Annual Revenue of Hundreds of Millions: AI + VTuber Enables Everyone to Become a VTuber

baoshi.rao

Unlike Hololive, which operates like an MCN by signing contracts with 'nakama' to manage VTuber businesses professionally, IRIAM focuses on enabling everyone to become a VTuber.

IRIAM recently announced that it has reached 2 million downloads and now generates over $1 million in monthly revenue, primarily through live streaming tips. Data from third-party sources indicates that IRIAM's annual revenue across both platforms is close to $18 million, totaling over 100 million RMB—excluding offline and third-party recharge channels. From financial data, the revenue from these latter two channels appears to be quite substantial...

In July of this year, we conducted an observation of the VTuber industry, specifically tracking an AITuber who rapidly accumulated 300,000 followers. The aim was to examine the impact of AI as a 'magic wand' on the VTuber sector. At that time, the conclusion was that, due to current technological limitations, AITubers are experiencing a surge in popularity, but it still seems to be the right direction. The fundamental reason is that a major flaw in the VTuber industry is the instability and high cost of the 'person behind the avatar' (中之人), and AI has the potential to address this issue. However, before learning about IRIAM, it hadn't occurred to us that there could be another scenario...

With real C-end users serving as 'virtual idols' (中之人), assisted by AI, the process lowers the threshold for ordinary users to create avatars, optimizes modeling and motion capture, and, through proper management, transforms the VTuber industry into something entirely new—achieving annual revenue exceeding 100 million.

Actually, back in July this year, we observed that Amazon invested in the VTuber application Hyper, a platform that also focuses on one-click avatar creation and motion capture live streaming, bearing some resemblance to IRIAM.

The arrival of new technology has attracted capital attention, and the validation of business models makes the 'intermediate' concept of AI+VTuber appear more reliable.

IRIAM was launched in 2018. Its founders early recognized the contradiction between the rapid expansion of the VTuber industry and the high entry barrier for streaming equipment. Therefore, IRIAM positioned its selling point from the outset on enabling VTuber streaming using just a smartphone.

Although initially limited by motion capture technology, users could only use 10 officially created Avatars for live streaming. However, today, users only need to upload a qualified anime-style illustration to conduct VTuber live broadcasts. This is because IRIAM launched an AI-based modeling and motion capture system in June 2021, which is compatible with various platforms and has a latency of only about 0.1 seconds.

So, Can I Also Become a VTuber? With excitement, the author quickly went to test it out.

IRIAM Live Preparation Page | Image Source: IRIAM

I first used an AI drawing tool to create an illustration and uploaded it to IRIAM. The system would first 'cut out' the character and place it on a background. At this stage, only the eyes, mouth, and eyebrows of the character could move, and simple actions like turning the head left/right or following head movements were possible. Before starting the live stream, the host could also adjust the movement range and sensitivity of the eyebrows, eyes, and mouth.

Avatar on IRIAM (2nd from left) and Avatar on REALITY (2nd from right, also an Avatar social product) | Image source: IRIAM, REALITY

Upon closer inspection, there are some notable differences between IRIAM's approach of allowing users to upload illustrations for direct modeling and other products that combine avatars with motion capture. IRIAM does not provide AI-generated illustration functionality, but there are many tools available on the market for users to create illustrations that meet their expectations. Compared to component-based avatar customization, IRIAM's operation is more user-friendly, and the results are more akin to deterministic combinations based on user preferences versus the more imaginative outputs of AI. The avatar styles on the IRIAM platform tend to be more diverse, whereas products like REALITY, which use component-based customization for avatars, often feel like they are made from the same mold, despite allowing changes to clothing, makeup, and hairstyles.

During the live stream, as mentioned earlier, the facial expressions were decent, and the head could move side to side and shift positions, but it couldn't nod or shake, and other parts of the illustration, such as the shoulders, couldn't move either. Compared to a real VTuber, there's still quite a difference.

The effect of IRIAM (left) and REALITY (right) making wink expressions | Image source: IRIAM, REALITY

In terms of details, it is generally better than some similar competitors using Avatar + motion capture, but still significantly inferior to professional motion capture equipment.

