Has the trillion-dollar business that Baidu, Tencent and ByteDance are competing for reached a turning point?

"The case has been solved. The new version of QQ has Unreal Engine 4 installed, and the installation package is almost 1G in size. This is to prepare for the internal test of Super QQ Show."

Zhang Qiang, an internet user who has been observing product dynamics for a long time, said that compared with WeChat's installation package of only more than 400M (1G=1024M), the size of the new QQ installation package has increased dramatically. The market speculated that it must be for the layout of the metaverse, but no one expected that it would "resurrect" the Super QQ Show in the form of virtual digital people.

QQ Show was once a childhood memory for those born in the 1980s and 1990s. In November 2021, there was news that the PC version of QQ Show would be taken offline, but Tencent claimed that it was just folded. On January 25, 2022, Super QQ Show started internal testing, which also caused a stir in the virtual digital human circle.

As the "ancestor" of virtual digital people, QQ Show now faces many competitors.

Liu Yexi, who became an overnight sensation on TikTok, Li Weike, who was invested by ByteDance, Ayayi, who became popular on Xiaohongshu, Hua Zhibing, a virtual student of Tsinghua University, and "Junjun", a virtual digital human created by Baidu spokesperson Gong Jun, and "Huang Renxun", a digital human CEO of Nvidia that is so lifelike that it can be mistaken for a real person, are all attracting the attention of the consumer and venture capital circles.

"QQ made its first fortune through QQ Show, and the value-added services and other businesses that followed made Tencent what it is today. Virtual digital humans may be the first commercial outlet for the Metaverse." Wu Shichun, founder of Meihua Venture Capital, who has just invested in the virtual digital human company Shiyue Xingcheng, told Tech Planet that he is very optimistic about the future of virtual digital humans.

Nowadays, virtual digital people with their own gimmicks have also ignited this track. On January 21, Ranmai Technology, a hyper-realistic digital human service provider, received tens of millions of yuan in investment from SIG, and owns Ayayi, an Alibaba virtual employee; on January 18, virtual digital developer Shiyuexingcheng also announced that it had received investments from NetEase and Meihua Venture Capital; on January 6, Hangzhou Li Weike Technology Co., Ltd., which created the virtual IP image "Li Weike", announced the completion of tens of millions of yuan in angel round financing, exclusively invested by ByteDance. Earlier, Cishi Culture, a cross-dimensional virtual IP content development and operation company, completed two rounds of financing within three months in 2021, raising millions of dollars.

Since January 2022, a virtual digital human company has announced financing every 3-5 days. The crazy entry of Baidu, Tencent, ByteDance, Alibaba and NetEase has also made the virtual digital human track extremely hot. Mixed with topics related to the metaverse, virtual digital humans have become the focus of market attention.

Virtual digital crowds rise

"Hi, this is our first meeting. What do you think of me?"

On the day of "520" half a year ago, Tang Yi, co-founder of Ranmai Technology, and other senior executives gathered in the office, excitedly typed this sentence on Xiaohongshu, and then uploaded the carefully crafted virtual digital person Ayayi image to observe Ayayi's debut on Xiaohongshu. "I didn't discuss cooperation with Xiaohongshu, but I felt that the platform and the character were highly compatible." Tang Yi told Tech Planet that since it was a completely cold start release, he himself didn't know whether Ayayi would be popular.

A picture, a greeting, and the result of the company's efforts for more than half a year, can it become popular? Tang Yi was unsure, "I will accompany my wife like she is pregnant and giving birth." In fact, Tang Yi also has an inexplicable confidence in Ayayi, "Ayayi's image has been adjusted more than 40 times, and the hair color alone took more than a month to adjust. We are confident that we can impress the young people of Generation Z."

The final result is quite gratifying. Ayayi made her debut successfully on Xiaohongshu, and now the number of likes for the first post has reached more than 100,000. "This face is too beautiful" "Is my sister an AI?" Many comments are very surprised by Ayayi. In order to maintain the mystery, Ranmai Technology has not given a specific explanation of Ayayi. Only with more and more virtual life releases, fans gradually confirmed that it was AI.

