While user-generated short online videos have existed since the emergence of video sharing sites in China, they have undergone a process of formalisation and commercialisation, culminating in the wave of micro-movies in recent years. By addressing the wider context of globalisation alongside relevant state policies and shifting viewing habits, this article analyses the local and global causes of this wave. It offers evidence that illustrates how online video service providers in China have adapted in a changing industry landscape as they negotiate state policies, advertiser interests and user preference. It then examines the production and distribution dynamics, where professional producers draw on social media, grassroots creativity and creative talents in regional markets. Finally, it discusses the cultural implications of this process in terms of both the nature and flow of creativity. Based on these analyses, the article also sheds light on the interplay between the state and the market in the context of globalisation and marketisation of media sectors, which becomes more complicated when the state-owned or controlled media enter the emerging market sectors.