According to IRIAM's own statement, they utilize AI-based facial recognition technology (MediaPipe face mesh). In the author's experience, compared to Japan's similar product REALITY, IRIAM's facial expressions appear more natural. For instance, when performing a wink action in IRIAM, the avatar's eyebrows will furrow accordingly, and the other eye will squint slightly. However, when the author attempted the same action on REALITY, there was no eyebrow movement effect, and the other eye remained completely unchanged, making the overall experience feel more mechanical.

Moreover, IRIAM supports custom adjustment of facial movement intensity, which is crucial for VTubers' expression presentation. If a streamer wants to portray a "cute girl" character who squints when smiling, IRIAM can achieve this by adjusting the squint intensity during smiles - a feature that REALITY can hardly implement.

But to be honest, it's somewhat unbelievable that a VTuber product that can't even perform basic actions like nodding or shaking its head could achieve an annual revenue of over 100 million RMB in Japan, the birthplace of VTubers and an extremely competitive market. However, upon closer observation, we found that while this product shows some technical progress but not much, it does have considerable expertise in talent management.

IRIAM live interface and main interface | Image source: IRIAM

Upon entering the app, the landing page is the live streaming recommendation interface. The top of this page features 10 secondary tabs that recommend currently live VTubers based on various dimensions such as popularity, follower count, and streaming experience. There is also a 'For Beginners' tab, which new viewers who registered within the last 3 days will land on directly when entering the app. Of course, users can also search for specific VTubers directly, and the system will recommend some VTubers on the search tab as well.

In terms of live streaming content, it typically features a single person appearing on camera for activities like chatting or singing. Viewers can only interact with the VTuber through text chat, likes, and sending gifts, which doesn't differ much from traditional VTuber streaming formats. Overall, popular streams attract around 20 viewers, while most streams on the recommendation page have about 10 viewers. During prime time after 19:00, viewership might increase slightly to around 20-30 viewers. The total number of live streaming rooms is approximately over 100.

This is quite different from conventional live streaming apps, which typically feature dozens of rooms with hundreds to thousands of viewers each. IRIAM presents a decentralized model composed of numerous small-scale live rooms.

The Japanese live streaming industry is divided into four forms based on image (virtual/real) and orientation (fans/media). The main difference between IRIAM and traditional VTubers is illustrated in this quadrant classification. | Image source: VLiver project

From VLiver's analysis, it can be seen that IRIAM and VTuber differ in aspects such as virtual performers (中之人), content production, viewership, and monetization models. Traditional VTubers focus on brand and media dissemination as their core, attracting more fans through professional content. They primarily monetize through IP, similar to the relationship between MCN companies and artists, maintaining a relatively distant connection with fans.

On IRIAM, the 'virtual personas' (中之人) of VTubers are usually ordinary people, which naturally brings them closer to their audience. Since viewer donations are their primary source of income, maintaining relationships with fans is their core objective. These VTubers often establish strong connections with their audience, such as interacting more frequently with fans during live streams and even forming friendships with them. Centered around fan experience, companionship is the defining feature of VTubers on IRIAM.

In this decentralized livestreaming model, IRIAM has established a comprehensive monetization and revenue-sharing mechanism to motivate VTubers to compete and even pursue professionalization for higher income.

Anchor live streaming duration earnings, unit: yen/hour | Image source: IRIAM

VTuber income is divided into two parts: live streaming duration share and gift share. IRIAM categorizes all VTubers into 15 levels, and both types of income require reaching at least B1 level. The live streaming duration share is related to the VTuber's level, similar to a base salary. The highest-level streamers can earn 2,300 yen (about 110 RMB) per hour, while the lowest B1 level earns only 100 yen per hour, less than 5 RMB...which is lower than the minimum hourly wage in many Chinese cities.

IRIAM's gift page | Image source: IRIAM

In terms of gifts, IRIAM does not offer free gifts. All gifts require points for purchase, with 1pt roughly equivalent to 1 yen. Gifts range from 1 to 10,000pt. Users receive 30pt daily upon logging in and can also earn a small amount of pt by completing tasks, which serves as a free allowance.

Gift revenue sharing not only calculates income from gifts, but also factors in view counts, interaction metrics, and likes proportionally, similar to commissions. Based on available information, the gift revenue share typically ranges between 15%-30% of the gift's value. Top VTubers on IRIAM can earn approximately 25,000 RMB per month from gift shares, while mid-tier VTubers earn around 3,000 RMB - fortunately as a side income.

