“China’s AI Avatars: The New Kings of Influence!”

BEIJING — According to a recent collaboration between the Chinese tech firm Baidu and a well-known livestreamer, AI-generated avatars can outperform real people in making sales.

Luo Yonghao, one of China’s pioneering livestreamers, along with Xiao Mu, used digital versions of themselves to engage with viewers for over six hours on Baidu’s “Youxuan” e-commerce platform, generating 55 million yuan (approximately $7.65 million).

This performance outshined Luo’s previous livestream on Youxuan the month before, which, despite lasting just over four hours, garnered fewer sales for items like consumer electronics and food, as reported by Baidu.

Luo mentioned that it was his first experience utilizing virtual human technology to market products in a livestream.

“The digital human phenomenon has left me a bit overwhelmed,” he shared with his 1.7 million followers on Weibo, as translated by CNBC.

He began his livestreaming journey in April 2020 on ByteDance’s Douyin app, aiming to clear debts accumulated by his struggling smartphone venture, Smartisan. His Douyin account, “Be Friends,” has almost 24.7 million followers.

His and Xiao Mu’s avatars were developed using Baidu’s generative AI, which analyzed five years of videos to replicate their humor and style, according to Wu Jialu, research head at Luo’s other company, Be Friends Holding, who spoke to CNBC on Wednesday.

“This marks a pivotal moment for the entirety of China’s livestreaming and digital human sector,” Wu commented in Mandarin, as translated by CNBC. DeepSeek, China’s equivalent of OpenAI, has shaken up global investors with its claims of competing with ChatGPT at much lower costs using an open-source model.

AI avatars can significantly lower expenses since businesses won’t need vast production teams or studios for livestreams. Additionally, digital avatars can continuously stream without breaks.

“We’ve always had our doubts about digital humans in livestreaming,” Wu admitted, noting their prior attempts at various digital personas over the years.

However, he asserted that Baidu now provides the most advanced digital human product on the market, especially compared to earlier livestreaming e-commerce ventures from five to six years ago.

The popularity of livestream shopping surged in China as businesses sought alternative selling methods due to the pandemic. More individuals are turning to livestreaming for income through commissions and virtual gifts, especially during slower economic periods.

Last year, Douyin’s livestreaming generated substantial sales, allowing the app to surpass traditional e-commerce player JD.com to become the second-largest e-commerce platform in China, while also eating into the market shares of leading firm Alibaba, as revealed in a report from Worldpanel and Bain & Company last week. Both JD.com and Alibaba’s Taobao feature livestreaming sales options.

Additionally, other Chinese firms, including tech leader Tencent, have developed tools for creating digital entities suitable for use as newscasters. In late 2023, various companies began experimenting with virtual human livestreamers during the Singles Day shopping events.

Yet, analysts have highlighted that items sold during livestreams often see a high return rate, as they frequently constitute impulse buys.

Now, the primary hurdle for employing virtual humans in livestreams is less about technology and more about compliance with regulations and platform standards, Wu noted. Digital entities must be trained to follow advertising laws, while major livestream platforms might impose differing requirements regarding virtual hosts.

For instance, Douyin has implemented rules regarding the use of this technology, primarily if digital avatars do not engage with their audience.

While the timing of Luo’s next digital human appearance remains uncertain, Wu anticipates it will occur soon. Looking ahead, he mentioned that digital avatars could potentially livestream in multiple languages to connect with audiences beyond China.