Who is using virtual people to set up the game?

As digital humans have become the "new favorite" of the live e-commerce industry, related chaos has also emerged, and there has been a serious mismatch between the upstream and downstream of digital virtual humans. In this article, the author analyzes and interprets the root causes of the chaos in the digital human market. Let's take a look.

"It's a mess. It's quite a mess. Prices range from 99 yuan to 300,000 yuan. I don't know who to trust."

Since virtual digital humans (hereinafter referred to as digital humans) entered the live broadcast room in March this year, "unmanned live broadcast" has quickly become the new favorite in the e-commerce industry. Various myths about digital humans being able to work 24 hours a day and significantly increase sales conversion rates have become popular in the e-commerce circle and even swept all transaction-oriented fields.

But behind the technology boom, there is a mix of good and bad. More than one business owner expressed to "Zi Quadrant" that they were confused about what to do in the mixed digital human market.

At the same time, many regulatory authorities have recently made intensive statements, requiring rectification of live streaming sales, and pointed out that digital humans may lead to false propaganda. This undoubtedly poured cold water on the digital human market. Due to the lack of interaction and emotion, it is still questionable whether digital human live streaming can really attract users like human anchors.

This can't help but remind people of the craze of blockchain, metaverse, and even the recent enterprise micro-mall. They all use technology and intelligence as selling points, promising to enable merchants to get twice the result with half the effort. However, after a short period of popularity, they generally fail to land, and the applications generally fail to achieve the expected results. Many merchants can only put them aside in the end.

Will digital humans make the same mistake today? Is it a new type of money-burning "pitfall" or a black technology that can really make businesses profitable? To solve the mystery behind digital humans, we must first answer a key question: What is the root cause of the current chaos in the digital human market?

1. Who is using “digital people” to set up the game?

In March this year, Li Lin (pseudonym), who thought he had smelled the first wave of digital human business opportunities, spent 300,000 yuan to become the agent of a digital human brand that claims to be the "digital human source factory", hoping to use digital human live broadcasts on TikTok to engage in cross-border e-commerce.

At that time, he thought that the market for digital humans might contain countless opportunities and unlimited "money prospects" that people looked forward to. To use a popular saying in the Internet circle, "all live broadcast rooms are worth doing again with digital humans."

But the good scene lasted only less than a month, and the platform banned Li Lin’s multiple accounts in the name of “digital human recording and broadcasting”.

"At first, I was really confused. 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 assured him that he could broadcast live, but the other party insisted that this was just an isolated case and they would neither be responsible nor provide follow-up services.

Li Lin came to his senses and suddenly realized that he had been deceived. The manufacturer, which claimed to be the "source factory", was actually a shell company. Every day, they sent him some popular videos of spliced ​​virtual digital people, giving him strong psychological hints, with the purpose of luring him into the trap.

"It's impossible to get a refund, but I can resell this set of things. They said I got the lowest price from the agent and I can make a profit from the difference." Li Lin said: "They taught me how to post on WeChat Moments, saying that as long as I follow the instructions, I will gradually have traffic and people will inquire about it."

"Zi Quadrant" learned that in the entire sales industry chain, there are two ways to deliver digital people, namely pure software delivery and integrated software and hardware delivery. However, most sellers prefer the integrated software and hardware delivery method, because this not only makes money from software, but also drives hardware sales.

Digital people sound full of technology and futuristic sense, but their sales strategy is a very simple business logic: buy me, and you will make money. To support this whole business model, you only need a small incision, and a smartphone is the fulcrum to start this game.

"Zi Quadrant" wanted to inquire about prices from several larger middlemen on Douyin and Kuaishou on the pretext of wanting to buy virtual digital people. The other party first described to us what kind of black technology digital virtual people are and how AI will replace humans in the future. At the same time, they boasted about the advantages of virtual people, saying that they are more hardworking than real people and can broadcast live 24 hours a day.

Many middlemen said in their own words that "virtual live broadcasts require certain equipment, so they specialize in producing mobile phones for live broadcasts." At the same time, in order to convince us, one middleman even sent us a live photo of "high-end equipment."

▲Image source: provided by the 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 for hardware purchase. After owning such a high-end device, you only need to pay a 500 yuan Douyin showcase deposit to immediately open a virtual digital avatar and let AI help you make money.

At the same time, these middlemen who sell virtual digital people will sign so-called "service contract terms" with merchants, which stipulate that the agency operating company must prepare live broadcast accounts for customers, be responsible for team building and software technical support, build virtual human software into mobile phones or computers, and ensure that the "death rate is within 5%-10%". Commissions are paid monthly, and both parties take 50% of the profits.

