Updated
Updated · Yahoo Canada Finance · Aug 25
Meta, ByteDance and YouTube Capture 94% of $150 Billion Vertical Video Market
Updated
Updated · Yahoo Canada Finance · Aug 25

Meta, ByteDance and YouTube Capture 94% of $150 Billion Vertical Video Market

1 articles · Updated · Yahoo Canada Finance · Aug 25

Summary

  • Owl & Co estimates Meta, ByteDance and YouTube will take 94% of vertical-video revenue outside China in 2026, with the market reaching $150 billion after 42% annual growth.
  • Advertising drives $131 billion of that total, far ahead of $10 billion from consumer payments and $9 billion from shopping take rates, underscoring how scale platforms dominate the format’s economics.
  • Dedicated microdrama apps account for only about $4 billion—less than 3% of the market—even with nearly 2,000 apps competing, as leaders such as ReelShort spend about 73% of revenue on user acquisition and app-store fees.
  • A surge in AI-assisted output has not translated into demand: leading paid apps lifted new series releases 25% in Q2 2026 while aggregate time spent fell 4%, and ReelShort’s live-action titles outdrew AI titles.
  • Streamers and newer entrants are still pushing into vertical video, but Owl & Co says they are using it mainly to deepen engagement and cut churn rather than to replicate the paid microdrama model.

Insights

Can interactive AI characters save the vertical video economy before skyrocketing user acquisition costs bankrupt the creators?
With tech giants hoarding 94% of revenue, is the booming microdrama market actually a rigged game designed for independents to fail?