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Character.ai has initiated voluntary Chapter 11 bankruptcy
(blog.character.ai)
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this post was submitted on 13 Oct 2026
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It might be happening finally. All it takes is one domino that's just big enough to knock over the next one...
The CEO and most of the staff left the company to work for Disney. The company was run by a skeleton staff and they ran out of money is all.
Yeah...and I suppose they all hauled ass out of there because their company was doing so incredibly well and they felt super optimistic about the near future?
Also, if you can't make a chatbot BF/GF company profitable, that's a pretty damning signal for the industry as a whole, certainly from an end-user perspective.
No one in the AI industry is making money. They are all burning through venture capital just to stay afloat. They don't have viable a economic plan, the pricing they would have to charge in order to make a profit makes the product unappealing to the vast majority of people. So either they continuously subsidize the product in which case they don't make profit, or they charge what they actually need to charge and then they don't have any customers.
It's a no win scenario created entirely by the fact that they are trying to put an in-development technology out into public before it's really ready.
They're doing a Tesla.
Ive been saying this. The only way this succeeds is to sell this to businesses, but even then I feel like companies are realizing it's way to much money to actually justify it because they want to reduce workforce and save money but this will not do that. In the end they get a great deal on the first few years before the contract is up and then have to renew at way higher pricing. Not to mention they have less control over the company and will be paying yearly maintenance fees that probably cost more than the raises they wouldnt have given their employees but now have to pay up those crazy fees every year no matter what. Yeah it's absolutely going to fail for most things for the forseeable future. Someone will find a way to make it work eventually, but its still a ways off.
And Tesla is still around, so…
And making great financial decisions.
They can barely even sell the cyber truck in North America which is a problem because that's the only place they're allowed to sell it
So all the rats abandoned ship when they saw that it was sinking. All the AI ships are sinking because there is no way to make it profitable. The operational costs are just too high. I imagine there are a lot of AI company CEOs watching this and deciding whether or not they too should be jumping ship now. Because it's not a matter of if, it's a matter of when.