Companion robots are embodied AI's first real market

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Companion robots are embodied AI's first real market

Fuzozo looks like a plush toy small enough to clip onto a bag. But the little robot has become a big hit: it costs 399 yuan ($55) and has sold nearly 300,000 units in China since launching in July 2025. Robopoet, the Shanghai company behind it, says many users talk to Fuzozo for more than 40 minutes a day.

The robot is one of a growing class of products known as "cyber pets" or "companion robots," many of which are on show at IFA Berlin this month. Some look like animals, some walk around on their own, while others burp, purr or simply sit there and talk to you. Few have any function beyond providing company, but they are proving to be embodied AI's first real commercial success.

Consumer robot maker OlloBot explores the rise of companion robots and what their early success says about the future of embodied AI.

Where the commercialization is

Embodied AI, simply put, refers to AI systems that can perceive and interact with the physical world. The category is most commonly associated with humanoid robots, which have gone viral over the past year for falling over, dancing and generally doing things that look more entertaining than useful. But there is serious money behind the hype. Goldman Sachs Research puts the global humanoid market at $38 billion by 2035. Morgan Stanley Research forecasts a $5 trillion market by 2050, with more than 1 billion machines in service.

Yet, the industry is still struggling to decide what exactly these humanoid machines are for. Will they be used mainly for factory work, assisting older people or dancing at trade shows? Zhu Xiaohu, managing partner at GSR Ventures, put it well: "Every humanoid robot can do somersaults, but where is the commercialization?"

Companion robots, by contrast, may not be able to do somersaults, but they are already selling in large numbers. Fuzozo, which GSR Ventures now backs, moved roughly 40,000 units during China's 618 shopping festival in June. Haivivi's BubblePal, a clip-on charm that turns any soft toy into a talking one, claimed more than 300,000 units at its U.S. launch in April.

So why are companion robots delivering sales so much faster than their humanoid equivalents?

One reason is that the need for companionship is hardly new. The World Health Organization reported last year that one in six people worldwide experience loneliness. It found the highest rates among people aged 13 to 29, with between 17% and 21% reporting loneliness.

Pet ownership has traditionally helped ease feelings of isolation. More than 1 billion pets live in households worldwide, and in a survey by the Human Animal Bond Research Institute, 98% of owners reported at least one health benefit from their animals, including reduced loneliness.

But not everybody can have a pet. That includes renters whose leases prohibit them, residents of care facilities, frequent travelers, people with allergies and older adults concerned about outliving an animal. Then there are people who simply don't like fluff on the sofa.

From fixed behavior to language models

The idea of making robots that can substitute for pets has been around for decades. R2-D2, K9 and Doraemon sold the world on machines that could keep people company long before it was possible to build one. But in reality, most things marketed as "robot pets" haven't come close to simulating the relationships people enjoy with their animals.

The most famous historically was Sony's Aibo, a robotic dog that launched in 1999 and sold in large numbers. However, it was limited by its fixed behavior. Aibo could respond to touch and roll over like a real canine, but it could not tell one owner from another, and nothing you said to it would change how it behaved the next day.

If all you wanted was companionship, a teddy bear did just about as well as Aibo and never needed charging.

The second reason is technological. Large language models, and advances in AI more broadly, have freed cyber pets from limited programmable behaviors. Put an LLM inside Aibo and you get something that can listen, answer in its own words and remember what you told it last week. That is the premise behind the current generation of devices at IFA.

Studies suggest LLMs can be surprisingly good at producing empathetic responses. In a 2023 JAMA Internal Medicine study, licensed clinicians rated chatbot answers to patient questions as empathetic or very empathetic 45.1% of the time, compared with just 4.6% for responses from physicians.

That ability helps make this generation of cyber pets a plausible alternative to keeping an animal: less mess, less maintenance, but still capable of providing comfort to their owners.

The growing pains of a fast market

None of this is to say the sector's success has been without controversy. The massive demand for these products has prompted many companies to rush their own versions to market, and some have been careless about who they sell to and what they ship.

Many companion robots are marketed as toys, but the language models that power them require serious safeguards before they are suitable for children. U.S. PIRG tested four AI-enabled toys last year and found that some would discuss sexually explicit material and tell a child where to find matches and knives. Common Sense Media has advised against these products entirely for children aged 5 and under.

In other cases, children have woken up to find their robot pets effectively dead after the company running them went out of business. Embodied Inc.‘s $799 Moxie companion stopped working after the company shut down because all of its interactions depended on the company's servers. Owners had no way to keep the product running.

These problems are relatively easy to fix. Devices should be able to run locally, and companies need to set appropriate age ratings. Nobody wants any old chatbot to be reading their children a bedtime story. But most importantly, these are complications of a young industry moving fast, not one that has failed to find buyers.

The humanoid sector has the opposite problem. The demonstrations are impressive and the forecasts are enormous, but the question Zhu raised about commercialization remains unanswered.

Humanoids may eventually find their place in factories and hospitals. But embodied AI's first real market is already here: the home, where people are buying robots simply for companionship.

This story was produced by OlloBot and reviewed and distributed by Stacker.