Consumers behaviour towards Generative AI

Its been just over 10 months since ChatGPT was released and has become the fastest consumer app to reach 100 mil MAUs. This signals a new trend and era of generative AI.

For the past 5 years, many consumer apps have been caught in an subscriber acquisition game. With no platform shift (e.g., internet → mobile), it’s been difficult to drive excitement for new products. Costs of acquisition?are rising, meaning that most B2C companies have had to discard MAUs and instead worry about metrics like?LTV(lifetime value) and SAC(subscriber acquisition cost).

GenAI has changed the game. The majority of companies on this list have miniscule paid marketing. There is significant free traffic “available” via X, Reddit, Discord, and email, as well as word of mouth and referral growth.

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How lonely are we as a population that companion category is so highly sought after?!!

The bottom quartile of these GenAI products saw just 2% of their traffic coming from paid sources. This compares to 70% paid traffic for the bottom quartile of non-AI consumer subscription companies

And consumers are willing to pay for GenAI. 90% of companies on the list are already monetizing, nearly all of them via a subscription model. The average product on the list makes $21/month (for users on monthly plans)—yielding $252 annually.?

If you’ve subscribed to any popular consumer subscription products pre-AI (e.g., Calm, Headspace, Duolingo) you’ll know they mostly charge less than $70 per year for annual subscribers. Generative AI?creates a new level of value, which increases consumer willingness to pay.

The future is Intelligent and we are lonely....