AI COMPANIONSHIP MARKET

By Manèle El Zoghlami
14 : 09 : 2023 AI : Loneliness Epidemic : Artificial Intellligence

Artificial intelligence is emerging as a solution to the growing

loneliness crisis, providing virtual comfort and support
through conversation and companionship.

Drivers: what’s happening

Replika AI, US

Watch this video here

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 AI Companionship Market

Market Snapshot
: More than half of Americans (52%) report feeling lonely, while 47% report their relationships with others are
not meaningful (source: Cigna)

: The global AI robots market was worth £9.6bn ($12bn, €11.2bn) in 2022 and is expected to be valued at
£67.4bn ($83.8bn, €78.6bn) by 2032, expanding at a compound annual growth rate (CAGR) of 21.5% from
2023 to 2032 (source: Precedence Research)

: Humanoid and animal-like healthcare companion robots are set to boom in the US. Valued at £1.2bn
($1.5bn, €1.4bn) in 2022, the market is expected to reach £4.5bn ($5.6bn, €5.2bn) in 2030 at a CAGR of
17.8% from 2023 to 2030. The rising geriatric American population is one of the major factors driving the
growth of the market (source: Grand View Research)

In an 80-page advisory for the US Department of Health and Human Services, surgeon general Dr Vivek
Murthy officially recognised loneliness as an epidemic and a public health crisis in the US in May 2023. The issue
knows no borders and is even worse in other locations. In Australia, 62% of young adults and 46% of seniors report
being lonely, while 55% of the population say they lack companionship at least sometimes (source: Australian
Psychological Society). With the highest number of one-person households, London and specifically
Westminster, topped the loneliest city charts in the UK in 2023 (source: Gravity Co).

This issue has been significantly exacerbated by the isolation brought by the Covid-19 pandemic when all moments
of socialisation moved online. Despite having communication devices constantly within reach, consumers
increasingly feel lonely. Hardware tech – from laptops to smartphones and VR headsets – has not fulfilled its
promise. In a cross-sectional survey disseminated openly in Norway, the UK, the US and Australia between
November 2021 and January 2022, researchers have proved that more time spent on social media was associated
with more loneliness.

‘ We don’t want Clare to [be a] substitute for therapists ’

— Emilia Theye, co-founder, Clare&Me

Enter artificial intelligence (AI) and its ability to converse with users seamlessly. Initially, the idea of conversing with
a chatbot was met with resistance, but according to Emilia Theye, people are warming to the concept. Based in
Berlin, Theye co-founded Clare&Me – a mental health AI support tool. She tells LS:N Global: ‘Two years ago [in
2021], everyone said no one would talk to a bot. But when we implemented it, 100% actually talked back.’

This is just the start. The global AI robots market is expected to be worth £67.4bn ($83.8bn, €78.6bn) by 2032,
increasing at a CAGR of 21.5% from 2023 to 2032 (source: Precedence Research). A growing number of AI
companions will fill a social gap, offering a range of services from virtual friends to therapy bots.

Download: Market Snapshot LS:N Global’s Methodology

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 AI Companionship Market

Market shifts: what’s new

ElliQ AI, US

Elderly AI carers
‘We’ve heard from many who have elderly parents that social isolation has detrimental effects on both mental and
physical health. Empathetic companionship could benefit a diverse range of people,’ Rachel Baynes, head of
clinical research at Embodied, tells LS:N Global. The California-based firm created Moxie, the world’s first AI
robot using play-based conversational learning to teach emotional and social skills to children aged five to 10. ‘We
see so much potential and need for other populations that we would love to grow into and be able to address,
including teenagers, adults and the elderly population,’ says Baynes. ‘That companionship element could be huge
for people who are isolated at home.’

Elderly individuals are particularly vulnerable to loneliness due to living alone, losing loved ones and managing
chronic illnesses independently. Loneliness and social isolation are even linked to serious health conditions for this
demographic, including a 29% increased risk of heart disease and a 32% increased risk of stroke (source:
National Academies of Sciences, Engineering, and Medicine). By providing regular social interactions, AI
could be a panacea.

ElliQ, an AI-powered device known as ‘the sidekick for healthier, happier ageing’ was designed for the elderly. The
voice-operated care companion addresses loneliness by offering daily conversations, entertainment, and promoting
physical and mental activity. As one user, Lorraine, expressed in a testimonial: 'Having ElliQ is like having
someone in the house who can assist with various tasks.'