Here we come up with a formula: The code of wealth = equipment fee of 5,500 yuan + Douyin showcase deposit of 500 yuan.

It sounds like this is a one-stop hosting service for virtual live broadcasts. Merchants can buy accounts and sell their own goods or other people's goods without having to worry about it. These middlemen even proposed that if the contract is terminated within one year, the equipment will be depreciated and recovered at 10%, that is, the principal of 4,500 yuan of equipment fees will be returned, and the 500 yuan Douyin window deposit can also be applied to the platform for refund. According to this agreement, if the principal of 6,000 yuan is not used after one year, 5,000 yuan can be refunded. This means that the cost is only 1,000 yuan a year, and the commission can be guaranteed, which is a sure win.

But unfortunately, there is no business in this world that only makes profits and no losses.

"Zi 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 mainly "copycats". 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 the current mainstream mobile phones. The price of this brand of mobile phones is mostly between 459 yuan and 699 yuan, and the latest model is only 899 yuan per unit.

▲Image source: Screenshot of JD.com search

What makes this phone so different and allows it to be sold at nearly ten times the price is the virtual digital human.

After the popularity of virtual digital people, many businesses hope to apply virtual people to their live broadcast rooms as soon as possible. But at the same time, they have no idea how to buy virtual digital people and how to configure them after buying them.

It is this huge demand gap that has given rise to these middlemen who set up scams to make money.

A merchant who purchased virtual digital human equipment in the early days mentioned to "Zi Quadrant": "A year later, I only got the deposit returned by Douyin Showcase, and the rest was not refunded."

"In fact, the contract specifically states that if there are problems with the equipment, the depreciation costs will be negotiated separately based on the specific circumstances. However, given the configuration of these knockoff phones, it is almost impossible for them to not have problems after a year of normal use."

The integrated packaging of software and hardware has certainly solved the trouble of early configuration of virtual digital humans, but these middlemen are limited by their technical level. They simply package a virtual digital human image into the hardware device, which results in the virtual digital human having few functions, single scenes, insufficient interactive effects, and almost no conversion.

"Let me give you a specific example." Another merchant who has purchased a virtual digital person told "Zi Quadrant": "In most cases, it is difficult to get the digital person to introduce the product normally. The user's question is answered 10 seconds later, and the user has already left the live broadcast room."

However, the middlemen will not directly disclose these shortcomings. They just repeatedly emphasize to customers that "virtual digital human live broadcast has requirements for equipment, so you must use specially produced mobile phones for live broadcast."

Even during the purchase process, the sales staff of the middlemen would urge customers to place orders by means of provocation. For example, when "Self-quadrant" consulted a middleman about the specific functions of the virtual digital human it sold, the middleman did not give a clear answer, but only urged us to sign the contract quickly, and used some rhetoric to stimulate consumption, "Why are you in business if you are so indecisive?", "Or you can just stop doing it, we don't need people, you are too slow."

Li Lin admitted that “it’s starting to feel like the days of 2017 and 2018 when businesses were tricked into developing WeChat mini-programs…”

2. The source of chaos: mismatch of upstream and downstream demand

The popularity of digital people was inflated because they were only for "selling" and not for "using". Buyers who wanted to save trouble thought they had caught the trend, but ended up suffering a big loss; sellers who wanted to make a quick buck took the opportunity to enter the market and successfully harvested the first batch of leeks.

In fact, Li Lin is not an isolated case. To understand the fundamental reasons behind the confusion, we need to return to the current industrial chain of virtual humans. According to "Zi Quadrant", the upstream, midstream and downstream stratification of digital human trading is relatively clear.

Upstream suppliers are divided into two types: hardware and software suppliers: hardware vendors + software vendors.

Hardware vendors mainly refer to the equipment that provides live broadcast for digital people, including but not limited to mobile phones, vertical screen tablets, cabinets, etc.; mainly some Guangdong electronics factories in the past, and some copycat manufacturers have transformed. For example, different middlemen provide us with hardware products of brands such as Pepsi, VIKK, and DOOV; software vendors are divided into virtual human production, virtual human operation, virtual human service providers, etc., including large manufacturers such as Kuaishou and SenseTime, as well as startups such as Mofa Technology and Zhegou Technology that focus on the needs of vertical merchants.

