TikTok, Meta, YouTube plus other Social Media Applications (Photo by Anna Barclay/Getty Images)
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Owl & Co released its first “Vertical Economy Report” this month, putting vertical video revenue outside China at $150 billion in 2026, up 42% in a year.
That is the number most likely to travel. It may be the least interesting one.
The more useful number is 94%. On Owl & Co’s estimates, Meta, ByteDance and YouTube capture that share of the market between them. Advertising contributes $131 billion of the total, against $10 billion from consumer payments and $9 billion from shopping take rates.
The report puts a price on a distinction I have been drawing all year. The screen orientation is the common feature. The economics are not.
The Category Everyone Covers Is 3% Of The Market
Dedicated microdrama apps account for roughly $4 billion, or less than 3% of the total, despite nearly 2,000 apps competing globally or regionally.
The cost side helps explain the mismatch.
Owl & Co cites a Media Partners Asia estimate that ReelShort, the leading app by revenue, spends about 73% of revenue on user acquisition and app-store fees, and notes the ratio is likely higher at smaller apps. That is a far larger share than these apps spend making the shows.
Free ad-supported apps went from 15% of microdrama time spent to 83% in six quarters.
Paid apps operate more like mobile games than television. They buy users, convert them through cliffhangers and then buy the next audience. Meta, ByteDance and YouTube do not start from zero each time.
More Shows Did Not Produce More Attention
The report also contains an uncomfortable result for the AI-production thesis.
Across a group of leading paid apps, new series releases rose 25% in the second quarter of 2026 while aggregate time spent fell 4%. Releases increased from 1,659 in the first quarter of 2025 to 5,145.
Owl & Co attributes much of that acceleration to AI-generated titles. But on ReelShort, new live-action titles released in June and July averaged 4.17 million views, versus 2.74 million for its AI titles.
Cheaper production can increase supply. It does not manufacture demand.
Owning The Audience Changes The Business
Streamers are entering the format on different terms. Peacock has commissioned original Bravo microdramas for its mobile app, and ViX produced 145 original vertical titles in its first year. The report counts JioHotstar among the fastest movers, and gives engagement and churn reduction, rather than per-episode conversion, as the streamers’ motive.
Character.ai is testing something else again: vertical series built around characters its users can keep talking to after an episode ends. Jamie Oliver’s Life360-funded comedy runs through channels his business already controls, with the brand paying for access to an audience that exists whether or not the show does.
Those are different businesses. They share one advantage the paid-app model lacks. The relationship with the audience is already there before the next show is marketed.
Owl & Co’s own figures show the same advantage at the top of the market. The report puts Meta at $253 billion in 2026 revenue with 27% of it attributed to vertical. By my calculation that implies roughly $68 billion from vertical alone, more than the $52 billion the report estimates for Netflix’s total revenue.
Production cost was never the binding constraint in this category. Acquisition was.
Generative AI can make another episode cheaper and another thousand titles possible. But when supply expands that fast, attention becomes harder to buy, not easier.
The scarce asset is still the same: a reason to watch this story, and somewhere to put it that does not charge you for the same audience twice.