"It's chaotic, quite confusing. Prices range from 99 yuan to 300,000 yuan. I don't know who to believe." Since virtual digital people (hereinafter collectively referred to as digital people) entered the live broadcast room in March this year, "unmanned live broadcast" has quickly become the new favorite in the e-commerce world. Various myths about digital people being able to work 24 hours a day and significantly increase sales conversion rates are popular in the e-commerce circle, and have even swept across all transaction-oriented fields.
But behind the technological boom, there are both mud and sand. More than one merchant expressed to "Self Quadrant" his confusion about being at a loss in the mixed digital human market.
At the same time, a number of regulatory authorities have been vocal in recent days, putting forward rectification requirements for live streaming and naming digital people who may lead to false propaganda. This undoubtedly poured cold water on the digital human market. Due to the lack of interaction and emotion, there are doubts whether digital live broadcasts can really attract users like human anchors.
This can't help but remind people of the historical craze of blockchain, metaverse, and even the nearby enterprise micro-mall. They all use technology and intelligence as their selling points, promising to allow businesses to get twice the result with half the effort. However, after a short period of popularity, they generally fail to be implemented, and the applications generally fail to achieve the expected results. Many businesses can only shelve them in the end.
Will digital people make the same mistake today? Is it a new money-burning “trap”, or is it a black technology that can truly make businesses profitable? To solve the mystery behind digital people, we must first answer a key question: What is the root cause of the current chaotic situation in the digital people market?
Who is taking advantage of "digital people"?
In March this year, Li Lin (pseudonym), who thought he had sensed the first wave of digital human business opportunities, spent RMB 300,000 to become an agent for a digital human brand that claimed to be the "Digital Human Source Factory" and wanted to use digital human live broadcasts on TikTok for cross-border e-commerce.
In his opinion at the time, the market for digital people might contain countless opportunities, as well as unlimited "money prospects" that people could long for. To paraphrase a popular discourse system in the Internet circle, "All live broadcast rooms are worth doing again with digital people."
But the beautiful scene only lasted for less than a month, and the platform banned multiple accounts of Li Lin in the name of "digital human recording and broadcasting".
"I was really confused at first. I thought this was a business to make quick money, but I didn't expect it to end so soon." Li Lin immediately contacted the manufacturer who had promised him that he could live broadcast, but the other party insisted that this was just an example and was neither responsible nor provided follow-up services.
After coming back to his senses, Li Lin suddenly realized that he had been deceived. This manufacturer, which is known as the "source factory", is actually a shell company. It sends him some hot videos of spliced virtual digital people every day, giving him strong psychological hints, and its purpose is just to lure him into taking the bait.
"It is impossible to get a refund, but I can resell this set of things. They said that I got the lowest price agent and I can make a profit on the difference." Li Lin said: "They taught me how to post to Moments. They said that as long as I follow the post to Moments, people will start to inquire as the traffic gradually increases."
"Zi Quadrant" learned that in the entire sales industry chain, there are two delivery methods for digital people, namely pure software delivery and integrated software and hardware delivery. However, most sellers prefer the delivery method of integrating software and hardware, because this can not only make money for software, but also drive sales of hardware.
Digital people sound full of technology and futuristic sense, but their sales strategy is very simple and unpretentious business logic: buy me, you will make a profit without losing money. To support this entire business model, often only a small incision is needed, and a smartphone is the fulcrum to start this game.
"Self-Quadrant" wanted to purchase a virtual digital human, so it made inquiries with several relatively large-scale intermediaries on Douyin and Kuaishou. The other party first described to us what kind of black technology digital virtual humans are, and how AI will replace humans in the future. At the same time, they boasted about the advantages of virtual humans, that they are harder-working than real people, and that they can live broadcast 24 hours a day without going offline.
Many intermediaries unanimously stated that "virtual human live broadcasts require equipment, so they specialize in producing mobile phones for live broadcasts." At the same time, in order to convince us, a middleman also sent an on-site photo of "high-end equipment".
▲Image source provided by middleman
You only need to spend 5,500 yuan to buy it and you can open the door to wealth. This 5,500 yuan includes 500 yuan (logistics transportation fee + operator traffic fee) and 5,000 yuan hardware purchase fee. After owning such a high-end device, you only need to pay another 500 yuan Douyin window deposit, and you can immediately turn on the virtual digital human clone and let AI help you make money.
At the same time, these intermediaries who sell virtual digital humans will sign so-called "service contract terms" with the merchants, which stipulate that the operating company must prepare live broadcast accounts for customers, be responsible for team formation and software technical support, build the virtual human software into mobile phones or computers, and ensure that the "dead account rate is within 5%-10%". Commissions are divided monthly, and both parties share 50% of the profits.