Hyper-realistic virtual digital people often seek to become popular, whether it is Ayayi who became popular on Xiaohongshu, Liu Yexi who became popular on Douyin, or Luo Tianyi who debuted on Bilibili earlier. The reason behind this is not difficult to understand. Hyper-realistic virtual people often have high requirements for character appearance, etc., and only when the IP becomes popular can it stand out.

Coincidentally, these hyper-realistic virtual digital people all have similar styles. "Short hair, sharp eyes, delicate faces" are the main characteristics of this generation of virtual people. Similar ones include MERROR from Cishi Culture and Gina from Snow Claw Technology. Of course, there are also ancient styles such as "Ling" from Cishi Culture and sports realistic styles such as Shiyue Xingcheng.

Tang Yi told Tech Planet that the final image is this kind of cold but cool, very independent beauty image, which is not just a coincidence, but it is conducive to the IP to carry more connotations and facilitate its entry into the fields of fashion, culture, sports, etc. Recently, Liu Yexi released a short story play "Liu Yexi: Earthly Branches Maze", which is actually a monster-catching plot created to extend Liu Yexi's independent character.

These virtual digital people can be your friends, lovers, or even idols. They debuted in different ways and ignited the enthusiasm of the public. Many digital people have millions or even tens of millions of fans.

Therefore, in 2021, virtual idol startups including Cishi Culture received 25 financings, with the highest amount of financing reaching tens of millions of dollars. Among the investors were star institutions such as Shunwei Capital, Qiming Venture Partners, and GSR Ventures. In 2022, many startups received financing at the beginning, and well-known institutions began to "sweep" the leading virtual digital human companies.

Giants are entering the game

Different from Ayayi and other companies that have become popular through IP, there is another group of virtual digital human companies that are driven by technology. In other words, they are more concerned about promoting the practicality and intelligence of virtual digital humans.

Baidu, which created the "Xiling" digital human production platform, Tencent, which launched the Super QQ Show, and Hangzhou Li Weike Company, which uses XR glasses to create virtual people, are all typical examples of this school.

These companies also have IP, but they focus more on the research and development of related technologies. On the one hand, they hope to shorten the time and difficulty of producing virtual digital people, and on the other hand, let virtual people "fly into the hands of ordinary consumers."

Baidu's Xiling has three asset production lines: 3D realism, 2D realism, and 3D cartoons . "2D takes a few minutes, 3D takes a few hours." Li Shiyan told Tech Planet that Baidu's cross-modal generation technology has achieved a 98.5% accuracy rate in the lip-synthesis of digital humans.

Similar to Baidu's thinking, Tencent currently has two business lines for virtual digital humans. One is the hyper-realistic digital human Xiao Zheng created by the Interactive Entertainment Group. Her identities are "Xinhua News Agency Digital Reporter" and "the world's first digital astronaut." At the same time, Tencent has also built a digital human production pipeline, xFaceBuilder®, which brought the hyper-realistic Xiao Zheng into being in just two and a half months.

Another line is the Super QQ Show that QQ is promoting. The characters in Super QQ Show are in anime style, and they can create various cute images by assembling different hairstyles, clothes and other accessories. However, according to the internal test, if users want to DIY their own faces, facial features, clothes and shoes, they need to pay.

Super QQ Show internal test screen

Tencent is very likely to use Super QQ Show to let everyone have their own virtual digital human earlier. Hangzhou Li Weike's dream is even more ambitious. Ru Yi hopes to use subversive XR glasses and other methods to make virtual digital human a form of "Doraemon" and a partner that everyone wants to have in the future.

Li Shiyan also mentioned this future: "With the upgrade of the new generation of computing platforms represented by the Metaverse, everyone will enter the Metaverse through VR and AR devices in the future. Digital humans or digital avatars are the infrastructure. On the one hand, they allow users to express themselves and establish connections in social networks. On the other hand, enterprises or institutions can provide personalized services to thousands of people through service-oriented digital humans."

