By Brandon Zheng
Research Associate
China Studies Program
Companies streaming wildly popular anime characters on YouTube and similar platforms are not an obvious front for geopolitical conflict. But a decision by a Japanese streaming company to suspend operations in China is the latest iteration in China’s war for influence over soft power cultural products from other countries. Even more surprising, it ended with a loss for China.
The controversy reached its conclusion on October 22, 2020, when Civia — a Chinese “virtual idol” affiliated with Hololive, a Japanese collective of online virtual streamers — announced that the six virtual idols in Hololive’s Chinese branch were entering negotiations with Cover Corp, its parent company, to end their affiliations with Hololive, as Hololive planned to close its operations in China. The reason: China’s attempt to shut down two Hololive idols’ reference to Taiwan.
The larger implications of this decision have yet to play out. Streaming has risen as both a viable source of income for creators and a popular source of entertainment for viewers, with New York congresswoman Alexandria Ocasio-Cortez recently hosting a successful stream where she discussed politics while playing several rounds of the game “Among Us,” with as many as 430,000 people concurrently watching at its peak. Streaming is popular because it allows for direct interaction between popular creators and their fans.
“Virtual YouTubers,” or “VTubers” for short (although they often also use platforms other than YouTube), take things further by creating a fictional personality and using an anime avatar separate from their real-life identities, which remain private, in essence giving fans the sense that they are interacting with a real-life anime girl.
Hololive and its parent company, Cover Corp, are among the biggest players in this intersection between streamer culture and anime culture, calling their talent “virtual idols,” as several in their talent pool are talented singers. Cover Corp raised $6.6 million in its most recent round of funding in May 2020. Hololive’s popularity exploded in mid-2020 during the coronavirus lockdowns, dominating the virtual YouTuber industry by late 2020. As of October 25, 2020, the most popular member of Hololive had over one million subscribers, but even an “average” member with a median number of subscribers had almost 500,000 subscribers and over 160,000 daily views on her videos.
The first modern “virtual YouTuber” was Kizuna Ai, who released her first video on December 1, 2016. The VTuber industry is thus less than four years old, with an impact on the global digital economy that is yet to be fully understood. However, in this short time, the VTuber medium has already been hit by a China controversy.
On September 28, Cover Corp announced that it was suspending two of its idols, Akai Haato (usually referred to by fans as “Haachama”) and Kiryu Coco, for three weeks for saying the word “Taiwan” out loud on-stream. Both idols received hate comments from Chinese nationalists following the incident, and they were suspended by Cover a few days later. This news was met with outrage online among non-Chinese fans, who were furious that the victims of online nationalist bullying were being punished and who saw this as Cover bowing down to China.
From originally appeasing Chinese nationalists, Cover then changed course, as evident on October 22, three days after Haachama and Coco returned from their suspensions, when Civia made her bombshell announcement. Within a few days, several of Hololive’s Chinese idols had removed all mention of Hololive from their social media accounts. Controversies involving foreign companies working in China have abounded in recent years, from the NBA’s troubles over Hong Kong to controversy over the Disney live-action remake of Mulan. However, the Hololive incident is one of the few in which the company in question decided to leave China instead of appeasing it.
The Haachama and Coco suspension incident directly pitted Western fans against Chinese nationalists for the first time, as Haachama and Coco are two of the most popular Hololive members among Westerners for their eccentric behavior, innovative use of memes, surrealist content, and videos targeted at their Western fans. The effect of Western fans is evident in Kiryu Coco’s success. Coco is not just popular; she is the most profitable YouTube streamer of all time. According to Playboard, as of October 25, 2020, Kiryu Coco had received over $1.1 million in direct donations from fans on YouTube, far more than any other streamer on the platform. She is particularly popular among Western fans for her fluency in English and her vulgar, irreverent humor.
In September, a few weeks before the Taiwan controversy, Hololive debuted its first group of English-language streamers to great success. One new English-speaking streamer, Mori Calliope, a talented musician, released a rap album that reached #1 on the iTunes worldwide chart on October 22, 2020. Another English-speaking streamer, Gawr Gura, became the most popular streamer on all of Hololive, gaining one million subscribers in less than six weeks. In contrast, the Chinese market is stunted by the fact that Hololive’s activities in China are on a separate platform. Because YouTube is blocked in China, Hololive’s idols upload their videos aimed at Chinese fans onto Bilibili, a Chinese streaming site, instead. Because Bilibili’s user base is largely confined to China, Hololive’s Chinese idols do not receive much exposure abroad, while the idols from Hololive’s Japanese, Indonesian, and English-speaking branches can regularly collaborate on YouTube and grow their fan bases around the world.
However, Cover makes most of its money through collaborations and merchandising, not contributions by fans. In this sense, China is still a more developed market for anime companies than Western markets. For example, the quintessentially Japanese medium of anime and anime-adjacent media actually has a large Chinese footprint, with several popular anime-style mobile games, like “Genshin Impact,” “Girls’ Frontline,” and “Azur Lane,” actually made by Chinese companies. Hololive has already collaborated with “Azur Lane,” and by leaving China, Cover is putting future such opportunities in jeopardy.
Cover’s decision to withdraw from China was likely not an easy decision. It has chosen to abandon an established market for anime in China for the newer and more untested Western market. Though China’s market is more established for anime companies, the West is more liquid and connected to the Japanese domestic market because of their shared platforms. Cover has apparently decided that the latter is more valuable than the former. It will be worth observing to see if this is a unique set of circumstances that won’t be repeated, or if it is the start of a trend as more media companies decide that China isn’t worth it.