Here is a formula: Wealth password = equipment fee of 5,500 yuan + Douyin window deposit of 500 yuan.
From what I hear, this is one-stop hosting for virtual human live streaming. Merchants spend money to buy an account, and they can bring their own goods or other people's goods, without having to worry about it at all. These middlemen even proposed that if the contract is terminated within one year, the equipment will be recovered based on 10% depreciation, which means that the principal of the equipment fee of 4,500 yuan will be refunded. The 500 yuan deposit on Douyin's showcase can also be refunded to the platform. According to this agreement, if the principal investment of 6,000 yuan is not made after one year, 5,000 yuan can be refunded. This means that the cost is only 1,000 yuan a year, and the commission is guaranteed, and it is a proper "only make money, no compensation".
But unfortunately, there is never a business in this world where you can only make money but not lose money.
"Self-Quadrant" searched the e-commerce platform for the Pepsi mobile phone brand in the picture and found that Pepsi is actually a low-end mobile phone brand that is mainly "copycat". The appearance imitates Apple, the system imitates Huawei, and it also introduces the back screen design of Xiaomi Ultra, which can be called the Mix version of current mainstream mobile phones. Most of the mobile phones of this brand are priced between 459 yuan and 699 yuan, and the latest model only sells for 899 yuan.
▲Screenshot of image source JD.com platform search
What transforms this phone into something that can be sold at nearly ten times the price is a virtual digital human.
After virtual digital people become popular, many businesses hope to apply virtual people to their live broadcast rooms as soon as possible. But at the same time, they know nothing about how to purchase a virtual digital person, and how to configure it after purchasing it.
It is this huge demand gap that has given rise to these middlemen who make money by playing games.
A merchant who purchased virtual digital human equipment in the early stage mentioned to "Self Quadrant": "After one year, I only got the deposit refunded from the Douyin window, and the rest was not refunded."
"In fact, the contract specifically states that if there is a problem with the equipment, the depreciation costs will be negotiated separately based on the specific circumstances. However, with the configuration of these knock-off machines, it is almost impossible for them to be used normally without problems for a year."
The integrated packaging of software and hardware certainly solves the trouble of early configuration of virtual digital humans, but these middlemen are limited by their technical level. They simply encapsulate a virtual digital human image into the hardware device. This results in few functions that the virtual digital humans can use, single scenes, insufficient interactive effects, and almost no transformation.
"Give me a specific example." Another merchant who has purchased a virtual digital human said to "Self Quadrant": "In most cases, it is difficult to get the digital human to introduce the product normally. Questions asked by users are only answered after 10 seconds, and the user has already left the live broadcast room."
However, these shortcomings are not directly mentioned by middlemen on the table. They just repeatedly emphasize to customers that "virtual digital human live broadcasts have equipment requirements, so they must use specially produced mobile phones for live broadcasts."
Even during the purchasing process, the sales staff of the middlemen will use provocation to urge customers to place orders. For example, when "Self Quadrant" consulted an intermediary about the specific functions of the virtual digital people it sold, it did not give a clear answer for convenience. It only urged us to sign the contract quickly and used some words to stimulate consumption, "What kind of business are you so indecisive?"
Li Lin said frankly, “It started to feel like 2017 and 2018, when businesses were tricked into developing WeChat mini programs…”
Origin of confusion, mismatch of upstream and downstream needs
Just for "selling", not for "using", the popularity of digital people has been exaggerated. Buyers who wanted to save trouble thought they had caught up with the trend, but ended up suffering big losses; sellers who wanted to make quick money took advantage of the opportunity and successfully harvested the first batch of leeks.
In fact, Li Lin is not an exception. If we want to understand the essential reasons behind the chaos, we have to return to the current industrial chain of virtual humans. According to "Zi Quadrant", at present, the upstream, middle and downstream stratification of digital human buying and selling has been relatively clear.
The upstream is divided into two types of suppliers: hardware and software suppliers: hardware vendors + software vendors.
Hardware vendors mainly refer to equipment that provides live broadcasts for digital people, including but not limited to mobile phones, vertical screen tablets, cabinets, etc.; they are mainly the transformation of some Guangdong electronics factories in the past, and there are also some copycat phone manufacturers. For example, different intermediaries provide us with hardware products of brands such as PepsiCo, VIKK, and Duowei; software vendors are divided into virtual human production, virtual human operations, virtual human service providers, etc., including major manufacturers such as Kuaishou and SenseTime, as well as startups such as Mofa Technology and Jigou Technology that focus on the needs of vertical merchants.
The midstream are the middlemen who reap the most profits in this industry chain. Without exception, these middlemen are keen to make quick money. As mentioned above, they are "only for sale, not for use". They are typical sales-driven companies. They play tricks and harvest leeks.
