With an annual income of 4 billion, why do emoticons make so much money?

In 2017, industry insiders estimated that the annual output value of emojis would be no less than 1 billion yuan. From the subsequent development and changes in the industry, this figure obviously underestimates the commercial value of light IPs such as emojis. How much money do emojis make? How do emojis make money? Where is the industry's code for getting rich? Today, let's explore the emojis and the stories behind them.

What is the indispensable thing in your WeChat?

I believe many people will answer: emoticons.

Nowadays, emoticons have become a very important part of online communication. If there are no emoticons in WeChat, the language and text will seem a little too pale.

According to Swyft Media, more than 6 billion emojis are sent through communication apps around the world every day. In my country, the number of emojis sent every day is about 600 million, of which only 20% of the total number of users use emojis less than 10 times a day.

At the beginning of this year, Taobao Tao IP Library released the 2022 IP Commercial Value List and the 2022 "Light IP" Dark Horse List. From these two lists, we can clearly understand the popularity of IP-related peripheral derivatives among domestic consumer groups.

It is worth noting that in the entire list, in addition to the familiar IPs such as Ultraman, Disney, Transformers, etc., the popularity of a new type of IP has begun to continue to rise - emoticons.

As early as 2017, industry insiders estimated that the annual output value of emojis would be no less than 1 billion yuan. Judging from the subsequent development and changes in the industry, this figure obviously underestimated the commercial value of light IPs such as emojis.

How much money do emojis make? How do emojis make money? Where is the secret to wealth in the industry? Today, let's explore the secrets of emojis and the stories behind them.

1. The Infinite Universe of Branding

How much money do emojis make? Let’s first take a look at the performance of the leading groups.

There is a social software called "LINE" in South Korea, which is equivalent to WeChat and QQ in China. Brown Bear, Cony Rabbit, Sally Chicken, these familiar emoji characters are from LINE FRIENDS under LINE.

In 2016, LINE FRIENDS helped its parent company LINE to successfully go public. On that day, the company's market value reached US$9 billion.

LINE's 2018 financial report showed that the revenue from emoticons reached 1.796 billion yuan, while the revenue from other business derivatives led by LINE FRIENDS reached 1.81 billion yuan. It can be said that the annual revenue from emoticons and peripheral derivative products alone was nearly 4 billion yuan. LINE FRIENDS is even known as "Asia's No. 1 money-making group."

Image source: LINE

So, how are the domestic emoticon players doing?

At present, the entry progress of domestic emoticon-related companies is basically concentrated in the angel round to the A round stage. Currently, the relatively successful domestic companies operating the emoticon industry include Twelve Building Culture, Mosquito Animation, Mengli Planet, etc.

How do emoticons make money?

Many people’s first reaction to this is probably the paid emoticon package in WeChat.

In 2015, the WeChat Emoji Store was launched online, based on the WeChat platform and making money from traffic, becoming one of the sources of income for many independent creators.

Zhong Chaoneng, the creator of the emoji package "Good Boy", is one of them. According to media reports, the emoji package "Good Boy" became popular, with 150 million downloads in two years, and the author received 500,000 yuan in rewards.

The "Changcao Yantuanzi" with grass on his head is the first emoji image on WeChat to have been sent over 10 billion times. This IP was added to Building 12 in 2013. Its author Maotui was discovered and signed by Building 12. Later, the entire team made six design improvements to its image until it exploded two years later.

Image source: Twelve Building Culture Weibo

After the WeChat emoticon package was launched, "Changcao Yantuanzi" was launched as one of the first invited characters, and has been downloaded more than 10 billion times and sent tens of billions of times. In addition, Twelve Buildings also has many IPs such as Fu Lu Xiao Jiang Si and Refrigeration Girl. I believe that many readers are also fans of them.

But in fact, charging for emoticons is the lowest-level operation in this business.

Twelve Buildings is the company that has received the most praise for its WeChat emoticon production. It is reported that the company has earned a total of about 1 million yuan from praise in recent years. However, compared with the material and human resources it has invested, the income is just a drop in the bucket.

As of May 2021, taking the WeChat platform as an example, Shierdong Culture has launched nearly 100 sets of emoticon packs, of which 3 sets are priced at 1 yuan, and the rest can be downloaded and used for free. The charges and rewards for emoticon packs are extremely random, which increases the uncertainty of income.

Compared to relying solely on likes to make a living, branding is the best way to monetize emoticons.

BC12, a subsidiary of Shierdong Culture, is a retail brand that focuses on the entire industry chain of IP derivatives. It can now launch 1,500 products every year. Shierdong Culture is also engaged in the blind boxes that have been very popular in recent years. It has launched Gon's marmot Christmas series, music series, etc. In addition to blind boxes, BC12 has also launched peripheral products such as pillows, handbags, pendants, T-shirts, storage bags and cups.

