YH Entertainment Turns to AI and Trendy Toys as Idol Revenues Decline

In the face of a sharp decline in traditional idol revenue and the meteoric rise of AI‑generated content, YH Entertainment is redefining its strategy.

Founder and chairperson Du Hua, who recently appeared on the iQiyi variety show Sisters in Charge, warned that artificial intelligence would likely replace mid‑to‑lower tier artists while top‑tier performers remain largely untouched. To adapt, the company has already launched an AI‑driven girl group, opened more than 50 robotic retail stores, and reported that its trendy‑toy segment accounted for 4.1 % of total revenue in 2025.

Du Hua’s remarks come amid a broader industry contraction. Data from Tianyancha shows that the number of film crews in Hengdian has fallen to one‑fifth of the level two years earlier, and 50‑60 % of music festivals were cancelled in 2025. She cited the cost structure of a typical idol engagement—photography (10,000 yuan), makeup and hair (5,000 yuan), and agent, finance and legal labor—leaving artists with only a few thousand yuan in take‑home pay. Yuehua’s investment of nearly 10 million yuan in two albums has yet to generate significant streaming revenue.

A key pillar of the new strategy is the AI short‑drama production model. Du Hua explained that a three‑person AI team can produce 200 short‑drama episodes in a week at a cost of about 5,000 yuan per minute. By contrast, a traditional crew of dozens would film a month‑long production in Hengdian at a cost that could be covered by the AI team in a single week, producing dozens of times more output. The model is being applied across several new AI business units, including AI short videos, AI manhua dramas and short‑drama production.

In March 2026, YH Entertainment debuted HeyDream, billed as “Asia’s first AI‑driven real‑person girl group.” The six members—Wen Wei, Xi Yuan, Yong En, Mo Tong, Bella and Meng Han—are backed by an AI creation system that generates all promotional materials and visual content.

The company also opened its YH TOYS ROBO SHOP robotic retail stores, with more than 50 locations in core business districts such as Chaoyang Joy City in Beijing and Deji Plaza in Nanjing. Robots serve as sales clerks, reducing the need for three to four human sales guides to a single robot and a restocking staff.

YH Entertainment’s trendy‑toy business remains a small but high‑margin segment. The 2025 annual report shows first‑year revenue of 37.13 million yuan and a gross margin of 45 %, higher than the 22.8 % margin of its artist‑management business. WAKUKU, the company’s flagship IP, generated 129 million yuan in quarterly revenue and accounts for nearly three‑quarters of the trendy‑toy segment. However, the total revenue from trendy toys—about 37 million yuan—constitutes only 4.1 % of the company’s 907 million‑yuan annual revenue. In comparison, Pop Mart’s 2024 revenue exceeded 10 billion yuan.

YH Entertainment has pursued several partnerships to expand its IP reach. A collaboration with Quantum Song produced a 285 % surge in the partner’s stock price over three months, while a joint venture with Huaqiang Fantawild aims to develop cultural‑tourism projects that extend IP influence beyond retail. These initiatives are still in early stages and are expected to take until the second half of 2026 or later to generate sustainable revenue.

The company’s internal restructuring has merged its long‑form video production team into the short‑video department and established four new AI business teams. It is also working with Aijin Studio to develop artists with distinct cultural attributes. While the AI girl group and robotic stores have shown operational progress, the scalability of the trendy‑toy business remains uncertain.

At present, YH Entertainment’s new revenue streams—AI‑driven content, robotic retail and trendy toys—represent a small fraction of its overall earnings. The company’s next steps will involve increasing the share of new‑business revenue from 4.1 % to a higher level, while monitoring the performance of its AI and toy ventures in a rapidly changing entertainment landscape.