The Splice 🧬 Virtuals are Taking Over TikTok

Plus meet Lechat, the virtual K-Pop cover artist with cat ears and explore Adidas's new metaverse strategy in collaboration with Ready Player Me

Good afternoon!

Welcome back to The Splice 🧬 by VirtualHumans.org: a weekly newsletter curating the latest news, developments, and insights in the virtual influencer space.

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Our “In Conversation With…” insights segment is back this week, this time with financial expert Alex King of the Substack The Metaverse Investor — check his perspective out down below! 

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🧬 Core Strands from This Week

How Virtual Influencers Create Success on TikTok

🔎 The Synopsis: Virtual influencers are thriving on TikTok. Our three cover stars have over 14 million followers between them, and you may recognize Bum Bailey (far right) from their viral video trend with Lizzo back in September. 

🧬 The Splice: We interviewed several virtual creators with millions of followers to learn about their content strategy for TikTok and why it makes Gen Z want to hit the follow button. 

　

Who is the Virtual Cat-Girl and Cover Artist, Lechat?

🔎 The Synopsis: With over 3 million followers and counting, Lechat is a testament to the power of virtual stardom. She’s built an empire of K-Pop song and dance covers, and now her fans are excited to see her create her original music. 

🧬 The Splice:   “I’ve always enjoyed watching trending videos online, and so naturally I ended up creating them myself as well…I had absolutely no idea it would reach that many followers so quickly!” — Lechat

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🔭 What We’re Looking at This Week

Adidas Launches Personality-Based Metaverse Virtual Beings With Ready Player Me

🔑 Key Quote: "Adidas is promoting its latest Ozworld shoe collection with AI-generated digital avatars for the metaverse. Virtual being platform Ready Player Me produces the characters based on the answers to a personality test. Users can then explore the metaverse with the resulting three-dimensional digital characters.” — Voicebot.ai

“Virtual Influencers — How to Grow Gen Z Followers with Tech” The Marketing Agency Podcast

🔑 Key Quote: “We have this tech that allows people to interact with our characters in real-time on a Zoom call or on Twitch, they can do that with these characters. If you think about Marvel Universe and Captain America or Thor or someone like that, you’re not going to get content from Thor, but once every two years, once they release a movie. He’s not on social media. He’s not on Twitch. You can’t hop on a podcast with him. Maybe the actor, but not actually Thor, the character, because that would cost a ton of money for Marvel Universe to have Thor always on.

So that’s our concept. We can tell the story, a cinematic story, just as you would see with something like that, but you can also get day-to-day interaction with our characters.” — Shep Ogden, CEO of Offbeat.

Metaverse: Hyundai Motor inks investment deal with Netmarble F&C’s Metaverse Entertainment

🔑 Key Quote: “Hyundai Motor Group is investing in Netmarble F&C’s subsidiary, Metaverse Entertainment. It was reported that the automaker is putting in ₩2 billion or $1.6 million into the company to help fund its virtual human projects.” — Econo Times

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🗣️ In Conversation With…

Alex King of “The Metaverse Investor”

Cestrian Capital Research, Inc is an independent, SEC-regulated investment research company based in Newport Beach, CA. The firm focuses on the technology, space and defense sectors and operates a number of subscription research services. You can read their Metaverse newsletter on Substack here.

Please note: The information displayed here is intended to be educational and should not be considered financial advice.

What is your first tip for people initially looking to invest in the metaverse? 

Our first question for someone thinking of investing in Metaverse stocks is, “Why do you want to do this”. Our own logic is that the Metaverse represents the next leap forward in the Internet, from the flat experience we know today to a fully immersive environment. And we believe the development of the Metaverse is going to drive a capex replacement cycle across most all of tech. If you want to use Metaverse applications at home, you likely need an upgraded broadband connection. You may also need an upgraded set of WiFi mesh nodes. A new laptop. A headset or set of glasses you didn’t have last year. And so on. So for us, the Metaverse is simply the next driver of tech spending and we want to invest in it for that reason. 

How do you see virtual influencers and content creators affecting metaverse stocks?

Virtual influencers and smaller scale content creators – assuming we aren’t talking about Goldman Sachs here, though their analysts are certainly creating content – will likely influence Metaverse stocks insofar as those stocks are small, illiquid, newly public, traded on minor markets, and so on. We don’t expect virtual influencers to have much sway over the stock price of Meta Platforms ($FB), because the price of that stock is set by institutional buying and selling, not by retail, and we don’t believe institutions will at this stage take very much notice of virtual influencers (wrongly, perhaps!). 

But a new to market smaller cap stock? Virtual influencers can have a large impact on newer, smaller cap stocks, as have other influencers on stocks such as $GME, $AMC and so on. That impact will likely be transitory before moving on to the next stock. This likely means high levels of volatility amongst smaller Metaverse stocks which means that new investors may end up burnt as usual by chasing this week’s hot stocks. 

Many virtual influencers are launching their own DAOs and NFT communities where fans can purchase tokens which give them decision-making power. Have you heard of these decentralized communities before? And how do you determine if it's a good time to "buy-in" to a creator? 

Our house view on DAOs and NFT communities is that by and large these will be ephemeral investment opportunities that can pay off big, or not, and probably not too much in between. Judging which creator and when is a tough call from an investment perspective; that’s like asking an investor to judge whether to buy a Picasso or a Magritte today – mostly, investors won’t know. For non-specialists a lower risk approach is probably just to invest in stocks that have exposure to these new market themes. There are many ways to do so, from cryptocurrency platforms such as Coinbase ($COIN) to crypto itself – Ether in particular, either natively or via a fund such as $ETHE.

DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts hold long positions in, inter alia, $FB, $ETHE, $COIN, $AMC.

Best,

VirtualHumans.org

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Insights by Makena Rasmussen, Christopher Travers, and Astrid Hiort.