Character AI, a platform that lets users interact with AI-powered characters, is testing games on its desktop and mobile web apps to enhance user engagement.

The games are available to paid subscribers and a select group of free-plan users. For this initial rollout, Character AI has introduced two games: Speakeasy and War of Words.

To access the games, users can select any character they are chatting with and click the new controller icon. The app prompts users to start a separate chat for the game to preserve their ongoing conversations with the character.

In Speakeasy, players aim to get the chatbot to say a specific word without using five restricted words. For example, they might try to make the bot say “croissant” without mentioning “pastry,” “butter,” “bake,” “French,” or “flaky.”

In War of Words, users engage in a verbal duel with the character. An AI referee evaluates each round, with the competition spanning five rounds.

The company sees these games as a way to make the platform more entertaining. “Our goal as an AI entertainment company is to enhance the Character AI experience by making it more fun and immersive. This feature allows users to play games with their favorite characters while preserving the experience they enjoy,” a spokesperson said.

Users have already created their own text-based games, such as the Space Adventure Game. However, Character AI aims to expand its offerings by developing in-house games.

The company has recently undergone leadership changes. Co-founders Noam Shazeer and Daniel De Freitas departed for Google, while a former YouTube executive joined as Chief Product Officer. Dominic Perella, previously the company’s General Counsel, is now serving as interim CEO.

In an interview with TechCrunch in December, Perella emphasized that Character AI is focused on building a platform for entertainment rather than creating AI companions. “We want to create a wholesome entertainment platform where people can craft and share stories. To achieve this, we are continuously evolving our safety practices to the highest standards,” he explained.

The introduction of games aligns with strategies employed by platforms like YouTube, LinkedIn, and Netflix to boost user engagement. According to Sensor Tower, Character AI users already spend an average of 98 minutes per day on the app, and the addition of games could further increase this figure.

Last year, Character AI implemented new safety measures for teens, including clearer labels indicating that AI characters are not real people and a time-out notification for users who spend over 60 consecutive minutes on the app. These changes followed multiple lawsuits involving the company.

With the introduction of games, Character AI is taking another step toward cementing its position as a leading AI-driven entertainment platform.

Hyzon Motors, a hydrogen fuel cell developer, has shut down after struggling to sustain operations since going public during the 2020-2021 SPAC boom. Despite positive press, warning signs persisted, culminating in the company’s downfall.

A Rocky Start and SEC Troubles

Hyzon, a spinoff from Singapore’s Horizon Fuel Cell Technologies, raised $550 million in 2021 through a reverse merger with Decarbonization Plus Acquisition Corp. However, its operations were focused on Europe, Australia, and China, with no U.S. or North American business initially.

In 2021, short-seller Blue Orca Capital accused Hyzon of fabricating orders in China, leading to an SEC investigation. The company paid a $25 million fine, and CEO Craig Knight was replaced in 2022 by Parker Meeks, a former McKinsey & Co. partner.

Attempts to Revive the Business

Under Meeks, Hyzon closed its European and Australian operations and focused on specific markets like refuse trucks. The company also partnered with Fontaine Modification to retrofit Freightliner Cascadia trucks with 110-kilowatt fuel cell systems while developing a larger 200-kW system.

Despite technological progress, Hyzon struggled to generate sales. By the third quarter of 2023, it had only $100,000 in revenue. With just $14 million in cash, the board decided on December 19 to pay creditors and shut down operations. Remaining employees in Michigan and Illinois are set to lose their jobs by February 2024.

Optimism Faded

Until its third-quarter earnings call, Meeks expressed hope, citing potential fleet contracts and falling hydrogen prices, which were projected to drop to $10-$12 per kilogram by 2025. However, Hyzon’s high truck costs and inability to secure large orders sealed its fate.

Broader Industry Struggles

Hyzon’s collapse is part of a broader trend among hydrogen fuel cell and SPAC-funded startups. German company Quantron AG entered insolvency in late 2023, while Nikola Corporation faces funding challenges. Other SPAC-backed ventures like Lordstown Motors and Embark Trucks also failed due to financial difficulties.

