AI solved costs. Demand’s the catch

Welcome to The Prompt, your Monday dive into the world of AI that puts Asia front and center. From Big Tech’s power players to the region’s scrappy disruptors, we cover it all. Want full access to all our AI reporting? Subscribe to us here.

---

Hello reader,

Boiled down to the simplest form possible, there are two ways for a business to make more money: boost revenue or cut costs. Our top AI stories this past week show that AI may have mastered the latter, but the former is proving tricky.

Take Elyssa’s story on how AI is being used in the production of microdramas. While the tech can cut production costs by up to 90%, removing that constraint doesn’t solve the other one: audience attention.

One microdrama CEO Tech in Asia spoke with estimates that only 20% of short-video viewers globally have ever watched a microdrama, illustrating how making supply cheaper doesn’t manufacture demand.

From videos you watch to video games you play – and even make – Glenn’s story on AI-generated games shows a similar pattern playing out.

Companies like PixVerse and Roblox are letting users generate playable games from a text prompt. But on Chinese platform TapTap, where 80% of the 5,000 playable games it released in the first half of the year were AI-generated, user numbers stayed flat. You can build it, but it doesn’t mean players will come.

Elsewhere in AI, the constraint isn’t a supply glut with questionable demand, it’s the opposite: GPU supply is struggling to keep up with the huge demand for compute. Pranav looks into the AI labs unable to beat China’s open models, now pivoting to rent out the GPUs they secured for training so they can serve customers their erstwhile competitors’ models instead.

For now, it’s better to be short on supply than short on demand.

Peter Cowan, engagement editor

---

TOP AI READS FROM OUR DESK

1️⃣ AI came for microdramas. Now it wants the whole picture

---

WHAT WE THINK

---

RESEARCH SPOTLIGHT

---