The midstream consists of the middlemen who reap the most profits in this industrial chain. These middlemen are all keen on making quick money, just as mentioned earlier, “only for selling, not for use”. They are typical sales-driven companies that use tricks and reap profits.

▲Image source: Screenshot of the virtual person live broadcast room

"Self-quadrant" found in the survey that these manufacturers are still using the same old tricks, packaging successful cases on social platforms such as Douyin, Kuaishou, Weibo, and Xiaohongshu to attract traffic, and then forcing potential customers to pay deposits by adding WeChat, and finally successfully winning them over.

Downstream are the retailers of virtual digital people . Their routine is to use the so-called lowest agency price to acquire thousands of virtual digital people, and then resell them at a higher price to other small merchants who want to use virtual digital people to sell goods through 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 in the upstream and downstream, and the technology and application are out of touch.

Upstream technology suppliers, such as startups such as iQiyi and Magic, aim to make digital humans smarter and closer to humans through continuous iteration and innovation, and they pursue the advancement of technology itself. However, downstream e-commerce users, especially small and medium-sized merchants, have very practical and simple expectations for virtual digital humans - they just want to use them directly and realize sales and monetization 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 not mature enough and is expensive, which is a luxury for ordinary merchants. The low-threshold digital humans provided by the so-called "operation agents" are of poor quality and cannot achieve the expected commercial effect. Small and medium-sized merchants are in a dilemma. Either the investment is too high, or the platform blocks their account. They have to make a painful choice between effect and budget. This also caused the reputation of digital humans to plummet.

It can be said that the industry is currently in a serious state of chaos. There is neither sufficient demand matching between upstream and downstream, nor a long-term layout for coordinated development. This casts a shadow on the early development of the digital human industry.

Judging from the results, Zhongyou has made a fortune by relying on the old tricks of excessive marketing and traffic business.

For example, Fenghuo Alliance, the largest virtual digital human middleman on Douyin, has more than 50 accounts on the Douyin platform and more than 300 accounts on the entire platform, according to preliminary statistics from "Zi Quadrant". The middleman has now begun to take shape, relying on crazy screen swiping and roaring output to successfully fool a large number of merchants. According to industry insiders, "Fenghuo Alliance spends 6k-8k on advertising every day, generating 8k-10k accurate sales leads for buying virtual digital people."

▲Image source: Screenshots of Fenghuo Alliance related accounts

"It is obvious that virtual digital people are being used as new bait, and the essence is still a traffic business," commented the above-mentioned industry insider.

The seemingly absurd logic, disguised as technology, is able to successfully "kill" customers invincibly. This is the cruel and funny reality of the current virtual digital market.

3. Conclusion

At present, there is a great deal of chaos in the field of virtual digital people, which needs to be regulated by relevant regulatory authorities. However, the problem is that the mainstream short video platforms have an ambiguous attitude towards this field, neither completely banning it nor actively cleaning it up, and the considerations behind it are complex and diverse.

"Now, Taobao's digital people are open to merchants. They are more expensive than third-party ones, but they are official and authentic, so they will not be blocked." A Taobao service provider revealed a "rumor" to "Zi Quadrant", but it has not been made public through any official channels. "Recently, a large number of virtual people have flooded into Taobao's live broadcast room, especially in the evening and early morning, and 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 closures to the greatest extent, and will also bring a certain premium. As for platforms like Douyin and Kuaishou, they have not completely rejected digital humans, but have adopted an open attitude of waiting and watching. On the one hand, they encourage merchants to use them, and on the other hand, they may guide merchants to invest more in improving the performance of digital humans through means such as algorithm recommendations. Ultimately, this can also bring considerable economic benefits in the form of advertising fees.

A brand merchant told "Zi Quadrant": "When virtual people were at their peak, we bought virtual human anchors. The first few live broadcasts were quite good, and we could barely break even in the first three months. But in July and August this year, the electricity bill was more than 10,000 yuan, plus the traffic for the virtual human anchors, we lost about 100,000 yuan."

It can be seen that the attitude of major short video platforms towards the field of digital humans is neither cold nor enthusiastic, but rather 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 chaos in the field of digital humans in a short period of time.

In the early stages of technological development, we cannot lose our rationality due to market chaos, nor can we give up exploration due to 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 eliminate noise in the industry and move towards the next step of development.

(The pictures in this article are from the Internet)

Author: Cheng Xin, Editor: Zhou You

Source public account: Zixiangxian (ID: zixiangxian), between the squares, there is a quadrant. Care about science and technology, economy, humanities, and life.