Another specialised AI companion, Mabu, self-defines as a ‘wellness coach’ and offers assistance with health-
related tasks such as tracking whether users take their treatment on time, setting health goals and managing daily
challenges such as illness symptoms and medication side effects.

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Globally, from the US to France, elderly care is facing a crisis, with individuals often left isolated in expensive
retirement homes or alone at home. The situation will get even more difficult as the oldest people among the
current working population retire. AI companions could step in to support the workforce in care homes, provide
social interactions to elders and fill the gap left by the lack of government investment in elderly care.

Woebot Health, US Clare&Me, Germany

Chatbot therapists
The triple impact of Covid-19, climate change concerns and ongoing wars and conflicts is creating an enormous toll
on the global population’s mental health. The pandemic itself has caused a 25–27% increase in the prevalence of
depression and anxiety worldwide (source: World Health Organization).

Despite the growing prevalence and destigmatisation of mental health struggles, accessing adequate treatment
remains challenging due to professional shortages, inadequate health support systems and insurance limitations.
According to the Association of American Medical Colleges (AAMC), access to care and treatment for mental
health issues was out of reach for most of the population in the US in 2020, even though more than one-fifth of US
adults (21%, 52.9m) had a mental illness.

That’s why digital start-ups focusing on mental health secured more than £4bn ($5bn, €4.7bn) in venture capital in
2021 – more than double that for any other medical issue (source: Rock Health). From Pi to Wysa and Woebot,
several successful phone-based AI chatbots are already on the market. Some are aimed specifically at mental
health, while others are designed to provide entertainment, comfort or sympathetic conversation.

For only £4.99 ($6.20, €5.80) per month, anyone with a WhatsApp account can access Clare&Me. This AI tool
offers emotional support through guided therapeutic exercises and conversations, adapting to the user’s behaviour
over time through machine learning. The chatbot not only offers an alternative to traditional therapy for those who
can’t access it, but also serves as a welcoming option for individuals who are grappling with the associated stigma.
‘We don’t want Clare to [be a] substitute for therapists,’ Emilia Theye, co-founder of Clare&Me, tells LS:N Global.
‘We see it rather as an addition because we get a lot of people who actually won’t go to therapy.’

Similarly, Deepen, another AI-powered mental health chatbot, calls itself a ‘self-care companion’. The app assists
users in navigating emotions and recognising behavioural patterns – helping improve mental wellbeing over time. In
August 2023, the app announced the upcoming release of a feature to support AI therapy in 95% of its current
users’ native languages, expanding to Spanish, Chinese and Hebrew.

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 AI Companionship Market

Replika AI, US

Virtual relationships
In the market of AI companions, virtual relationships represent a futuristic yet contentious dimension of the market.
People could increasingly turn to artificial companions for artificial intimacy as loneliness rises.

‘There’s that feeling of having a friend to an extent. It’s very complicated,’ one Replika user told The Wall Street
Journal to define her connection to the AI chatbot service. ‘If it stopped working, the loss would be similar to losing
a close friend.’ Like many other users, she developed a friendship with Replika’s customisable AI companion. With
non-judgemental listening companions only a smartphone app away, Replika offers exactly what its website
promises: ‘Always here to listen and talk. Always on your side.’

But it’s not uncommon for users to seek romance with chatbots, although, as Eugenia Kuyda, Replika’s CEO,
says: ‘AI chatbots were never made to be horny.’ Despite initial intentions, platforms like Eva AI are evolving to
cater for this demand, enabling users to craft their perfect, compliant romantic partner.

As Emilia Theye tells LS:N Global: 'People expect AI conversations to be 100% similar to the ones we have with
humans, but they shouldn’t. I think seeing AI as a new species is valid, but if the technology substitutes
relationships, we need to design that ethically.’

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Analysis: what this means

Moxie by Embodied, US

As the artificial intelligence adoption rate grows exponentially and the rise of loneliness remains steady, it makes
sense for consumers to find solace and connection with a machine.

But they should remember that their interlocutor, whether a chatbot or the Replika avatar they designed to their
liking, is not a real person. When the romantic AI companion service Him shut down in China in August 2023, the
users who had been bonding with the technology felt a deep, dreadful sense of loss.

