How virtual idols create great business opportunities

For the next generation, the virtual world might be the real world. And for private capitalists, it could mean a great business.

In October, social media platform KilaKila completed Rmb120 million ($17.2 million) Series A fundraising from Nasdaq-listed Weibo, Sequoia Capital, and venture funds that include CITIC Capital, Axpfund and Qingyu.

KilaKila's chief executive Liu Zizheng told FinanceAsia that the company is using the proceeds to develop technology for virtual idols - a feature that can give each user an animated cartoon figure.

Users can design their own avatar within KilaKila’s app and use it during live streaming. Viewers will hear sounds from the actual person while watching a customized cartoon figure that mimics exact facial expressions and movement. According to Liu, such functionality will go online within a couple of months. 

He also said that the company is building what it calls its Variable Interest Entities structure and has already started Series B fundraising.

Founded in 2016, KilaKila targets comic and animation lovers. Users can share slash fiction and home-made videos, as well as live streaming on the website. It used to focus on voice actors and is now using this advantage to develop virtual figures for some famous ones.

“We want to create a virtual world, like the one in [the films] Avatar or Ready Player One,” Liu said. “In the future, everyone on our social platform can have a figure of their own. For the next generation, the virtual world might be their real world.”


The virtual world is becoming increasingly populated with virtual idols that have been created with a few lines of code. Have you ever seen a concert full of thousands of fans, but with no one actually onstage? You might get used to it quite soon.

On July 20 this year, a virtual singer called Luo Tianyi held a concert in Shanghai. There were more than 10,000 in the audience, and 4.5 million viewers watched the concert on Bilibili, a Nasdaq-listed Chinese video site that focuses on animation and comics. Fans cheered and applauded - just as everyone would for a real singer.

The songs that Luo Tianyi sang were all created by her fans online, using Yamaha's voice synthesis software VOCALOID. Zenith Group, the company which created Luo Tianyi, used a hologram in the concert to make the figure dance and sing on stage.

The concept of virtual idols comes out of Japan's long history of animation and comic book culture. Unsatisfied at seeing their favourite cartoon figures only on TV or in books, fans started to create comics or animations themselves to show off their love for the figure. This was the origin of virtual idols.

The first successful virtual idol was Hatsune Miku, a Japanese figure with green hair and twin ponytails. Developed by music software company Crypton Future Media in 2007, it uses the same VOCALOID technology. Hatsune Miku was released together with the software to encourage users to compose music. This inspired fans and boosted the sales of the software too.


Luo Tianyi is a Chinese version of Hatsune Miku. As Chinese companies have watched the animation audience grow, they have also developed their own virtual idols for the Chinese market.

To create such a figure and to hold a concert for him or her is not cheap. The company needs to spend a lot on movement-capture equipment and rendering. But returns are profitable. Fans are loyal to the figure as the song, dance and story are all user-generated. They are willing to pay for concert tickets, related cartoon products, and even wigs in the style of their idol too.

Kilakila has chosen a cheaper way to build its virtual idols. It is developing facial recognition technology that allows users to create cartoon figures via the camera on mobile telephones.

This fits in well with consumer psychology. People prefer to grow up with their idols. Consumers for these virtual idols are between 15 and 25, with a high willingness to spend. “They grew up with the online world and are already used to spending online,” Liu said.

The revenue of these virtual idols currently comes from live streaming, online tips, offline concerts and co-branding activities. But it seems there’s more to be done with such huge traffic volume online.

“We expect the virtual idol market to grow to over $10 billion,” said Liu. “And just as in Japan, we expect growth in the Chinese market to explode in one or two years.”


Some games companies have already started to invest in the virtual idol business.

On October 23, Chinese games company Giant Interactive Group said that it is going to invest more than $14.3 million to promote a Japanese virtual idol called Menhara Chan. Giant will use the money to create all types of content for Menhara Chan, including music, stories, videos and games.

Tencent Game is creating its own virtual idol called Diaochan from its King of Glory game. NetEase is also promoting several virtual idols from its popular game Onmyoji. Aside from starting the virtual idol business, these games companies also hope to extend gamers' playing time into new revenue growth.

According to research published in June this year by the Chinese Academy of Social Sciences and Tencent, Chinese teenagers first accessed the internet between the ages of six to ten. Almost a quarter of teenagers spent two to four hours online every day, and most of them prefer to watch animations and play games. Like it or not, the next generation is more likely to do everything online in the future. This includes following their pop stars. 

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media