The main component of Building 12's annual revenue of tens of millions is the sales revenue of merchandise created based on IP images such as Changcaoyantuanzi, as well as copyright fees from some brand licensing.

The monetization of emoticons is essentially the monetization of IP, and the monetization of IP is essentially the commercial value carried by cultural output.

How to export culture through emoticons?

Just like Japanese anime, emoticon marketing first requires a process of personalization to convey the uniqueness and high recognition of the image.

Take the "IP Empire" Disney as an example. Whether it is the old flagship IPs such as Mickey Mouse and Winnie the Pooh, or the later hits such as Lingna Belle and StellaLou, they all have their own characteristics and attract countless fans.

Secondly, through a series of works and scenes, such as animation, comics, movies, amusement parks, etc., the IP is transformed from image to content, giving it stronger vitality and interactivity. As for peripheral derivatives, IP licensing, etc., they are all natural products after the success of the IP.

Another example of domestic IP branding is Tongdao Dashu.

Uncle Tongdao first made his debut with comics. Since July 2014, he has been posting a series of comics on Weibo about zodiac signs. Zodiac signs have a wide audience, and compared to emoticons, comics are not only more informative, but also help to create a distinctive personality for Uncle Tongdao.

Image source: Tongdao Uncle

From an early self-media blogger to an IP new cultural and creative company, Tongdao Dashu now has 60 million core fans across the entire network.

In terms of branding, from Didi and subways to ofo and Mobike shared bicycles, from Minsheng Bank credit cards to daily necessities brands such as Yalijie and Xiaomihu, from beverages such as Jiang Xiaobai and Mengniu to offline retail stores such as FamilyMart and Belle, all are the partners of Tongdao Uncle.

IP licensing derivative cooperation has become an important part of Tongdao Uncle's income source. In terms of interaction with fans, Tongdao Uncle has launched projects such as books, video programs, carnival theme activities, etc., forming a relatively complete industrial chain.

In market research, when it comes to similar products, whether or not they have an IP licensed image, consumers generally accept that IP-licensed products are more expensive than similar products.

Public information shows that by the end of 2017, there were 327 brand licensing companies in China, with 1,032 IPs licensed, and the number grew rapidly in 2018. The countries and regions of IPs active in my country's licensing market are the United States (40%), China (29%), Japan (11%), South Korea (6%), and the United Kingdom (6%).

In the view of Rudy, Chairman and CEO of Tongdao Uncle, "Compared with the slow growth of the IP market in Europe, America, Japan and South Korea, domestic IP has grown faster. At the same time, IP in other countries has also increased year-on-year. The market demand for IP is becoming more niche and personalized. The era of IP entertainment is coming."

In the eyes of Wang Biao, the founder of Twelve Buildings, the company has always been a pan-entertainment consumer enterprise driven by image IP: "We are actually firmly optimistic about China's original IP and the entertainment consumer market driven by the IP economy, with Chinese young people as the main force."

The road to IP for domestic emoticons is now open and there is great potential for development.

2. Addition and subtraction

The development of anything must go through ups and downs, and emoticons are no exception.

You can choose to be a simple emoticon package, but if you want to achieve commercialization, fierce competition will follow.

For industries that rely on IP for their livelihood, the biggest problem is that it becomes outdated. Consumers’ minds are time-sensitive. Once the popularity drops, the IP’s money-making index will also plummet.

When it comes to maintaining fans, most new generation domestic companies choose to add value.

For example, the team behind Changcaoyantuanzi has implemented refined management of its fan base.

Luan Luan, COO and partner of Shierdong Culture, believes that "fans from different circles have different demands for an image, and we must effectively manage these fans so that they can stay fixed."

In the early days, Yan Tuanzi's fan groups were all indiscriminate, but now they are divided into various types of communities, and content is distributed to the groups based on different needs. When producing new content, we must also take into account the emotions of more people.

As for companies that have become industry leaders, when faced with development bottlenecks, most of them choose to do subtraction.

Since 2021, the popularity of LINE FRIENDS' offline stores in the Chinese market has plummeted, and many stores have closed down one after another.

In February 2022, the LINE FRIENDS Chengdu Sino-Ocean Taikoo Li store officially closed. This is also the last offline store of LINE FRIENDS in mainland China. The once-popular queue king has become the "tears of the times."

Why is LINE FRIENDS no longer popular?