Hyliion, however, has managed to thrive by pivoting to a fuel-agnostic stationary generator business, securing contracts, and achieving a significant stock price increase in 2023.

To stay competitive in the global technological race, Japan must merge its defence and civilian innovation ecosystems, which involve diverse stakeholders. In September 2024, Japan’s Ministry of Defense and Ministry of Economy, Trade and Industry unveiled the concept of a “dual-use startup ecosystem.” This initiative seeks to integrate startups into research and development (R&D) to meet the technological demands of defence equipment.

Strengthening Defence Innovation

Prior to the announcement, the government identified approximately 200 startups in July 2023, outlining plans to support these companies with defence-related equipment and financial assistance to ease their entry into the market. The startups specialize in advanced fields such as drones, cyber defence, satellite communications, and electromagnetic wave technologies.

Leading this initiative is the Ministry of Defense’s Acquisition, Technology, and Logistics Agency through its newly established Defense Innovation Science and Technology Institute (October 2024). The aim is to efficiently incorporate civilian technologies into defence equipment, aligning with global trends where private-sector innovation plays a growing role in defence development. The model draws inspiration from the U.S. Defense Advanced Research Projects Agency (DARPA) and the Defense Innovation Unit, which rapidly integrate private-sector advancements into defence projects.

Historical Roots and Persistent Challenges

Japan’s push for dual-use technologies is not entirely new. Efforts began with the 2013 National Security Strategy and the 2014 Strategy on Defense Production and Technological Bases, emphasizing public-private partnerships. These policies responded to challenges like globalized supply chains, Japan’s deteriorating security environment, the shrinking defence industry, and the need for technological cooperation with allies.

However, gaps between policy and implementation have hindered progress. A major issue is the low profitability of the defence industry, which has driven many private companies out of the sector. Reform efforts must offer stronger incentives for startups to participate. While increased defence spending has benefited traditional firms, smaller companies and startups face uncertain gains.

Another obstacle is the private sector’s cautious stance on defence R&D, rooted in Japan’s post-war anti-militarist norms. Many academic and industrial players perceive military involvement as a reputational risk in the predominantly civilian-focused business landscape.

For instance, the Ministry of Defense’s 2015 research funding initiative faced strong opposition from the academic community, including the Science Council of Japan, which criticized it for potentially restricting free scientific inquiry. This resistance has limited the impact of defence-related reforms, and startups entering the sector may encounter similar challenges.

Emerging Opportunities in a Changing Context

Despite these hurdles, Japan’s new dual-use startup ecosystem reflects an evolving political and social landscape. Since the 2010s, Japan’s national security policies have shifted to address growing security threats and fiscal constraints. Public opinion has gradually become more open to pragmatic national security measures, although resistance persists in some sectors.

Startups, particularly those led by younger entrepreneurs who are less tied to traditional business norms, are poised to play a pivotal role in this policy’s success.

Economic Security as a Catalyst

Economic security policies are further driving changes in Japan’s defence innovation ecosystem. The 2022 Economic Security Promotion Act has marked the beginning of “economic securitisation,” incorporating critical and emerging technologies into national policy. Initiatives like the “Key and Advanced Technology R&D through Cross Community Collaboration Program” have expanded R&D budgets, with applications spanning both civilian and military domains under the label of “multi-use” technologies.

By framing defence-related R&D as part of economic security, the government is addressing concerns within Japan’s political culture. This approach may reduce normative barriers for companies and universities to engage in defence-related activities.

A Defining Moment for Japan’s Innovation Ecosystem

As economic securitisation gains traction, Japan faces an opportunity to establish a robust defence innovation ecosystem. However, this moment also demands tough decisions from the private sector about their involvement in defence projects. Balancing commercial interests with normative considerations will shape the future of Japan’s defence and civilian innovation integration.