IRIAM ranking points diagram | Image source: IRIAM

However, maintaining a consistently high level is not easy. Every 24 hours, the platform generates "daily ranking" points by comprehensively evaluating metrics such as viewership traffic, interactions, likes, and gifts received by VTubers at the same level. These points determine whether a VTuber will be promoted, remain at the same level, or be demoted that day. This system requires VTubers not only to stream daily but also to continuously optimize their content and self-promotion. If they experience fan attrition due to issues like streaming interruptions, advancing to higher levels becomes significantly more difficult.

IRIAM's activity page | Image source: IRIAM

Moreover, VTubers don't just compete in rankings—they also participate in events. In the events tab, you can see all the activities scheduled for the day. These events typically start at 19:00 daily and require registration from VTubers who wish to participate and meet the requirements. Generally, events are organized by level, and it's rare to see activities with participants spanning a wide range of levels.

Leaderboard ranked by points during the event | Image source: IRIAM

During the event period, gifts received by VTubers are converted into "points" for ranking. The top-ranked VTubers will receive rewards, including exclusive backgrounds, special gifts, opportunities to be featured on the homepage recommendations and banner ads, chances to appear on offline billboards, or even have custom merchandise developed. The event page shows approximately 30 activities scheduled for tonight, with nearly all promotional opportunities requiring VTubers to participate in these events.

Under this mechanism, on one hand, it fosters competition among VTubers; on the other hand, the relationship between VTubers and their fans becomes closer due to more frequent interactions, maintaining the platform's fan-centric positioning. Although IRIAM indeed sets higher requirements for VTubers, the income earned is also higher compared to similar platforms like REALITY.

Overall, although starting live streaming is relatively simple, IRIAM has established a fairly complete creator economy ecosystem through a combination of mechanisms such as rankings, events, and revenue sharing. This ecosystem encourages streamers on the platform to become increasingly 'professional' for income purposes, even requiring them to join 'guilds' to seek help from professional operation teams.

IRIAM download trend | Image source: IRIAM

In fact, IRIAM wasn't always this competitive. In July 2021, about three years after its launch, Japan's live streaming industry was experiencing accelerated growth due to the pandemic, leading major platforms to explore mergers and acquisitions. IRIAM was acquired by DeNA group, which operates Japan's largest live streaming platform Pococha Live, in a deal valued at 12 billion yen (approximately $80 million USD). According to statements at the time of acquisition, DeNA aimed to enter the VTuber live streaming industry through the purchase of IRIAM. DeNA helped IRIAM improve its streamer reward system and invested more resources in promoting the application. It's evident that download growth accelerated noticeably after DeNA's acquisition.

However, the changes brought by DeNA seem to be pushing the original UGC model towards a more professional direction, which is also reflected in their promotional strategies. In a conversation, the founder mentioned that 2023 is IRIAM's 'marketing year,' with the company focusing on increasing brand awareness as its primary objective. The person in charge noted during the discussion that they place great importance on recognition within the existing VTuber fan community, even conducting quarterly surveys to use this metric as a marketing KPI.

This marketing KPI seems to conflict with the platform's fan-centric positioning. Whether professional VTubers fit within IRIAM's user profile is questionable. While targeting professional VTuber audiences, the promoted content is UGC, creating a convoluted approach.

IRIAM's advertisement on X | Image source: X

After being acquired, IRIAM will conduct advertising campaigns both online and offline. Online advertising will primarily be on X (formerly Twitter) and YouTube, as these platforms host the most VTuber-related content, making it easier to reach more VTuber fans. Offline, IRIAM will focus on locations like Shinjuku and Shibuya, which are popular gathering spots for young people.

In terms of promotional materials, whether online or offline, IRIAM adopts the UGC model. Online advertisements are usually initiated through official challenge campaigns. VTubers shoot advertising materials as required during live broadcasts, and those adopted by the official are rewarded with cash incentives.

Promotional image for the Shinjuku advertising campaign in March | Image source: PR Times

The opportunity to appear on offline billboards is also obtained through the activities mentioned above. Winners of these activities can have their promotional content displayed on the billboards, which is equivalent to the platform officially funding promotions for VTubers. During such events, it becomes a highly competitive period for VTubers to strive for these spots.