Startup Liwei is a representative of digital humans who are betting on the Metaverse era. Its founder Ru Yi was previously the product general manager of Tmall Genie and a partner of Xiaomi TV. After leaving her job to start her own business, she received tens of millions of yuan in investment from ByteDance. However, XR glasses are considered cutting-edge technology products. Ru Yi told Tech Planet: The market will not truly mature until Apple's AR glasses are released.

Hangzhou Li Weike Digital Human

Li Weike is a key company that ByteDance is betting on in the field of virtual digital people. But not only that, in June 2021, a subsidiary of ByteDance also acquired Hangzhou Kanchao Information Consulting Company, which owns the virtual idol girl group A-SOUL.

Of course, Alibaba was not absent from this feast. Its DAMO Academy is also exploring virtual digital humans. Tan Ping, the head of Alibaba's XR laboratory, once said that today's Internet is a two-dimensional interaction, while the metaverse composed of virtual humans and the virtual world is a three-dimensional interaction.

Questioning, Exploration and Commercialization

After virtual digital humans became popular, they received more attention, but there were also voices of doubt.

“What can virtual humans do? Just watch?” “Are virtual humans childish?” and similar voices are heard everywhere.

Objectively speaking, most early virtual humans adopted anime style, could not move independently and could not interact with people. Their simple two-dimensional display function was indeed a bit useless.

But for virtual digital people, it is no longer a simple matter of using CG technology to make an animation. The advancement of software and hardware technologies such as AI, 5G and AR has initially endowed virtual digital people with a "soul", making them more three-dimensional and vivid.

"At present, virtual digital humans have reached the L2++ level, which is already a practical 'assisted driving'," said Li Shiyan, head of Baidu's digital human business, using the analogy of the classification of autonomous driving levels to describe the current stage of development of virtual digital humans to Tech Planet. At present, new energy vehicles are generally equipped with L2++ level systems, which are crucial to the popularization of smart electric vehicles.

The same is true for virtual digital humans in the metaverse. Various explorations of virtual digital humans have also made the metaverse, which is still in a bubble, clearer. Virtual digital humans that can be commercialized are also accelerating the market's understanding of conceptual products.

Unlike Luo Tianyi who tried live streaming to sell goods very early, the more mature commercial model of virtual digital people nowadays is advertising endorsement. This is also the main reason why Wu Shichun invested in Shiyuexingcheng. Shiyuexingcheng, which has laid out the trendy virtual track, has completed the matrix of 5 virtual IPs such as Reddi and Vila in less than a year. Although the 5 IPs are not considered top-tier in the circle, they have also established cooperation with brands such as Gucci and China Li Ning.

The founder of Shiyuexingcheng came from the marketing circle and was more familiar with commercial implementation, which made Wu Shichun decide to invest in Shiyuexingcheng after just one meeting. At the same time, Shiyuexingcheng also launched China's first Metaverse trendy digital sports brand Meta Street Market.

Another digital human enterprise, Ranmai Technology, also recognized the profit model of brand endorsement. After Ayayi became popular, "500 brands approached us to discuss cooperation, and we finally selected about 40." Tang Yi told Tech Planet that they finally decided to only select one company in each industry, such as Porsche in the car industry, in order to cherish the hard-earned brand effect.

Baidu, which is more accustomed to doing To B business, prefers to introduce digital people into its business image. Baidu's current virtual digital people are mainly divided into performing digital people and service digital people. The performing digital people include CCTV.com virtual host Xiao C and the space agency's Mars rover digital person Zhurong. Service digital people are more often displayed as corporate customer service. For example, Baidu's first digital person was a customer service representative of a bank, and has currently served dozens of outlets.