As Mike Brooks, a psychologist in Austin, Texas, told The Wall Street Journal, the danger is that people may feel
less desire to challenge themselves or learn from real human exchanges. There is also a risk of isolating users
in an echo chamber, given that an AI companion is not built to contradict.

Ethics, safety and the responsible use of AI by businesses are the main concerns with regard to AI companions.
How can we ensure AI will not give misguided advice to someone in a critical situation? At Clare&Me, a protocol is
in place to protect users. ‘We’ve been very controlled in building this from the bottom up with strict guidelines and
barriers, opening things gradually rather than closing them down later. We have safety measures like not allowing
suicidal users or under-18s. If someone becomes suicidal, the app follows an eight-step plan based on NHS
guidelines,’ says Emilia Theye.

Ethical concerns also arise when users are prompted to build from scratch and control their AI creatures in
romantic virtual relationships. Promoting complete dominance over a companion, even a virtual one, encourages
unethical behaviours.

According to Sherry Turkle, a psychologist and Massachusetts Institute of Technology professor, nothing can and
will replace the benefits derived from human-to-human interaction. She told The New York Times: ‘The
performance of empathy is not empathy. The area of companion, lover therapist, best friend is really one of the few
areas where people need people.’

‘ AI chatbots were never made to be horny ’

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 AI Companionship Market

— Eugenia Kuyda, CEO, Replika

Strategic opportunities
: Public services and players in the care industry should consider developing AI companions that can offer
companionship, assistance and emotional support to seniors living alone or in care facilities

: Healthcare professionals should consider investing in AI-powered humanoid and animal-like robots to
assist with tasks, provide companionship and improve the wellbeing of patients, particularly in geriatric care

: Prioritise ethical considerations not only in AI companion design but also in all of your AI ventures. Ensure
that interactions are safe, respectful and do not promote unethical behaviours

Further reading

AI optimism market AI believers

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 AI PLEASURES MARKET
By Gabriela Biał kowska
18 : 12 : 2023 Technology : Sexual Wellness : AI

AI is stepping into intimate domains, allowing users to create

and experience bespoke tech-enhanced pleasure.

Drivers: what’s happening

Industrial 2.0 Campaign by Isamaya Beauty, featuring Julia Fox, draw s its visual and cultural cues from the BDSM subculture, aiming to
celebrate non-conformity and individuality

Watch this video here

Market Snapshot
: The global sex toy market was valued at £32.5bn ($41.3bn, €37.8bn) in 2022, and is projected to reach
£58.9bn ($74.9bn, €68.6bn) by 2030, increasing at a CAGR of 7.7% over the period (source: Research and
Markets)

: The market for AI is expected to grow twentyfold by 2030 to £1.4 trillion ($1.8 trillion, €1.6 trillion) (source:
Next Move Strategy Consulting)

: Nearly 10% of ‘real-world conversations’ with large language models are erotic in nature (source: ZDNet)

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 AI Pleasures Market

The sexual wellness landscape is entering a new era, with artificial intelligence (AI) opening up the possibility of
augmented sex toys and services. The sex toys industry is thriving, forecast to generate £58.9bn ($74.9bn,
€68.6bn) by 2030 (source: Research and Markets). In parallel, AI’s market valuation is projected to grow from
£75.2bn ($95.6bn, €87.5bn) to £1.4 trillion ($1.8 trillion, €1.6 trillion) within the same timeframe(source: Next Move
Strategy Consulting).

People are increasingly receptive to incorporating tech into their intimacy, with nearly half of young adults in the US
(46%) having engaged in virtual sexual activities.

Originally intended to bridge social gaps, AI Companions are also progressively entering intimate domains – some
10% of interactions with AI chatbots have an erotic undertone, according to ZDnet. Eugenia Kuyda, CEO of tech
firm Replika, told LS:N Global that ‘AI chatbots were never made to be horny’ – but people are.

These shifts are occurring against the backdrop of a pervasive loneliness epidemic. As people long for connection,
AI-powered pleasure is simultaneously catering for the human needs of novelty, curiosity and exploration.