▲Screenshot of the virtual live broadcast room of the picture source
"Self Quadrant" saw in the survey that these manufacturers are still playing the same old tricks as before, packaging successful cases on social platforms such as Douyin, Kuaishou, Weibo, and Xiaohongshu to attract traffic, and adding WeChat to force customers to place deposits, and finally succeeded in winning.
Downstream are the retailers of virtual digital people. Their strategy is to use the so-called lowest agency price to acquire tens of thousands of virtual digital people, and then resell them at a higher price to other small merchants who want to use virtual digital people for live streaming.
After communicating with several middlemen with good "sales", we found that even though the platforms and manufacturers are different, the "routines" are almost the same. It is precisely because of the emergence of these routine companies that the digital human industry has different motivations between upstream and downstream, and there is a disconnect between technology and application.
Upstream technology suppliers, such as startups such as Jigo and Magic, aim to push digital people in a more intelligent and human-like direction through continuous iteration and innovation. They pursue the advancement of technology itself. However, downstream e-commerce users, especially those small and medium-sized merchants, have very practical and simple expectations for virtual digital people - that is, they can be used directly and realize sales immediately.
As a result, there is now a serious mismatch between the upstream and downstream of virtual humans.
The technology provided by companies such as SenseTime is immature and expensive, and is a luxury product for ordinary merchants. And the low-threshold digital people provided by the so-called "operation agents" are of poor quality and cannot achieve the desired commercialization effect. Small and medium-sized businesses are in a dilemma: either they invest too much, or they get banned from the platform even if they use it. They had to make a painful choice between performance and budget. This has also caused the reputation of digital people to plummet.
It can be said that there is serious chaos in the industry at present. There is neither sufficient demand matching between upstream and downstream, nor a long-term layout for coordinated development. This casts a shadow over the early development of the digital human industry.
Judging from the results, midstream has made a lot of money by relying on the old routine of excessive marketing and traffic business.
For example, Fenghuo Alliance, the largest virtual digital human intermediary on Douyin, has more than 50 accounts on the Douyin platform, and approximately 300 accounts on the entire platform, according to preliminary statistics from "Self Quadrant". The middleman has now begun to take shape, and has successfully deceived a large number of merchants with its crazy screen-swiping and roaring output. According to industry insiders: "Fenghuo Alliance spends 6k-8k every day on advertising and generates 8k-10k accurate sales leads that are enough to buy virtual digital people."
▲Picture source: screenshots from Fiberhome Alliance related accounts
"It is clear that virtual digital people are used as new bait, but the essence is still a traffic business." The above-mentioned industry insider commented.
The seemingly absurd logic, disguised as technology, can be invincible and successful in "killing customers". This is the cruel and funny reality of the current virtual digital market.
Conclusion
Currently, there is considerable chaos in the field of virtual digital humans, which requires regulation by relevant regulatory authorities. But the problem is that mainstream short video platforms have an ambiguous attitude towards this field. They neither completely ban it nor actively clean it up. The considerations behind it are complex and diverse.
"Now, Taobao's digital people are open to merchants. They are more expensive than third parties, but they are official and authentic and will not be blocked." A Taobao service provider revealed a "tattletale" to "Self Quadrant", but it has not been disclosed in any official channels. "Recently, a large number of virtual human live broadcasts have poured into Taobao live broadcast rooms, especially in the evening and early morning. They are rarely seen during the day."
Platforms like Taobao can launch self-developed digital human services. Compared with third parties, the official can avoid account bans to the greatest extent and will also bring a certain premium. As for platforms like Douyin and Kuaishou, they have not completely rejected digital people, but have adopted a wait-and-see attitude. On the one hand, merchants are encouraged to use it, and on the other hand, merchants may be guided to invest more in order to improve the performance of digital people through algorithm recommendations and other means. Ultimately this can also bring considerable economic benefits in the form of advertising fees.
A brand merchant told "Self Quadrant": "When virtual humans were the most popular, I purchased virtual human anchors. The first few live broadcasts were very good. In the first three months, I could barely break even with profits and losses. In July and August this year, the photoelectricity bill was more than 10,000. In addition to streaming for the virtual human anchors, I lost about 100,000."
It can be seen that the attitude of the major short video platforms towards the digital human field is neither cold nor enthusiastic, but in a vague neutral state. Because whether it is open or restricted, the result may become a new profit point. This also makes it difficult to completely clean up the current chaotic situation in the digital human field in a short time.
In the early stages of technology development, we cannot lose our rationality because of market chaos, nor can we give up exploration because of temporary failures.
Only by being optimistic in the long term and cautious in the short term and avoiding falling into the trap of middlemen can we de-noise the industry and move to the next step of development.
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