VTuber Inuyama Tamaki recommends IRIAM's video | Image source: YouTube

Beyond online and offline channels, IRIAM has also collaborated with VTuber agency Nori Pro for promotion. VTuber "Inuyama Tamaki" (with 932K YouTube subscribers) directly interacted with VTubers on IRIAM and recommended the platform to viewers, resulting in 60,000 views for the video. Additionally, on June 1st this year, the debut livestream of Nori Pro's new VTuber, Shirayuki Mishiro, was hosted on IRIAM and simultaneously broadcasted on YouTube.

The company explained that collaborating with traditional VTuber agencies to produce content allows for targeted promotion of IRIAM's differentiated experience compared to traditional VTubers, directly reaching VTuber fans. This approach is quite innovative.

According to the data, the promotion effect of IRIAM is not very good, with costs continuously increasing but revenue growing slowly over the past year.

DeNA post-acquisition IRIAM financial data. Note: Costs are calculated by adding revenue and losses from financial reports. Data has been converted from JPY to USD for reference only | Image source: DeNA financial report

From a cost perspective, according to DeNA's financial report, IRIAM generated 1.5 billion yen (approximately $10 million) in revenue in Q2 2023 while also recording a loss of nearly 400 million yen (around $2.6 million). This translates to an estimated total cost of $12.6 million.

IRIAM host quantity changes | Image source: IRIAM

As a leading VTuber streaming company, Hololive production's operational costs during the same period were approximately $16 million. Considering the threefold revenue gap between the two, IRIAM's costs are genuinely high. This is likely due to frequent advertising and various activities, coupled with the rising distribution costs caused by the continuous influx of new VTubers. It can be observed that the number of streamers on the platform has nearly doubled over the past four quarters, exceeding 150,000 by June this year.

From a revenue perspective, IRIAM showed notable growth in the first 6 quarters after DeNA took over, increasing from less than $2.6 million to approximately $8.5 million in Q3 2022. By improving the creator economy and incentivizing platform streamers to produce content, it effectively boosted user spending on the platform. However, IRIAM's revenue growth has plateaued over the past year.

IRIAM's MAU and ARPDAU data over the past year | Image source: DianDian Data

Looking at IRIAM's user growth over the past year, although MAU has grown rapidly since December 2022, increasing from less than 150,000 to 670,000, at the same time, DAU has only seen a slight increase, rising from less than 30,000 to around 35,000, and ARPU has remained almost unchanged.

This phenomenon indicates that while IRIAM's marketing has indeed brought user growth, these new users exhibit weak engagement and low viewing frequency. The slow revenue growth further suggests issues with their willingness to pay. The predominantly 'scattered and disorganized' virtual streamers and the companionship-focused livestreaming model seem unable to retain fans accustomed to high-quality content, leading to poor sustained viewership and payment.

IRIAM's daily revenue from both ends in the past 4 years | Image source: DianDian Data

According to the daily revenue data collected by Diandian Data over the past four years, IRIAM's daily revenue saw a significant increase after being acquired, aligning with the financial report data. However, when viewed on a daily basis over the past year, the revenue has not remained stable but has instead declined, returning to the level of around $40,000 at the time of acquisition...

IRIAM's custom VTuber perfume merchandise | Image source: DeNA

In continuing the commercialization model for VTubers beyond live streaming donations, IRIAM has also attempted monetization through peripheral product sales. For instance, in May this year, IRIAM launched the "Personalized Perfume Challenge," where the top three VTubers in the event's ranking could customize their own perfumes, which were then officially sold by IRIAM. This challenge even ran for multiple rounds. As of now, 18 VTubers on the platform have released personalized perfumes. However, for a platform primarily operating on a decentralized model, monetizing through IP in this manner has limited effectiveness.

Looking at the overall development of IRIAM in recent years, we can see the product changes brought about by the integration of AI technology, including certain improvements in Avatar and motion capture effects. This is a typical example of how many products can be reinvented with AI.

The UGC-based decentralized live streaming model had already proven viable before acquisition. After being acquired by a major group, the introduction of streamer operation mechanisms further enhanced its monetization capabilities. However, its growth strategy remains debatable. The stagnation of IRIAM's growth raises another question: how large is the actual audience for virtual avatar live streaming in Japan? How big is the market for platforms like IRIAM? And with the growing popularity of anime culture worldwide, what opportunities exist in other markets?