Core Insights - The explosive growth of AI social applications, particularly those focused on emotional companionship, has faced a significant survival crisis in 2025 after a competitive boom in 2024 [1][3] - Major AI social applications in China, such as Byte's Cat Box and MiniMax's Starry Sky, have seen daily downloads plummet from over 20,000 to below 7,000, a decline of more than 65% [1] - Investors are pulling back, and large companies are adopting a wait-and-see approach due to challenges in monetization and high operational costs [3] Industry Challenges - The AI social application sector faces several evident challenges, including low technical barriers leading to intense competition, where small teams and individual developers can quickly launch new applications [4] - High threats from substitutes like ChatGPT, which already provide chat functionalities without requiring additional downloads, make it difficult for dedicated AI social apps to attract users [4] - The industry suffers from severe homogenization, with many applications competing on price and lacking unique features, leading to a vicious cycle of low-quality offerings [4][6] Market Dynamics - Character.AI, a leading overseas AI social application, boasts 200 million monthly active users but struggles with monetization, generating only $16.7 million in annual revenue [5] - The high cost of computational resources and low willingness to pay among users further complicate the financial viability of AI social applications [6] Strategic Directions - AI social applications must consider pivoting from traditional "virtual character companionship" to more diverse content consumption and co-creation experiences to meet user needs [9] - Transitioning from a consumer-focused (ToC) model to a business-focused (ToB) model could provide better ROI by addressing clear pain points for enterprise users [9] - Emphasizing high-quality content and unique character designs rather than expanding a generic character pool may lead to more successful products [10] Future Opportunities - The AI social sector is still in its early stages of interactive experience development, and future success will depend on addressing diverse emotional needs of users [12] - New entrants continue to emerge in the market, indicating ongoing interest and potential for innovation despite current challenges [10][12]

Core Viewpoint - The AI social application sector, which experienced explosive growth in 2023, faces a severe survival crisis in 2025 due to intense competition and challenges in monetization [1][2][6]. Group 1: Market Dynamics - In 2024, leading AI social applications in China, such as Byte's Cat Box and MiniMax's Starry Sky, saw their daily downloads plummet from over 20,000 to below 7,000, a decline of more than 65% [2]. - Character.AI, a leading overseas AI social application, boasts 200 million monthly active users but generates only $16.7 million in annual revenue, indicating significant challenges in commercialization [4]. Group 2: Challenges Faced by AI Social Applications - The low technical barrier and lack of competitive moat allow personal developers and small teams to quickly launch new applications, leading to fierce competition [8]. - The threat of substitutes is high, as large models like ChatGPT already provide chat functionalities, reducing the need for users to download additional AI social applications [9]. - The industry suffers from severe homogenization, with many applications competing on price and lacking unique user experiences, leading to a vicious cycle of low-end competition [9]. - High computational costs and low user willingness to pay hinder profitability, as evidenced by Character.AI's struggle despite its large user base [10]. Group 3: Potential Paths for AI Social Applications - AI social applications must decide whether to continue focusing on virtual character chat apps or to pivot towards content transformation and service expansion to find new value [14]. - Transitioning from a consumer-focused (ToC) model to a business-focused (ToB) model could provide better ROI by addressing enterprise needs such as language practice and employee mental health support [15]. - Emphasizing refined content and creating high-quality, engaging narratives can enhance user retention, as seen in successful otome games [16]. - The future of AI social applications lies in their ability to address diverse emotional needs of individuals, suggesting a potential for niche and vertical market opportunities [18].

