Post by @lagrangeinterpolator@awful.systems

2026-10-14 12:21 UTC

More news about the character dot ai bankruptcy: as it turns out, the true economics of the company are disastrous. At their peak, their revenue was around $1M a month while their AI compute expenses alone were $14M a month! Their total expenses in 2025 were around $23M a month. All of this is for a pure text-based low power LLM (none of the “reasoning” business). Before AI boosters crow about how much cheaper AI is currently, they tried every trick in the book to enshittify: open models, ads, usage limits, etc. This allowed them to cut down their losses to a mere $9M a month. Surely this is all one big exception, everyone else in the AI bubble is doing just fine!

Replies (2)

@V0ldek@awful.systems 2026-10-14 12:46

How you look at “my company pays $14 for every $ from the user” and not like, idk, stop, seek help, change your job, name, and address, is completely beyond me.

Open ##5029621
@corbin@awful.systems 2026-10-14 19:08

I haven’t really kept up, but it looks like Character’s business model was still focused on NSFW content. If so, then this is also a disaster for the industry at large, since NSFW content is one of the few genuine money-printers for chatbot and image-generation services; people really do want thousands of iterations of the same fantasy, slightly changed in order to stay engaging, and Character was highly recommended as a source of affordable slop. (Examples of unaffordability include the rampant free-tier abuse on ChatGPT, Gemini, and Grok; I’m assuming that customers are willing to open their wallets at least a little. In general, the porn industry turns a profit, so I do think that people will pay for porn.) My prior estimate (previously, on Awful and on Lobsters) was that token generation was subsidized to the tune of an effective 80-90% discount; this looks to be more in the 90-95% range. For contrast, consider chatbot-booster Willison’s belief, in reply above, that Chinese labs will magically produce a five-fold improvement in token production; this still would be between two to four times slower than needed to turn a profit for Character.

Open ##5034060