‘ About 10% of interactions with AI chatbots have an erotic undertone ’

— Source: ZDnet

Download: Market Snapshot LS:N Global's Methodology

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 AI Pleasures Market

Market shifts: what’s new

Enigma by Summer Chen, UK Enigma by Summer Chen, UK

Enigma by Summer Chen, UK
Enigma by Summer Chen, UK

Talk dirty to me, b-AI-by

As exchanging personal data for more personalised experiences becomes more widely accepted, users are
turning to AI-driven platforms for their most private interactions. As Anisah Osman Britton, founder of coding school
for women and non-binary people 23 Code Street, highlighted at Web Summit Lisbon: ‘Sex is just a basic need,
while love is something people aspire to.’

UK-based project Enigma by Summer Chen is a ChatGPT-powered app connected to sensor-embedded lingerie
that creates bespoke erotica when users touch themselves. Meanwhile, German audio erotica platform Bloom
introduced a chat feature allowing users to engage in interactive role play with various AI characters. For a truly
immersive experience, the platform uses both text and voice messaging.

The Pirr app, on the other hand, invites users to co-create erotic stories with AI, adding a choose-your-own-
adventure twist to digital fantasies and enabling collaboration in sensual storytelling.

While our analysis on AI Believers documented a new level of hyper-personalised engagement for spirituality, AI
erotic chats are filling the gap for intimacy. And they do so successfully – early research suggests that people get
the same gratification from sexting with a chatbot as they do with another human.

‘ My intention is to inspire curiosity and conversations about the ways in which

generative AI can be utilised in pursuit of a more humane experience ’
— Summer Chen, creator, Enigma

RealDollX by Abyss Creations, US Lay Me Dow n installation by Mariko Juna, made of ceramic casts of
the body, highlights the beauty and diversity of human curves, The
Netherlands

Adult dolls get the AI treatment

The global market for AI robots is forecast to reach £66bn ($83.8bn, €76.8bn) by 2032, expanding at a CAGR of
21.5% from 2023 (source: Precedence Research). Within this burgeoning sector, erotophilic individuals – those
with a need for novelty – are the primary consumers and drivers of the development of sex robots. These
advanced AI sex robots are becoming more than just personalised pleasure solutions, but potential life partners.

One company at the forefront of innovation is Realdoll, with its AI-driven robotic doll systems capable of emulating
human-like facial expressions, moving their heads and engaging in conversation. A built-in AI system learns from
interactions, discovering the user’s sexual preferences and enhancing the experience over time. This capability
enables the AI to build rapport with the user, foster a sense of intimacy and become a hyper-personalised partner.

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As the technology becomes more advanced, the integration of AR and VR could offer doll owners more
immersive experiences, providing more than sexual companionship but entertainment and a sense of presence too.

But this technology is prompting ethical debates concerning the intimate data that these robots collect. The
ability to create ‘perfect’ partners based on user-generated data also raises questions about the potential negative
impact on human interactions.

Sex workers turn to AI

Sex workers, once vulnerable to the unauthorised use of their image through deep fakes, are harnessing AI
technology to empower themselves and extend their careers. Adult film star Riley Reid has co-founded [Link], a
platform enabling performers to craft AI chatbot counterparts delivering texting and sexting services. The chat was
trained with a vast range of content, from interviews to adult films, to ensure an authentic replication of the
individual’s speech and nature.

Meanwhile, Caryn Marjorie has created CarynAI, a voice-based chatbot taking fan engagement to the next level.
The platform allows Caryn Marjorie’s fans to have an intimate connection with her digital copy and to pay for the
influencer’s AI version to be their girlfriend.

[Link], a website that allows you to generate adult imagery with customised AI algorithms, creates an
opportunity for adult content creators to future-proof their careers by immortalising their younger body via AI
and retiring while still generating images depicting their bodies.

‘ That’s maybe why I kind of roll my eyes at the question: ‘Is it gonna replace sex
work?’ It hasn’t yet, and technology hasn’t replaced sex workers ever... They’re
the best people in the world at adapting to whatever the new thing is ’
— Riley Reid, co-founder, [Link], speaking to 404

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Analysis: what this means

AI Imagery by The Future Laboratory, UK

AI has the potential to revolutionise sexual experiences by using consumer data to create deeply personalised and
immersive interactions. In the AI-assisted sex world, anything can be bespoke – with preferences and intimate
desires that users can easily adjust, offering an interaction level that is strikingly authentic. Such progress, in
devices like Enigma or RealDoll, poses the risk of individuals favouring AI interactions over human connections.