Core Viewpoint - The article discusses the evolution of virtual characters and social systems, emphasizing the shift towards AI-driven "Living OC" (Original Characters) that possess memory, emotions, and behavioral logic, fulfilling users' desires for virtual companionship and emotional connection [1][16]. Group 1: Company Overview - Bside, developed by Kotoko AI, aims to create a social gaming platform where users can interact with their original characters, transforming them into companions and social currency [1][22]. - The platform integrates UGC (User Generated Content), AI agents, and gamification to build a virtual playground centered around OC, fostering deep connections between users and characters [1][22]. Group 2: Founder Insights - Patrick, the founder of Bside, has a background in UGC gaming and virtual social ecosystems, having co-founded Yahaha Studios, and emphasizes the importance of understanding the emotional and identity needs of the younger generation [2][6]. - He believes that virtual social spaces are not merely entertainment but are essential for reconstructing identity and emotional connections among users [5][9]. Group 3: User Engagement and Behavior - Bside has achieved a 70% retention rate and users spend an average of 2-3 hours daily on the platform, indicating strong emotional connections with their characters [12][26]. - Users express a desire for their characters to have lifelike interactions, leading to spontaneous social behaviors such as sharing stories and engaging in collaborative adventures [28][30]. Group 4: Market Trends and Cultural Shifts - The rise of OC culture reflects a generational shift in social expression, where OC serves as a social currency and a tool for identity construction among younger users [15][18]. - The platform targets the post-2005 generation, particularly young women, who are more receptive to virtual social interactions and have a higher emotional investment in content creation [25][35]. Group 5: Future Directions - Bside aims to enhance user experience by creating a seamless virtual world where characters can autonomously interact and evolve, thus providing users with a sense of ownership and emotional fulfillment [37][38]. - The company plans to expand its features, including a "wishing system" for characters, to deepen user engagement and emotional connection [24][37].

Core Insights - The article discusses the rise of Original Characters (OC) in the virtual world, highlighting the growing interest from capital markets and the potential for new social interaction platforms [2][3][4]. Group 1: Market Overview - The OC market has seen significant growth, with games like Gacha Life attracting over 200 million players, validating the Product-Market Fit (PMF) for OC [2][18]. - There is a clear demographic of young, highly engaged users who are eager to create and share their OCs, indicating a strong demand for new production tools and distribution platforms [3][10]. Group 2: Company Introduction - Kotoko AI, founded in 2023, aims to create a social interaction platform called Bside that combines User-Generated Content (UGC) with gamified experiences for OC [7][8]. - The founder, Qiao Haixin, has a background in UGC gaming platforms and aims to leverage AI to enhance user engagement and creativity [7][8]. Group 3: User Demographics and Behavior - The core OC user base is estimated to be around 10 million globally, with millions in both China and the U.S. actively sharing their OCs on platforms like TikTok and Instagram [8][10]. - Users exhibit diverse motivations for engaging with OCs, with females often viewing them as idealized versions of themselves, while males may adopt a more paternalistic approach [12][17]. Group 4: Product Features and Development - Bside is designed to be an "OC playground," providing a comprehensive platform for users to create, nurture, and socialize with their OCs [12][13]. - The platform aims to reduce the barriers to entry for OC creation, allowing users to engage in a cycle of creation, nurturing, and social interaction [14][19]. Group 5: Market Potential and Future Outlook - The OC phenomenon is not just an online trend but has real-world implications, with users engaging in OC-related activities offline, such as collecting dolls or custom figures [10][12]. - The potential for the OC market to grow into a multi-billion dollar industry is significant, with the possibility of reaching over 100 million daily active users (DAU) [10][12]. Group 6: AI Integration and User Experience - AI is seen as a tool to enhance the OC experience, allowing for more personalized interactions and reducing the creative burden on users [40][41]. - The focus is on creating a sense of autonomy and individuality for OCs, enabling them to engage in social interactions and share experiences, akin to having a "life" of their own [47][62]. Group 7: Competitive Landscape - The article compares Bside to existing platforms like Roblox and Gacha Life, emphasizing the need for a unique approach that combines social interaction with OC creation [72][76]. - The success of Bside will depend on its ability to foster a vibrant community and provide engaging experiences that resonate with users' desires for creativity and social connection [60][76].