The Age of AI: Beyond the Hype in Consumer AI
Unlocking behavior through psychology
Generative AI (GenAI) has dominated conversations around technology, especially with breakthroughs like ChatGPT, Character.AI, and Replika. Yet, there is a clear disparity between the massive hype and the actual depth of consumer engagement. Unlike Instagram or WhatsApp, which are deeply embedded in everyday life, many GenAI platforms are still struggling with retention and real-world usage.
In this piece, I’m focusing not on foundational models but on the transformative potential of GenAI in consumer applications—specifically how it can influence consumer behavior, both by accelerating current habits and enabling new ones. This shift will be driven by multimodal interfaces, which blend text, image, video, and voice to create seamless, rich, and dynamic user experiences.
The Reality Behind the Hype
While applications like ChatGPT have captured the imagination, most consumer-facing GenAI platforms remain underutilized. For instance, despite its global recognition, ChatGPT’s retention rates don’t approach those of major consumer platforms. In part, this is because GenAI today is still primarily viewed as a tool—a valuable one, but not yet embedded into everyday behavior in the way a social media app or messaging platform might be.
Looking beyond the United States, the Indian market provides an excellent case study of where GenAI could shine, especially when adapted to specific economic and cultural nuances. India’s unique consumer behavior patterns require a rethinking of how GenAI is developed and applied.
Rethinking GenAI Through Consumer Behavior
Traditional analysis of GenAI is function or sector-focused, but a behavior-centric framework offers deeper insights into how AI can change consumer habits. Let’s break this down into key areas:
1. Companionship
In an era where human reliability and trust are increasingly questioned, AI companions can bridge the emotional gap. AI entities are no longer passive; they exist continuously, learning from user interactions and adapting to their emotional and social needs.
Think of films like Her, which showcased a future where AI companions become central to daily life, extending beyond mere tools into emotionally resonant relationships. This future is now within reach.
Real-world examples:
Wysa (a portfolio company) is already making strides in mental health AI companionship, where emotional intelligence and empathetic interactions foster long-term engagement.
Hume, another innovative startup, is pioneering emotional AI that understands and reacts to human emotions, laying the groundwork for more sophisticated emotional AI companions.
Astrotalk, an astrology platform, taps into cultural niches in India by offering companionship through AI-driven astrologers—creating an entirely new form of digital companionship that resonates deeply with its users.
2. Creative and Intellectual Partnership
Beyond emotional engagement, AI has the potential to augment creative and intellectual capabilities. This AI-human partnership could revolutionize professional fields such as healthcare, law, and education, offering personalized, data-driven support that doesn’t replace humans but enhances their decision-making.
Jasper is an example of a generative content tool that aids creators in generating copy faster and more efficiently, turning content creation into a collaborative effort between humans and AI.
RunwayML automates video editing, allowing creators to focus on high-level creative direction while the AI handles the more mundane tasks.
Supernova, a personalized English language learning platform, is showing how AI tutors can reshape the learning experience by offering hyper-personalized lessons, adapting to each student’s pace and needs.
3. Interaction & Immersion
AI is driving the demand for more immersive digital experiences. These go beyond the static interactions we have with current platforms, venturing into dynamic content that adapts in real-time based on user behavior and preferences.
Imagine playing a video game that adjusts its difficulty level to your skills, or an AI assistant that learns your preferences over time and optimizes your environment for productivity, health, or relaxation. AI-powered social networks focused on AI friends or influencers will likely represent the next breakthrough. These immersive, AI-first experiences are nascent but poised for explosive growth.
4. Personalization & Discovery
Personalization has long been a mainstay of AI, especially in sectors like e-commerce, streaming, and news. But GenAI can take this a step further by offering contextually aware, conversational interfaces that provide a genuinely personalized user experience.
The Yes and Stitch Fix are examples of AI-driven platforms that predict consumer behavior with impressive accuracy, curating products for individual tastes rather than relying solely on past behaviors.
AI-driven discovery tools, like Perplexity, go beyond traditional search engines, allowing users to interact with information in a more intuitive, human-like way, enhancing the overall user experience.
The Matrix of Consumer GenAI Applications
To further explore how GenAI can impact consumer behavior, we can categorize applications based on two key factors: user autonomy and influence over decisions.
CategoryExamplesAutonomy LevelInfluenceHigh Autonomy, High InfluenceAI-driven health systems (e.g., Babylon Health) that offer critical insights but leave final decisions to usersHighEmpowered with significant insightsHigh Autonomy, Low InfluenceAutonomous vehicles or household robots (e.g., Tesla’s FSD, Roomba)—they act autonomously, requiring user trustHighMinimal user inputLow Autonomy, High InfluenceEntertainment recommendations (e.g., Netflix, Spotify) that enhance leisure with minimal riskLowHighly influenced user choicesLow Autonomy, Low InfluenceSmart home devices like thermostats (e.g., Nest) that operate autonomously without user interventionLowNo major influence on daily life
The Indian Perspective: A Unique Market
India presents a unique socio-economic and cultural landscape that must be addressed for GenAI to flourish. The generational gap, family dynamics, and regional diversity create both challenges and opportunities for AI-driven consumer applications.
Cultural Relevance: AI tools in India must resonate with local values, such as community, family structure, and respect for tradition. Consider Haptik, a conversational AI platform supporting multiple Indian languages—an example of AI tailored to India’s multilingual reality.
Economic Diversity: GenAI applications must address diverse economic segments. AI-driven platforms like JioSaavn have proven how personalization can scale across various price points, offering high-tech experiences at affordable rates.
Technological Integration: GenAI solutions must blend seamlessly into existing consumer behaviors. India’s mobile-first approach means AI must be optimized for smartphones and data-light environments.
Challenges and Guardrails
While GenAI offers exciting opportunities, it also presents challenges:
Privacy Concerns: AI systems that gather sensitive data (especially in health, finance, or emotions) must ensure user privacy and transparency. Consumers are becoming more aware of how their data is being used, and platforms that can provide robust security will thrive.
Ethical Boundaries: Emotional AI systems that detect and respond to user moods raise ethical concerns. As AI becomes more emotionally aware, questions around consent and manipulation will become more pressing.
Retention vs. Novelty: For AI applications to move beyond mere novelty, they need to focus on long-term retention. Platforms like Astrotalk, which merge tradition with technology, show how GenAI can achieve sustained engagement.
Final Thoughts
The fusion of GenAI with consumer behavior—whether through emotional engagement, creative partnership, immersive experiences, or deep personalization—presents a monumental opportunity for the next wave of technological innovation. India, with its diverse cultural and economic landscape, is particularly well-positioned to benefit from this revolution, provided that applications are adapted to local realities.
By understanding how GenAI can shape everyday behavior and addressing challenges such as privacy, cultural relevance, and economic diversity, we can lead this technological evolution toward seamless, human-centric experiences. The key is thoughtful implementation: integrating GenAI deeply into our lives while ensuring trust, safety, and utility.
In summary, GenAI is no longer just a novelty. By aligning with real consumer behavior—whether in India or globally—it has the potential to transform how we live, work, and play. The journey is just beginning, and the next wave of AI will be one of seamless integration, deep personalization, and meaningful engagement.
Let’s build the future.