Character.ai's Rising Popularity Challenges ChatGPT in the AI App Space

NNicholas September 11, 2023 8:32 PM

The AI app Character.ai is increasing its monthly active users in the U.S, according to market intelligence firm Similarweb. The firm's analysis shows the app is catching up to ChatGPT in terms of mobile app usage, particularly among the young demographic.

Character.ai gains ground on ChatGPT

Character.ai, an AI app company that allows users to design their own AI characters, is making significant strides in the U.S market. Recent data from Similarweb, a market intelligence firm, indicate that Character.ai is now boasting 4.2 million monthly active users in the U.S. This represents a considerable increase in user engagement, bringing the AI app maker a step closer to rival ChatGPT, which maintains a monthly active user base of nearly 6 million in the U.S.

Successful user retention by Character.ai

Since its launch in May 2023, Character.ai has not only managed to attract a respectable user base but has also successfully retained many of its early adopters. As is common in the app industry, not all installations translate to active users. However, Character.ai has bucked the trend and demonstrated steady growth in active users over the months following its debut.

Younger demographic drawn to Character.ai

While ChatGPT continues to dominate the web, Character.ai has carved out a niche for itself among younger users. Many of Character.ai’s users prefer the interactive experience of building and interacting with their AI chatbots on their personal mobile devices, rather than through a website. Moreover, Character.ai has managed to attract an audience predominantly from the 18- to 24-year-old age bracket, distinguishing it from ChatGPT and other AI apps.

Despite Character.ai's growth in the U.S market, globally, ChatGPT still maintains a significant lead. Android data suggest that ChatGPT boasts a robust 22.5 million monthly active users worldwide, compared to Character.ai's 5.27 million. However, Character.ai's noteworthy attraction to the younger demographic may signal a shift in future trends as these users mature and become more active.

Interestingly, ChatGPT has noted a decrease in global website visits and time spent on its website. However, as the new school year commences, the AI app has seen some resurgence in U.S traffic. The cyclical nature of this trend may suggest a large portion of ChatGPT's user base consists of students utilizing the app for educational purposes.

Character.ai’s massive funding boosts potential

Character.ai is positioned for further expansion, bolstered by a massive $150 million Series A funding round that has valued the startup at $1 billion. Created by AI experts Noam Shazeer and Daniel De Freitas, who previously led a team at Google, Character.ai's unique offering and strong financial backing could play a crucial role in its continued growth and competitiveness in the AI app market.

Future of Character.ai's youth appeal uncertain

Despite its success, it remains to be seen whether Character.ai's appeal among young users will persist over time, or if it will fade out as just another AI fad. Furthermore, the company's response to this recent data and its strategies for maintaining its user base and encouraging continued growth will be critical factors in its future success.

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