ByteDance has folded its Xiaoyunque artificial intelligence platform into Dreamina, also known in China as Jimeng AI, while keeping a separate entry point for the product, people familiar with the matter told 36Kr.
The consolidation took place within CapCut, ByteDance’s video editing business. Dreamina has already integrated Xiaoyunque’s microdrama capabilities. Chen Xinran, who oversees Dreamina’s operations and marketing, will also oversee Xiaoyunque’s operations. Its product team remains unchanged.
Limited growth prospects and a need to concentrate resources drove the move. A former CapCut employee told 36Kr that AI-native products such as Dreamina and Xiaoyunque were still growing, but user gains had not generated returns to match the investment. A proliferation of video agents was also making ByteDance’s offerings harder to distinguish from competitors’ products.
The move reflects a broader shift toward foundation models. As major technology companies direct more resources to models, they are reassessing the priority they give to AI applications. ByteDance has moved particularly quickly and aggressively, according to 36Kr, and is discussing other possible AI product mergers alongside the integration of Dreamina and Xiaoyunque.
Two years ago, ByteDance had a different ambition for Dreamina.
In early 2024, Kelly Zhang stepped down as CEO of Douyin Group and took charge of CapCut in China and internationally. CapCut launched Dreamina that May, shortly after OpenAI’s Sora raised the question of whether AI video products or chatbots would become the next dominant app or gateway for users. ByteDance invested in both Doubao and Dreamina.
At the time, Zhang wanted Dreamina to become both a creative tool and a community for AI content.
Dreamina’s priorities subsequently shifted several times. The initial plan envisioned a division similar to that between CapCut and Douyin: users would create content on the web version and watch it on the mobile app. After Seedance launched, the app also experimented with Sora-like features that put real people on screen and enabled interaction through digital avatars.
As the models improved, however, many users could create AI content within Douyin or Doubao. Dreamina increasingly targeted professional creators, expanding from text- and image-to-video generation into tools such as first- and last-frame controls, an intelligent canvas, and agent-assisted editing.
Before China’s National Day holiday this year, Dreamina had already reduced investment in its mobile app and begun combining its app and web operations, according to 36Kr. Future resources will be directed toward the web version for professional creators. The company also plans to invest more in Dreamina’s overseas business and monetization.
Rapid model improvements over the past two years have changed how the market values applications. As coding agents opened opportunities in office work, the idea that AI models are themselves the applications gained ground. ByteDance’s February release of Seedance 2.0 also changed the relationship between its models and apps.
Even before that release, Xiaoyunque, Dreamina, CapCut, and Doubao had competed to be the first to offer Seedance capabilities. A person at Volcano Engine told 36Kr that competition intensified after version 2.0 launched, giving the model teams greater influence.
Limited product growth has also contributed indirectly to a wave of departures from CapCut over the past two years. Senior product and operations executives who left to start businesses include Chen Mian, formerly responsible for global commercialization and operations; Ming Chaoping, who led mobile editing; product manager Nao Nao, an alias; and product head Zhang Qizhi.
In late 2024, 36Kr also reported the departure of CapCut product head Zhang Xiaoran. She later joined Flova.ai, the startup founded by Guo Lie, CapCut’s original founder.
Meanwhile, Volcano Engine has been expanding its Seedance model-as-a-service (MaaS) business. According to 36Kr, almost all video agents and production workflows for short dramas and animations in China have integrated Seedance, and revenue from Volcano Engine’s Seedance-based MaaS offerings far exceeds that of products such as Dreamina and Xiaoyunque.
That changes how ByteDance assesses its own AI applications. With numerous outside video apps using the same models and finding paying users, its in-house products must show how much additional value they create by acquiring, retaining, and monetizing users, as well as how much they differ from one another.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Deng Yongyi for 36Kr.