// TECHCRUNCH — INTELLIGENZA ARTIFICIALE
A16z’s Olivia Moore on the state of consumer AI
I wrote this week about the bleak economics of consumer AI – but where some see a crisis, others see an opportunity.
Olivia Moore covers consumer AI as a partner at Andreessen Horowitz – and on Monday, she released a report on the top 100 consumer AI apps. ChatGPT is still the biggest player by a mile, but smaller players like Suno and ElevenLabs are showing real staying power. Even more interesting is what we don’t see, as Moore’s report details half a dozen consumer categories that seem to be completely untouched by AI.
Moore sees a huge opportunity in consumer AI, particularly if the industry can tap into revenue streams beyond just subscriptions and API charges. On a call this week, I talked with her about the unusual economics of consumer AI and why it’s still early days for the category.
This interview has been edited for length and clarity.
It’s an interesting moment for a report about consumer AI, since we’ve seen OpenAI pivot back to enterprise this year. It’s inspired a lot of pessimism about the overall revenue picture for consumer AI, including from me. But I take it you’re more optimistic?
I agree with you that OpenAI has moved back towards the enterprise. To me, it’s not necessarily a pivot because they’re still launching a lot in consumer. It’s more of an expansion. But I don’t blame them, as much as I love consumer, because almost all of the AI revenue thus far has come from subscriptions and then token usage. And that is much more concentrated on the enterprise and prosumer side.
How can consumer AI products change that revenue problem? The State of Markets report reminded us that just 2.2% of U.S. households are paying for AI. Do we need that number to rise before the market becomes attractive?
I actually don’t know if I want to see that user number increase. I’m more interested in getting back to a world where the consumer is monetized in a way that isn’t subscription dollars out of their own pocket.
I think it’s very easy in Silicon Valley, with people who are high-income and have corporate cards to pay for those tools, to say, “oh well, I’d rather pay for the product.” But I think most people would actually rather have free access to something and see some ads, and then they can decide if they want to subscribe or not to make the ads go away.
The other challenge is the marginal cost of AI services, which is still a lot higher than classic internet services like Facebook or Google Search. Do you see a lot of these services finding ways to keep those costs down, whether it’s open-source or other lightweight models?