Ashley Dudarenok on TechNode:

  1. A large number of multi-channel networks (MCNs), which are like incubators for new KOLs and online personalities, have appeared and the competition is fierce.

There were around 14,500 MCNs in China in 2019. It’s estimated that by the end of 2020, there will be more than 20,000 and might be as many as 28,000.

The MCN market is saturated and it’s becoming less and less cost-effective for the MCNs to create popular KOLs. Beauty ONE’s “BA Celebrity” plan selected 200 amateurs and spent two years developing only one top celebrity—Li Jiaqi. A report from online news site Xinkuaibao claimed that labor costs for training a celebrity are at least RMB 1 million a year.

The costs is high because of how the MCNs try to game the system to go viral. They seed dozens of different cuts of the same video across hundreds of accounts on different platforms such as Douyin, Kuaishou and other video platforms to see which cut gets picked up by the algorithm. Then the cut that has the higher chance of going viral goes on the KOL account.