According to a research report released by Cinda Securities, the cost of virtual artists is significantly lower than that of real-life artists, and operation and management still need to be explored. Virtual artist market is still in the early stage of development, in the blue sea market, belongs to the supply to create demand, the market concentration is relatively low. Recommend those with virtual artist IP$Tencent (00700.HK) $、$Bilibili Inc.-SW (09626.HK) $, Lehua Entertainment, Blue cursor (300058.SZ), Zhejiang language Interconnection (600986.SH), Saturday (002291.SZ), etc., virtual human marketing and production related trio (605168.SH), Huayang Lianzhong (603825.SZ), Jiecheng shares (300182.SZ) and functional AI virtual human iFLYTEK (002230.SZ).

Events:On May 10, 2022, the official account of Bilibili Inc., a virtual idol of A-SOUL, a member of A-SOUL, announced that Jia Le, a member of Lehua Entertainment, had entered "live dormancy".

On the evening of May 6, 2022, Bilibili Inc. introduced overseas virtual anchor Vox. The first live broadcast gained 50 weeks of fans, and more than 20, 000 people sent on-screen comments. The live broadcast lasted 1. 7 hours, paid by nearly 40, 000 people, and live revenue reached 1.18 million yuan. During the Statistics week, the official Vox account ranked first on Bilibili Inc. 's fan list, up 560000 fans, followed by Liu Xihong (Bilibili Inc. gained 390000 fans over the same period).

On May 4, 2022, Tencent's virtual characters Jili, Star pupil, Tong and Guang appeared on CCTV's "Youth of struggle-2022 May 4th Youth Day Special Program" and danced with Avatar virtual people based on Tencent Music's virtual social platform TMELAND, which can accommodate 100000 users to interact on the same screen at the same time.

The main points of Cinda Securities are as follows:

The cost of virtual artists is significantly lower than that of real artists, and operation and management still need to be explored.

The cost of virtual artists is significantly lower than that of real artists. Take Lehua Entertainment as an example, the revenue of pan-entertainment business is mainly contributed by virtual artists, which mainly comes from the A-SOUL combination, while A-SOUL belongs to the virtual artists launched by Lehua Entertainment and byte Jump, and the income needs to be shared. The gross profit margin of the company's pan-entertainment business increased from 47.6% in 2019 to 77.7% in 2021, with revenue of 37.86 million in 2021 and operating cost of only 8.45 million. The gross profit margin is much higher than the 21-year gross profit margin of the company's live artist management sector (46.01%). The live broadcast dormancy event may be related to personnel management and salary management, indicating that the operation and management of virtual artists is still in the exploratory period.

The iterative update of virtual artists is fast, and head artists have the opportunity to get out of the circle.

A-SOUL, launched by Lehua Entertainment and byte Jump, belongs to the head virtual entertainer, whose monthly live broadcast revenue and Bilibili Inc. 's VirtualReal combination have long ranked in the top two. Tencent's three virtual characters who participate in the CCTV program, Jili is the digital spokesman of "Game for Peace", the star pupil comes from "QQ Xuanwu", and Tong Heguang has its own IP. Overseas virtual anchor Vox is from Rainbow Society, whose parent company is ANYCOLOR. Among them, A-SOUL made its debut in 2020, composed of five virtual artists, respectively, Bella, Jiaran, Nailin, Jiale, Xie, and gave each character a position in the way of IP operation, and produced a series of songs and MV for A-SOUL. The first single "Quiet" produced in December 2020, as of December 31, 2021, it has been played on Douyin more than 200 million times, the first MV "super sensitive" There have been more than 4.8 million hits on Bilibili Inc. as of December 31, 2021.

At present, the virtual artist market is in the early stage of development and the blue ocean stage, and the market concentration is low.

Virtual human can be divided into functional virtual human and identity virtual human. Virtual artists belong to identity virtual human. Compared with ordinary virtual people, virtual artists emphasize the characteristics of artists more. Characters generated by advanced CG animation and rendering technology interact with each other through motion capture and other virtual reality technology, with fine facial expressions and body movements. Virtual artists have a variety of identities, such as singers, bands, key opinion leaders / web celebrities or anchors, including their own IP, virtual versions of live artists, or avatars of consumer brands. Virtual artist market is still in the early stage of development, in the blue sea market, belongs to the supply to create demand, the market concentration is relatively low.

The business model of virtual artists emphasizes the operational attributes of IP, and its income mainly comes from commercial activities such as live broadcasting.

At present, there are two main business models in the virtual digital human industry, one is content production, the other is IP operation. The business model of virtual artists emphasizes the operational attributes of IP, mainly through a variety of business activities, such as brand endorsements, live broadcasts, live concerts and marketing activities. Virtual artists can perform on the same stage as real artists, and they can also participate in talk shows, interviews and live broadcasts like real artists, similar to real-life artists and celebrities. Compared with managing real artists, managing virtual artists involves fewer challenges, the public image of virtual artists can be managed effectively, and artists management companies have stronger control over virtual artists, but they are still unable to completely get rid of the dependence on "people in the middle". In terms of flexibility, through technical methods, the artist management company can adjust the image of virtual artists in time and customize the performance content of virtual artists according to the changes of public taste and market preferences. In addition, virtual artists can easily reach the audience, break through the boundaries of time and space, and appear in multiple channels around the clock.

Traffic cycle management is the key to the business model.

Virtual artists participate in activities in groups through groups, some virtual artists "generate income", some virtual artists are still in the "cost" input link or training link, and the flow of a single virtual artist is periodic. The core of operation is the mechanism of cultivating virtual artist IP, which is characterized by the use of professional means to cultivate and manage virtual artists, do a good job in flow cycle management, recover costs through cultivated virtual artists in the later stage, and train different virtual artists IP according to the needs of the market, adjust the image and skills of virtual artists in time, and make use of the linkage between virtual artists to bring forth the new.