Is Cover Corp the next Anycolor?

Three of Hololive's vtubers have left in quick succession. Is this the beginning of a Nijisanji-like debacle?

On Monday, Cover Corp's shares saw a sudden drop. Almost 15% at the trough, and about 13% at the close. While it has recovered a bit as of today, it is still far below the price last Friday. The reason is, for once, easy to grasp. Two of their vtubers (Sakamata Chloe and Ceres Fauna) announced they were leaving the company over the weekend. That, added to the departure of Amelia in September and Aqua in August has sparked rumours of Hololive going down the drain, as Nijisanji EN has done in the last year or so. This is going to be a quick not on why I think that is not the case, since some people have asked and I thought it might be useful to share!

Now, this is not something to take lightly. Something I highlighted in the original article (that you can check below) is Cover's low churn as a competitive advantage, as talent is key, and replacement is not really an option. Talent leaving is the biggest risk for this company by far.

In terms of numbers, Aqua had around 2M subscribers (she got a big boost after leaving), Amelia 1.8 M and both Chloe and Fauna sit around 1 M (a bit more for Chloe, a bit less for Fauna) and all were relevant inside their generations. Aqua in particular was one of the most popular streamers in the agency, close to the top in hours watched and average concurrent viewers.

Hololive had 40 channels above 1 million subscribers at the end of September (that is, after Aqua left), and 39 currently (after Amelia left), but a few (Bales, Rosenthal, Raden) are close to that target and the new channels are growing well. We will likely see around 40 in Q3 (with the new 2 leavers still on, as they will leave in January) and 40 or more by the end of March if there are no new losses.

And the likelihood of that is what I would like to discuss!

First, a certain rate of attrition, while not exactly desirable, is to be expected, and Hololive (leaving out Holostars, the male branch¹) had an extremely low attrition rate so far, with only 3 voluntary leavers before this year, out of 79 streamers². That's not annual, that's since 2019! This year, they have had 4 streamers leaving voluntarily plus one dismissal. Sky-high in comparison, but not that high in context. And then, there is the nature of the cases.

• Minato Aqua just seems to prefer focusing on doing her own stuff with minimal supervision, or that is what the messaging seemed to be. And that is normal. Unless you want to do live events, past a certain subscriber base it is probably more profitable to go without an agency, and she is simply big enough to try (her new channel is already close to 1 million subscribers). She has released already several songs (relevant in a bit!)

• Amelia Watson seems to be a similar case. She has since revealed she was a foley specialist (and an Emmy-winning one, apparently!), and it was well-known that she was into the technicalities of streaming and models for a long time, and has been releasing animations. Her model also seems a bit more advanced than usual. Again, a case where she had some hunger to do something different, and a relevant fanbase to capitalise on (she has now around 400k subscribers in her new channel)

• Sakamata Chloe essentially cited workload, as all the songs and live concerts and the like require a lot of additional work behind the scenes.

• Ceres Fauna has said that she is leaving because of disagreements with management, but that she liked the idol stuff.

So we have someone who preferred no corporate supervision, someone who wanted to go in a different direction creatively, someone who preferred a more relaxed schedule and someone that liked all that but couldn't find accommodation inside the company for whatever reason (can be percentage cut, can be number of activities, what she promoted… who knows). Even in that last case, the departure won't be sudden, and was announced a month in advance, and in two out of four there might be occasional collaboration. All of them have talked glowingly about the rest of the talent in the agency, too.

The narrative that has emerged from this is that Cover is in danger of losing a lot of streamers because they are pushing the music/idol stuff too much. That seems to fit two cases at best (since Aqua is doing it anyway, and Fauna has mentioned she liked it actually). And inside Hololive there seems to be some flexibility, at least in some cases, for long breaks (Gura, Ina'nis) and focusing on some areas more than others. Not only that, some of their most popular streamers seem to be actively pushing for it (Suisei, Marine or Mori being the most prominent). This direction might push some streamers out, but seems a good way to solidify the relationship with others (publishing and organizing large events are something you kinda need an agency, or a very large following, for).

In any case, very different from Nijisanji where aside from a much higher attrition rate over time there were… harsh words between talent, accusations of harassment and even some mentioning attempted suicide because of the environment. Huge, huge difference, in my view.

There is an additional phenomenon that I have seen in startups before, and you might be familiar with… and that I think is what we are seeing, although this is just a guess. For a few years, no one (really liked) leaves, or at least it happens extremely rarely. And then after a few years there is one or two waves of people that decide they will be better off elsewhere. And when I have seen it, it was a cascade. Someone key leaves, and suddenly other people start thinking about it. And then, suddenly, it is over and things continue to go along. In this case, I think Aqua has played that role. I don't know if Fauna is the last or there will be someone else. But I think it is due to people reflecting on their opportunities after a few years and with a trigger, and not to Hololive falling apart.

Well, hope this has been useful for you, to understand a bit better the situation, even if you don't agree with the conclusions! As for me, I'll get back to looking into Square Enix stuff!

1. Here the rate is higher, with 3 voluntary leavers out of 25 streamers, but still pretty low.

2. Excluding the Chinese branch that was closed in full.