peak market share exceeding 30%, to fill the gap between variety show seasons. When users finish following a variety show and have no new drama to watch, they enter a wait-and-see mode and may even shift to on-demand purchasing rather than continuous subscriptions.
Furthermore, the company's profitability declined in the first half of the year. The semi-annual report shows Mango Excellent Media's operating revenue at 6.194 billion yuan, a 3.86% year-on-year increase. However, net profit attributable to shareholders plummeted by 73.58% to just 202 million yuan. Within this 200-million-yuan profit figure are a -168 million yuan income tax expense credit and 116 million yuan in interest income, primarily from fixed deposits, large-denomination certificates of deposit, and structured deposits. Excluding these two non-operational items, the underlying profitability of Mango Excellent Media's main business has become extremely thin.
More concerning is the rigidity of its costs. The company's operating costs for H1 reached 4.952 billion yuan, a year-on-year increase of 13.06%, outpacing revenue growth. While content investment has not been cut, returns from paying subscribers have not kept pace. As users become more cautious about paying for content, Mango Excellent Media must answer how to build a diversified content ecosystem beyond variety shows that can support sustained membership growth, offering users more content that feels worth the subscription price.
Doubling Down on AIGC
In its half-year report, Mango Excellent Media stated that it established a new "AIGC Innovation Content Center" as a first-level department, on par with traditional content production units and reporting directly to the Chairman. This structural change not only elevates the strategic priority of AI-generated content but also signals direct competition for internal resources within its traditional content divisions. During the same period, Mango TV launched a dedicated AIGC channel, featuring premium horizontal-screen simulation dramas, female-oriented genre series, derivative creations based on its own IPs, and youth animations, aiming to diversify its content ecosystem matrix. In terms of category, the AIGC content is not positioned to replace flagship variety shows but rather to fill the long-tail gaps in the platform's content library with low-cost, high-frequency, and fast-paced production.
This strategic pivot has also triggered personnel changes. On June 30th, Liang Deping, a director and general manager at Mango Excellent Media, resigned due to a work transfer and ceased to hold any position in the company. During his tenure as Party Secretary and President of Mango TV, Liang served as chief planner, chief editor, or producer on numerous programs. The company is committing resources to AIGC; the notes to the half-year report show R&D expenses of 129 million yuan, up from 108 million yuan in the same period last year. CICC (601995.SH/03908.HK) noted in a research report that the modest increase in R&D spending is directed towards building the AIGC Innovation Content Center and the Mango large model.
A more pressing reality is the company's cash flow situation. Net cash flow from operating activities in H1 was -342 million yuan, a stark contrast to the +460 million yuan reported in H1 2025. As of the end of June 2026, the company's total of notes payable, accounts payable, short-term borrowings, and non-current liabilities due within one year amounted to approximately 7.1 billion yuan, against cash on hand of only 2.75 billion yuan. Considering the 4.952 billion yuan in operating costs over six months and the negative cash flow, sustaining high investment in flagship variety shows while rapidly expanding its AIGC business requires meticulous calculation of the ROI for every content expenditure. Furthermore, according to the company's phased investment plan for its raised funds, two major investment projects require over 360 million yuan in 2026 and 2027 to support its traditional programs.
The resource allocation contradiction of fighting on two fronts is clearly visible in the financials. The company is using cash flow from its traditional business to fuel two engines simultaneously: one is its core business, which is decelerating, and the other is its just-ignited AIGC venture.
The Monetization Challenge
The viewership figures for "Journey to the West: After Story" are impressive—it garnered 4.24 million plays within two hours of its premiere and ranked first among provincial satellite channels for its evening timeslot. By September 2nd, total plays on Mango TV had surpassed 34.53 million. On that day, the company's Chairman, Cai Huaijun, stated that the total cost of the AI-generated drama was only a fraction of an S-tier live-action production. However, audience reception has been sharply polarized, indicating that full viewer acceptance of AI-generated drama is still a work in progress. On Weibo (09898.HK/WB.O), some users commented that the AI effect in the show was too prominent, while others criticized the AI-generated faces as formulaic and repetitive.
Beyond the challenge of catering to diverse audience tastes, the monetization puzzle for AI dramas is arguably a more significant issue. According to DataEye's "2026 H1 AI Drama & Animation Report," over 221,900 new AI-generated short dramas were launched natively on Douyin in the first half of the year. Of these, 1,055 surpassed 100 million plays, a "blockbuster" rate of just 0.47%. Using an industry-standard break-even estimate of 50 million plays, less than 1.3% of these dramas managed to recoup their costs. More critically than the low hit rate is the declining value per unit of traffic. Reports indicate that the revenue per 10,000 plays for AI short dramas has fallen from a peak of 30-100 yuan in 2025 to just 5-10 yuan in 2026. AI has cut production costs, but it has also made earning money much harder.
This is not a challenge unique to Mango Excellent Media. China Literature Ltd (00772.HK) reported revenue exceeding 430 million yuan from short dramas and AI animations in H1 2026, a 230% year-on-year increase and roughly 12.2% of its total revenue. However, this 430 million yuan is tied to its IP operations business (27% of total revenue) and is built on the company's massive, long-accumulated IP reserves and scale. The free short drama platform Hongguo boasts a monthly active user base of 356 million, firmly ranking first in its field. But since May 2026, Hongguo has significantly reduced its revenue-sharing payouts, slashing the per-10,000-play effective income from tens or even hundreds of yuan down to 5-10 yuan. In May 2026, a screenshot posted online purportedly showed a backend from an AI animation company, where a work with 180 million plays settled for just 180,000 yuan, translating to 10 yuan per 10,000 plays. The free-play business model generates massive user scale, but the monetization efficiency for content creators has plummeted.
Focusing back on Mango Excellent Media, while "Journey to the West: After Story" added over 10 billion yuan to its market value in two days, according to public information, no dedicated advertising sponsorships for the show have been announced yet. Currently, the drama relies primarily on membership fees: SVIP members can watch 3 episodes in advance, and VIP members can watch 2 episodes early. This monetization logic is fundamentally unchanged from traditional long-form video platforms. This suggests that the business model for Mango Excellent Media's AI short and long dramas remains the same—revenue from ads and subscriptions. It is crucial to note that barriers to entry for AI-generated content are not high, and Mango Excellent Media is not the only player in AI-powered long-form video. In July 2026, iQIYI (IQ.O) launched its self-proclaimed AIGC network film "Qitan: Zhi Ren Duo Huangxu," which hit a heat index of over 5300 on its first day. It subsequently released two more films in the "Ba Du" series, which generated over 3 million yuan in split-revenue within three days, reaching a peak heat index of 6600. iQIYI is exploring the online split-revenue model, while "Journey to the West: After Story" uses a membership-based model. Both paths are being tested, but neither has yet been proven as a scalable, replicable commercial loop.
Most importantly, Mango Excellent Media does not possess the vast IP library of China Literature, nor the 356 million MAU of Hongguo (Mango TV's MAU in H1 was 243 million). Even if the company were to achieve revenue comparable to China Literature's 430 million yuan, it would not cover the 563 million yuan year-on-year decline in its membership income. "Journey to the West: After Story" proves AI can produce a long-form drama that airs in a satellite channel's prime time, and it demonstrates that the capital market is, at least temporarily, willing to pay for it. But the play count of one drama and two limit-up trading days are a long way from constituting a sustainable business model. Once the market's enthusiasm cools, Mango Excellent Media will still need to answer the fundamental question: how exactly does AIGC content intend to make money, and can it genuinely serve as the company's second growth curve.
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