AI yearbook picture craze makes it rain for Snow

Photos of public figures made using Epik’s 90s American yearbook style AI photo generator [JOONGANG PHOTO]

The global craze for AI-generated yearbook pictures had one lesser-known Korean company ride high in terms of sales and reputation ahead of a possible listing.

The paid yearbook service is made available by Epik, a photo-editing app owned by Seongnam, Gyeonggi-based Snow. Naver, Korea's biggest portal, is the largest shareholder of Snow.

It is a viral trend commonly seen on social media — using photo generator apps equipped with AI to make digitally altered portraits.

Ever since the yearbook design came out on Sept. 18, Epik has been placed first on the list for total app downloads on the App Store in 56 countries including the United States, Britain and Thailand, as of Oct. 10. It placed first in the photo and video category in 93 countries including Germany and the United Arab Emirates.

Epik generates 60 photos in the 90s American yearbook style out of eight to 12 photos uploaded by the user. While downloading the app is free, photo output requires payment. The standard offer generates photos in less than 24 hours for 5,500 won ($4), and under two hours for 8,800 won under the express offer. And people are opening their wallets. Epik has earned around seven million dollars in cumulative sales just on iOS, according to market research agency data.ai.

Snow released the “AI Avatar” in January and the “AI Profile” generator through its camera application “SNOW” in May this year, which creates ID-style portraits out of the user’s uploaded photos but made more “beautiful” as deemed by the generator’s algorithms. The number of service users surpassed 1.5 million within a month of its release. The “AI Baby” editor released in August churns out photos of a younger self, or of a virtual child with facial characteristics resembling those of the user.

The popularity of such generators can be attributed to the company’s strategy of targeting “Gen Zalpha,” a combination of Generation Z and Generation Alpha referring to anyone born after 1996, whose members show the tendency to be internet savvy, enthusiastically post records of themselves online and strongly desire to express themselves. “We closely followed online and offline content shared by Gen Zalpha,” said a source from Snow.

Epik is not the first AI photo app to go viral, with preceding apps such as Lensa, which offered AI-generated “magic avatars” and Remini, which transformed selfies into professional headshots. However, with many AI photo generators losing consumer interest quickly, it is pivotal for Snow to be able to maintain users’ interest in its services.

Successful trend or not, if the service finishes as a one-time hit and cannot generate any value for the business, sales and subsequently revenue will most likely fall.

Snow’s strategy is solely focused on targeting Gen Zalpha. Separated from Naver subsidiary Camp Mobile in 2016, Snow owns several camera applications including the SNOW app — of which 90 percent of its users are from the MZ generation — Epik, Foodie, B612 and more. It also operates the English education service Cake, which has more than 10 million monthly users subscribed, Metaverse service Zepeto, with more than 300 million users worldwide signed up, and Kream, a sneaker-oriented resale platform that grew 1300 percent in revenue last year. All of the above services are aimed at Gen Zalpha users.

Kream earned 340.6 billion won in funds by Series C, Zepeto operator Naver Z earned 240.5 billion won and Cake earned 200 billion won by Series A. Snow’s enterprise value is estimated to be around 1.3 trillion won.

Snow is an essential future breadwinner for IT giant Naver. Yet Snow has not once turned a profit ever since its foundation. Snow’s revenue mainly comes from camera advertisements, subscriptions and single payments for its services, but its continuous investments have left nothing in the bank.

According to last year’s audit report, Snow made 19.3 billion won in sales and 61.9 billion won in losses. Revenue jumped this year thanks to the AI profile and yearbook photo-generating services.

Snow plans to transition to a positive feedback-looping business structure. A variety of in-app purchases will be updated in its apps. The problem is how much money will remain after expenses including server maintenance costs.

Snow’s subsidiaries are making preparations to go public. Former head of JP Morgan’s investment banking for Korea, Kim Young-ki, was recruited as chief financial officer for Kream and Naver Z last year, indicating the start of preliminary arrangements.

KIM IN-KYOUNG, KIM JU-YEON [kim.juyeon2@joongang.co.kr]