The AI character chat industry, which allows users to converse with AI characters, is facing significant challenges regarding business sustainability and user protection. In the United States, a major platform has entered bankruptcy proceedings, while in South Korea, a company representative is set to face inquiries at a national audit.
According to the IT industry on October 16, the U.S. character chat platform Character.AI has recently filed for bankruptcy protection and is pursuing asset sales under court supervision. Founded in 2021 by former Google developers, the company gained popularity by allowing users to interact with AI characters they created or role-play with characters from novels and games.
In 2023, Character.AI secured $150 million in investments, achieving a valuation of $1 billion. By 2024, the platform reported a monthly active user base of 20 million.
However, the expansion of its user base has not translated into profitability. The ongoing burden of computing costs necessary for operating generative AI services, coupled with lawsuits related to the mental health of underage users and compliance with new regulations, has strained the business.
On October 12, Character.AI filed for bankruptcy protection in a Delaware court and began the asset sale process. Disney has offered $20 million for certain intellectual property rights, but if no buyer emerges to continue platform operations, the service may be discontinued.
This case illustrates the difficulty of ensuring the sustainability of character chat services despite high user interest. The nature of these services, designed for prolonged interactions with users, can lead to accumulating operational costs for AI models. Additionally, ongoing investments are required to implement safeguards against emotional dependency and exposure to harmful content, which can exacerbate a high-cost, low-profit structure in a competitive environment.
In South Korea, discussions continue regarding the responsibilities and safety of character chat services. Kim Jong-yoon, CEO of Scatter Lab, which operates the AI character chat service Zeta, was absent from this year's National Assembly Science, Technology, Information, Broadcasting and Communications Committee audit due to overseas travel.
Last year, he also missed inquiries due to disruptions in the audit process. He is scheduled to attend the Education Committee audit on October 23 to address related issues.
Key concerns highlighted by lawmakers and regulatory authorities include exposure of minors to harmful content, emotional dependency on AI characters, excessive engagement, and data privacy. Given that users continuously interact with AI characters, ensuring effective age-appropriate protections and systems to block harmful conversations is a major challenge, as is determining the extent of corporate responsibility for user safety.
An industry insider stated, "Since continuous interaction with users is central to character chat services, it is essential to consider both user protection and operational costs. Not only is expanding the user base important, but establishing a safe service environment and securing a sustainable revenue model will be critical challenges for the industry."
* This article has been translated by AI.
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