Character.ai filed for Chapter 11 bankruptcy and agreed to sell some of its assets to Disney for $20 million in a deal that also gives Disney a perpetual, non-exclusive license to its technology. CEO Colin Adams said in a court affidavit that Character.ai spent $10 million a month on AI compute last year, down from $13.8 million in 2024, while its total revenue, including ads, never topped $5.3 million a month. Character.ai moved inference to cheaper GPUs, stopped building its own foundation models, cut staff, and added ads and in-app purchases, but it was still losing $8 million to $9 million a month as of August. The chatbot app stays online during the sale, which is expected to close in late November or early December, and will be wound down if no buyer emerges for the platform.