On the one hand, as a category that has entered the consumer's field of vision in the form of emoticons, the LINE FRIENDS experience is relatively simple, and offline stores can only provide cartoon image scene photo-taking and check-in, and peripheral product consumption.

Over time, people still only know Brown Bear and Cony Rabbit as cute, but know nothing about their personalities. It is difficult for IP images to interact with consumers, resulting in low user stickiness.

On the other hand, LINE as a chat software has never been able to open up the market in mainland China, resulting in a significant decrease in the frequency of users' use of LINE FRIENDS emoticons.

As new student emoticon packs continue to capture the hearts of young consumers in the WeChat market, further squeezing the market of LINE FRIENDS, it is natural that people gradually forget about LINE FRIENDS.

However, in LINE's view, closing offline store business is not a setback, but more of an iteration.

Image source: LINEFRIENDS official website

In the future, LINE FRIENDS' business focus will shift to online retail and IP licensing. Compared with asset-heavy businesses such as offline physical stores, online retail has less operating cost pressure, and IP licensing has a higher profit margin.

Regarding how to strengthen interaction with users, LINE FRIENDS stated that in the future, it will develop offline experience spaces in multiple business formats, such as theme hotels, restaurants, small retail stores, and unmanned retail, to provide fans with diversified interactive experiences such as theme exhibitions, flash mobs, and parties.
Whether it is addition or subtraction, whether it is IP innovation, refined management, or operation iteration, only by seeking innovation and change can we keep up with the trend of the times.

3. Disney’s Enlightenment

Like LINE FRIENDS, the "immortals" in the IP industry have surprisingly unanimously chosen to align themselves with the grandmaster Disney in terms of industry goals.

As early as 2019, Wang Ning, the founder of Pop Mart, said: "Pop Mart has a grand goal, which is to become the company in China that is most like Disney in five years."

Always imitated, never surpassed. This statement is true to describe Disney's status in the IP world.

Disney's revenue structure includes four major sectors: TV and Internet business, Disneyland Resort, film entertainment, and derivatives and games, accounting for 44%, 30.8%, 14% and 11.2% of revenue respectively. It can be seen that Disney's profits come from the entire cultural industry chain, and IP, as the core, has played a connecting role from beginning to end.

The images, stories and scenes make up the highly entertaining Disney culture.

The reason why many Disney IPs can last for a long time is largely due to the huge story background. Classic IPs such as Mickey, Donald Duck, and Goofy have cartoons and movies that are popular all over the world. However, one of the popular products in recent years, Lingna Belle, is an exception. As a derivative IP character, Lingna Belle has never appeared in Disney's previous film and television works.

Why is Lingna Belle more confident than LINE FRIENDS, both of which are IPs without a story? The reason is that Lingna Belle has a good father - Disney. Whether it is character creation or marketing, Disney is very good at it.

First of all, Lingna Belle's biggest feature is "cuteness". How to perfectly interpret the word "cuteness"? The simplest and most difficult.

With pink fur, big starry blue eyes, big ears and a fluffy tail, Lingna Belle has captured the hearts of thousands of young girls with her unique little fox image. And this soft and cute image has been taken to the next level with the addition of various special costumes and scenes.

Secondly, Lingna Belle is Disney's Lingna Belle, not a separate individual. Although Lingna Belle is a "schoolgirl without a story", she grew up in the deep-rooted soil of Disney and has multi-dimensional channels such as Disney animation and theme parks, so it is naturally easy to promote Lingna Belle.

In Disneyland, Lingna Belle can form a strong interaction with tourists. Therefore, although Lingna Belle has no story, she has created a story in reality.

Lingna Belle is just a drop in the ocean of Disney's IP empire, which has neither ancient nor new IPs. When batches of IPs become the face of the brand, Disney's comprehensive marketing costs will be diluted. New IPs one after another will also serve as fresh blood, making the Disney family more full and charming.

Disney has been around for 100 years since its founding in 1923. The construction of a century-old empire is not done overnight, and for domestic IP, there is still a long way to go to learn and catch up.

Looking at the current domestic emoticon packages, a number of popular ones have been produced with the help of WeChat, and their peripheral products can also be purchased on Taobao and WeChat mini-programs, but there is still a long way to go before they can truly achieve mature content, branding, and industrial chain development.

Luan Luan, COO and partner of Shierdong Culture, once said: "The image we have cultivated now is more like an internet celebrity than a star. There is still a little difference in the public perception. So when the company has enough resources, we will consider how to turn internet celebrities into stars and promote them to a higher level."

We are all waiting together for the emergence of a star-level domestic emoticon package to see the stories it can create.

Author: Koala is a Deer

Source: WeChat public account "New Retail Business Review (ID: xinlingshou1001)"