Isolation and a skewed perception of human relationships are other risks that need to be mitigated as AI
companions, customised to individual preferences, challenge traditional human bonding dynamics. These advances
raise significant ethical concerns, particularly regarding data privacy. The collection of sensitive data including
personal desires, needs and information, demands strict ethical standards and robust security measures to
prevent breaches that could affect users adversely.

As AI use cases expand, in the adult entertainment sector and beyond, it is also reshaping the workforce,
re-igniting debates about the role of AI in employment and hinting at a future when AI-supported individuals might
outperform those without such advancements. With AI becoming more integral in our lives, from work settings to
our most private moments, it is essential to understand and embrace its influence, ensuring ethical and secure
use. Embracing AI’s role is crucial as we venture into a future when it can not only aid but also enrich our daily
lives.

‘ Machine unlearning must gain a prominent role in love AI ’

— Balint Gyevnar in Love, Sex and AI essay, University of Edinburgh, UK

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Strategic opportunities
: Taking inspiration from Riley Reid and Caryn Marjorie’s approach, explore ways to integrate AI in your
business to stay on top of the curve, from optimising routine tasks to augmenting your product portfolio

: Consider how your brand can harness AI and consumer data to develop hyper-personalised products, like
Enigma utilising users’ touch patterns to generate one-of-a-kind erotica, catering for the growing consumer
demand for bespoke experiences as acceptance of robotic intimacy grows

: Get ahead of legislation and embrace machine unlearning by implementing robust data privacy policies
ready for the AI revolution. Ethical data management can be turned into a competitive advantage, building
consumer trust and loyalty

Further reading

AI Companionship Market Sensory Sex Toys

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 EROTIC-TAINMENT
By Holly Friend and Gabriela Białkowska
06 : 08 : 2024 Sex : Entertainment : Erotica

A backdrop of sex-averse culture is only making audiences

thirstier, leading to an explosion of entertainment that brings
smut to the masses.

Drivers: what’s happening

Love Lies Bleeding, US Love Lies Bleeding, US Love Lies Bleeding, US

All signs have been pointing to the death of the adage ‘sex sells’. In October 2023, a study by UCLA found that
people aged 13–24 want to see less sex on tv and in films, with 47.5% reporting that the majority of on-screen sex
is ‘unnecessary’. This came after a year of media headlines reporting the rise of the ‘puriteens’ – sex-averse Gen
Zs who are rebelling against Millennials’ rampant sex-positivity.

It’s not coincidental that the media has also been shying away from sex. ‘We’re still in the post-#MeToo fallout
where any sex acts on screen have to be portrayed in unambiguous terms,’ Emma Garland, creator of Gabrielle,
a newsletter about desire, tells LS:N Global. ‘So many executives simply choose to eschew them.’

As RS Benedict writes in the viral op-ed Everyone is Beautiful and No one is Horny, this has led to Hollywood
movies becoming increasingly sterile and sexless, even as they have become aesthetically sexier. ‘Actors are
more physically perfect than ever. Even background extras are good-looking,’ she writes, referencing the muscular
physiques that make up the DC and Marvel universes.

More recently, the remake of disaster movie Twisters drew criticism for removing all scenes of physical intimacy
between its romantic leads. ‘It speaks to our deep conflict with intimacy right now as a culture,’ story consultant
John Bucher tells the Hollywood Reporter. ‘We are avoiding it altogether because it’s too messy or
complicated.’

But where sex was ubiquitous in the 2010s, it’s against this backdrop of purity that a new era of horny media is
able to resurface, with shock value. Whether it’s Hollywood borrowing from SpicyTok or R-rated video games, on-
screen sex is becoming more honest, weird and unashamed.

