Character.ai, the chatbot company founded by former Google engineers, is launching a microdrama division, marking a notable diversification for a firm best known for its AI companion chatbots. The company will announce on Thursday that it has created AI-generated animated vertical-video series, penned by hired Hollywood writers but produced using artificial intelligence rather than traditional animation. The move matters because it signals an attempt to broaden the business beyond the intimate, companion-style interactions that have drawn lawsuits and allegations of harm, while tapping into the fast-growing microdrama market.

Three series launch initially: Last Summer, The Nighttime Game and Edenfall, with writers and artists said to have prior credits at Nickelodeon, Netflix, DreamWorks and Blumhouse. Chief executive Karandeep Anand said AI cuts production to roughly 40 days per series versus six months traditionally, but insisted the aim is fewer, higher-quality shows rather than "an AI slop machine for Gen Z". The company plans to add revenue through chatbot engagement and fan-fiction features. The expansion comes amid significant controversy: Character.ai faces multiple lawsuits, including a settled case brought by a Florida mother whose son died by suicide, a Pennsylvania suit over medical chatbots, and scrutiny over "chatbot psychosis". The firm, which has at least 20 million monthly users, banned under-18s last autumn.