San Francisco-based Fable Studio, a VR studio that won an Emmy Award for its “Wolves in the Walls” project, has debuted its first efforts in creating conversational AI virtual beings. Charlie and Beck, two characters that can converse as if they were real people, are Fable Studio’s bet in the future of such virtual beings for entertainment and even companionship. Its first AI being was Lucy, an 8-year-old girl, who starred in “Wolves in the Walls” and is now a standalone online character after the company debuted her in alpha tests last month.

VentureBeat reports that, “such characters are stepping stones to the metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One.” The company’s virtual beings are “powered by the Fable Wizard, an AI tool to bring characters to life through visuals, dialogue, voice, and animation.”

Anyone can sign up to “make friends” with Lucy, Charlie or Beck on the Fable Studio website. According to chief executive Edward Saatchi, “in the six weeks since launching Lucy’s alpha test, the company has received interest from seven-billion-dollar intellectual property companies to use the Wizard to create virtual beings from their characters.” The company is also working on a deal “to co-create a virtual being with a well-known influencer.”

Fable creative director Jessica Shamash explained, “we wanted to build these very intentional characters that people are inspired by and look up to.” “People will be able to hold conversations with Beck and Charlie, as they have been designed to tap AI tech,” she said. The company blends “human-written dialogue with AI responses available through GPT-3 technology.”

“Much of the writing by the humans is about taking the conversations down a ‘golden path,’ or a rewarding story,” said Saatchi. “GPT-3 has an amazing ability to just hold a compelling conversation, a believable conversation … But it doesn’t have a sense of memory.” He noted that, without a sense of memory, “after four or five turns of the conversation, it may ask you a very similar question that we’ve already answered, which would feel disappointing.”

“And then you’ve suddenly broken intimacy, or you’ve created an ‘uncanny valley’ of memory,” he said.

Still, Saatchi believes that, over time, virtual characters will grow in popularity. “In five years, we think every Gen Z person will have an AI virtual being as that close friend,” he said. Currently, the company is “being careful about how many people can have conversations with characters like Lucy … [and is] monitoring to see if people are testing to see how real the character is.”

“We haven’t had anything negative,” Saatchi said. “If you’re doing anything inappropriate, Lucy won’t respond or she might disconnect.”