Baidu’s Two Types of Digital Humans

"I recently went to a branch to experience Baidu's digital human, and I found that the number of users doing business in front of the digital human's integrated hardware and software has exceeded that of the ATM machine next to it," Li Shiyan cited his personal experience to demonstrate the prospects of virtual digital human. In the future, there will be a large number of digital human online and offline. They can communicate with people smoothly, understand business better, and understand service better. This is the reason why Baidu is optimistic about enterprise-level virtual digital human.

Li Shiyan concluded that in the future, 95% of virtual digital human users will be in these four dimensions: socializing, obtaining goods, consuming information, and obtaining services. Although Baidu also has apps such as Xirang and Baidu Live that are oriented to C-end users, Li Shiyan said that it will be more cautious in expanding the C-end.

For Tencent, the B-side virtual digital human business is not progressing very fast, while the Super QQ Show for the C-side will be fully launched in the near future. It remains to be seen whether it will trigger a craze for face-pinching and interaction among users.

The cold and hot of the trillion-dollar market

Today, there is no doubt that the concept of virtual digital humans is popular, and the market is inspired by its future imagination space.

"According to current reports, the market space for virtual humans based on the Internet is 270 billion yuan, and the market space for virtual digital humans based on Web 3.0 will reach a trillion yuan scale."

Wu Shichun told Tech Planet that the commercial value released by virtual digital humans is still relatively shallow. The price of a virtual digital human endorsement cooperation is about hundreds of thousands to millions, and the highest cooperation in the industry is three to four million yuan. In the future, more businesses will be combined with virtual digital humans, and the market prospects will be broader.

For example, the commercialization of virtual digital people in areas such as live streaming and brand endorsements has just begun. In the future metaverse world of Web 3.0, virtual digital people's social, e-commerce, education, games, payments and other commercial behaviors will all occur, and perhaps many business models will change.

"We use the mobile 12306 app to buy tickets (now the service is provided in the form of a website). In the three-dimensional world of the metaverse, I believe it is a digital person plus countless visual interfaces, providing users with both information services and warm human services." Li Shiyan is optimistic that digital people in the future will provide more three-dimensional services.

In the practice of virtual digital humans based on Web 3.0, Ranmai Technology is also moving fast. NFT brands based on Ayayi and digital blind boxes are all being tested. A multimedia digital art exhibition will also be held this year, which is an important direction for Ranmai to plan virtual IP.

"Web 3.0 makes digital assets more meaningful," Tang Yi believes that virtual digital people need to take this step to truly have real value. This is also the reason why virtual digital people will not go offline, just like Lingna Belle's development into the physical world. A door to the future has been opened. Copying IP and following the old path of Disney is not a distant future that everyone values.

Of course, although virtual digital humans have demonstrated unlimited imagination, they also face many constraints and challenges in their development.

For example, in terms of digital human expressions, there is a "uncanny valley" (if the virtual human's expression is not realistic, it will feel like a zombie). In terms of real-time interactive feedback of virtual human expressions, all giants are in the early stages, and startups basically do not have this capability yet.

On the other hand, it is the optimization of cost and efficiency. In this regard, the giants are taking the path of middle platform. In Li Shiyan's view, the middle platform is not only to quickly create virtual digital people, but also to output intelligent modules, so that digital people can learn intelligent dialogue and business knowledge.

At the same time, the development challenges brought by virtual digital humans are also taken seriously.

Nowadays, "Will virtual people occupy more labor market and steal jobs from humans?" is a hot topic on the Internet, especially after Vanke Group's 2021 Best Newcomer Award was awarded to a digital person "Cui Xiaopan", such voices have become more frequent.

Cui Xiaopan is a finance and tax digital person who is tireless and always warm to others, and therefore has a work performance that ordinary people can hardly achieve. Not only Cui Xiaopan, but now in various fields, virtual digital employees are emerging, and these digital employees are also making the workplace more involuted.

On the other hand, digital humans in the Web 3.0 era are bringing more unknown challenges. How to avoid violations and hype also requires industry progress and market supervision.

Regardless, virtual digital humans are coming to us and may be defining the future.