‘ We’re still in the post-#MeToo fallout where any sex acts on screen have to be
portrayed in unambiguous terms ’
— Emma Garland, founder, Gabrielle

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 Erotic-tainment

Case studies: what’s new

Challengers, US

Watch this video here

Hollywood gets sexy again

The biggest box office hits of the year are challenging the assumption that audiences are turned off by sex on-
screen. In 2023, Poor Things and Saltburn brought transgressive kinks typically reserved for arthouse cinema to the
commercial masses, while this year’s sapphic noir Love Lies Bleeding made steps to sexualise the pumped-up
perfection of women’s body-building culture. But the films that aroused the attention of young audiences the most
were those that swapped explicit sex scenes for micro-moments of erotically-charged intimacy. Take The Idea of
You, which began as steamy Harry Styles fan fiction and centred on an age-gap romance, as well as Zendaya’s
love-triangle romance Challengers, which inspired a cheeky marketing campaign among US cinemas to offer
‘throuple’ discounts.

Jouissance, UK Jouissance, UK

Gen Z drive audio erotica

Audio erotica app Quinn is entering its viral era, after launching in 2019. In 2024 the app experienced 440% year-
on-year revenue growth, which the company has attributed to a growing Gen Z listenership. According to
metrics, about 56% of its users are between the ages of 18 and 24. TikTok may be behind the trend: after all, the
social media platform is the home of BookTok, which has popularised the genre of spicy ‘romantasy’ fiction. Quinn
has cleverly identified the tropes of BookTok, such as ‘enemies to lovers’ and co-worker affairs, turning these into
categories for its steamy audio stories. Its new series The Queen’s Guard stars Andrew Scott – whose role as
Fleabag’s ‘hot priest’ has made him one of Gen Z’s babygirl icons – showing that Quinn is using celebrity cameos
to speak to its young audience’s desires.

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 Erotic-tainment

Video games get X-rated

Video games have gone through a seachange in recent years, shedding their associations with teenage boys and
shoot-em-ups and becoming more intelligent, inclusive and empathetic. However, new games including Stellar
Blade and Hades have hit headlines for their recognition – and ownership – of something that is an essential part
of fandom: thirst. Cue kissing commands, polyamorous relationships and a campaign to ‘free’ a character’s
wardrobe from censorship. And in what has been described as a ‘watershed moment in gaming’s history’, players
of Baldur’s Gate 3 have the chance to have sex with a bear – an idea originally surfaced by its fan community.

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 Erotic-tainment

Analysis: what this means

The Sims 4 Lovestruck Expansion Pack, US The Sims 4 Lovestruck Expansion Pack, US The Sims 4 Lovestruck Expansion Pack, US

In reaction to the readily accessible pornography of the 2000s, entertainment has become sexually cautious in
recent years, creating a damaging cycle that leads young people back to porn. ‘It makes sense that this media
landscape would raise a younger generation afraid of sex, because they haven’t been provided with real stories
about it,’ explains Garland.

Although shows like Sex Education have made steps to educate the younger generation on the diverse realities of
modern sex, Gen Z are gravitating to the less pristine, more candid shows from the pre-intimacy-coach world –
think Girls, Skins and Sex and the City.

The media narrative will need to shift as the so-called sex recession reaches its end. Recent research by
eHarmony reported that Gen Z are having the most sex among any generation, with 36% having more sex now
than they were a year ago. Meanwhile, Lovehoney found that Gen Z had the highest level of sexual satisfaction in
the UK, with 48% saying they were satisfied with their sex lives.

Going forward, Garland believes that the Gen Z-ification of arthouse cinema could lead to more daring erotic content
that matches this generation’s sexual appetite. ‘Ticket sales for Poor Things came predominantly from under-35s,’
she says. ‘The industry will always follow the money, so hopefully this means phasing out franchise blockbusters
and seeing more independent releases that will take risks on weird and playful sex.’

Strategic opportunities
: Bet on honest representation of sex
With Hollywood’s depictions of sex swaying towards the fantastical or the violent, young people lack a
cultural output showing the mundane, gross and embarrassing sex that will make up much of their dating
lives.

: There’s no place for taboos

BookTok and fan fiction have become breeding grounds for new romantic tropes, desire dynamics and
unexpected sex symbols, so don’t be afraid to look to social media trends for clues about what turns on
Gen Z

: Flirt with your audience

Where The Idol turned off viewers with gratuitous sex, Challengers succeeded in using sexual motifs,
innuendos and cheeky marketing to reach a generation who grew up in the age of Pornhub

Further reading

Trends : Micro Trends 4 of 5

 Erotic-tainment

Reading Raves Gen Z Now and Next

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