Workshop Exercise 1

115.116 Introduction to Marketing

Soul Machines

Purpose of the Workshop Exercise

This case study exercise will:

• Encourage a systematic approach to developing a basic SWOT analysis.

Assessment criteria

In the workshop exercises, you will be assessed on your:

• Explanation of the concepts you are being asked about.

Tasks

• Complete your study of Weeks 2 and 3 (read textbook chapters 2-3) and watch the
corresponding lecture recordings.
• Read the “Soul Machines” business case carefully.

Fill out the “Question & Answer sheet” (found in the Assessments section of the Stream site) and
complete it and upload it to Stream by 11.55pm (NZ time) Sunday 6th August 2023.

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Soul Machines: The Kiwi digital human
company taking on the world

Soul Machines and Microsoft partner to deliver digital humans with emotional connections to
users (image source: Microsoft News Centre).

Ever spent time online struggling to have your problem solved by a Chatbot and wished you had
a human to deal with your issue? For many companies, the desire from customers for immediate
feedback at odd times of the day (or night) and the sheer volume of requests means digital
customer service support is required. But this can also irritate customers, who are left feeling like
they have interacted with a robot. Soul Machines was founded in 2016 by Auckland entrepreneur
Greg Cross and Academy Award winner Mark Sagar with the goal of bringing digital customer
service to life and creating a more “human” experience. The company specialises in creating
digital avatars that have the ability to interact with users and read their emotions, and in turn
create facial expressions and movement that responds to them. The result is an immersive
experience with the impression of empathy, that helps customers feel a personal connection to
the brand.

The idea for digital humans came from Sagar’s work in film. As an engineer at the University of
Auckland and an avid sketcher, Sagar was interested in how to recreate human expressions
through digital animation. In the 1990s, he began work with a medical company looking to

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develop a surgical robot for eyeballs. From there he joined a spin-off company from the
Massachusetts Institute of Technology that was focused on mapping the expressions on actor Jim
Carrey’s face (University of Auckland, n.d). Carrey was chosen for the particularly elastic
expressions he had on his face, iconicised through movies such as Ace Ventura: Pet Detective
(1994), Dumb and Dumber (1994) and The Mask (1994). The goal was to map Carrey’s face
with thousands of tiny dots that captured the muscles involved in facial expressions, creating a
computer programme that could then be applied to other animations. The technology also
allowed Sagar to capture realistic lighting, recreating how an actor’s face could be illuminated
from 500 different angles (University of Auckland, n.d.). The technology was a significant
advance in the creation of realistic looking digital characters, and was used in the films King
Kong (2005), Avatar (2009), Spiderman 2 (2004) and The Curious Case of Benjamin Button
(2008), winning Sagar two Academy Awards.

Connecting with Cross, Sagar formed Soul Machines with the objective of commercialising the
technology into other branded contexts. The company is headquartered in the tech hub of San
Francisco, with their development labs based in Auckland. They managed to secure $7.5 million
in Series A funding to get the company up and running (Sebastian, 2020). Soul Machines aimed
to create autonomous artificial intelligence that mimics the human brain by realistically mapping
human physiology, cognition and emotion to create digital customer service characters that can
respond to the customer’s emotions and queries in an appropriate way. IBM’s Watson
technology provides conversational support, with the computer’s web camera functioning as the
eyes of the avatar, and the microphone as the ears, sending signals to the digital person that tell it
the appropriate way to respond. In 2017, Soul Machines launched their first digital human,
“Nadia”, for the National Disability Insurance Scheme in Australia. As Cross explains, “the
unique parts of the avatar technology that we’re responsible for is the ability for the avatar to be
emotionally responsive,” he says. “If Nadia detects that you’re upset about something, she may
respond instantaneously to be more empathetic, for example. This is the way in which we’re
utilising the human face as a next-generation leisure experience between humans and machines”
(Strang, 2017). The idea is that large brands will be able to create a personalised experience that
is scalable to many customers at once, that hopefully builds more trust than a traditional chatbot
experience.

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Soul Machines have developed digital humans for companies like Nestlé Toll House, Proctor &
Gamble, and Twitch. The New Zealand Police Force uses a virtual “Ella” in their Wellington
headquarters to meet and greet visitors. In 2021, Soul Machines announced a five-year
partnership with Microsoft to advance artificial intelligence across their Azure platform
(Microsoft, 2021). As well as customer service applications, the digital humans have also been
used in coaching programmes. In October 2022, Soul Machines partnered with the World Health
Organization to release Florence 2.0, a digital human that offers mental health advice and tips on
how to quit smoking in seven different languages (World Health Organization, 2022). The same
month they produced “Coach Jenny” for Calocurb, a 24-hour coaching health and fitness service
(Schwartz, 2022a). Soul Machines have also entered into producing virtual celebrities. In 2022,
they launched a virtual Jack Nicklaus, preserving the 82-year old golf star in his 30s (Schwartz,
2022b). The virtual Nicklaus is a part of their expansion into entertainment, with the company
launching a new Entertainment Division in Los Angeles on the back of a successful US$70
million investment round in 2022 (NZ Tech, 2022). Other celebrities the company has digitized
include NBA All-Star Carmelo Anthony and the Black Eyed Peas singer Will.I.Am. The
company is currently partnering with Authentic Brands Group to produce a digital version of
Marilyn Monroe, and a digital version of K-pop superstar Mark Tuan is in the pipeline (NZ
Tech, 2022). In doing so, the company hopes to capitalise on the market for brands seeking to
establish a retail or advertising presence in the Metaverse, a virtual and immersive 3D world that
many see as the future of the internet. Examples of Metaverses include Meta’s Horizon Worlds,
Roblox, IMVU, Decentraland, and Electric City. Bloomberg predicts the Metaverse market will
be worth nearly $800 billion by 2024 with a large proportion of its value driven by gaming
(Bloomberg, 2021). Brands such as Nike, Coca Cola and Gucci have already moved to establish
a presence in this space.

Despite Soul Machines’ success, they are not the only players in the market. Examples include
Metaphysic.ai’s debut of a digital Simon Cowell on America’s Got Talent in 2022, Star Trek star
William Shatner’s digital version of himself with company Storyfile, and Kiwi company
Uneeq’s attempt to capitalise on the growing market for digital workforces. Uneeq have also
produced a digital Albert Einstein, where users can interact with Einstein to learn about science

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and his life. While Soul Machines are early pioneers in this space, the technology market moves
fast. Competitors are able to emulate technology quickly and may develop advantages or provide
lower prices. For example, competitor Uneeq now offers companies the ability to develop an
avatar for free, with its use per month starting at USD $900 per month (Uneeq, n.d.).
Partnerships with larger companies that provide greater access and reach, such as Soul
Machines’ partnership with Microsoft, are an important part of the strategy to continue to grow
their market. Companies selling digital humans must also convince brands of the importance in
investing in this area and going beyond traditional digital solutions for service. Eventually,
digital humans may replace large sections of customer support, but in the meantime companies
may be reluctant to invest in the technology due to cost, or sceptical of its ability to support real-
time conversation. Soul Machines is also vulnerable to wider movements within the economy
and the technology market. A downturn in the investment start up market in the United States in
response to rising interest rates, inflation, and economic uncertainty due to the war in Ukraine
saw the company confirm in 2022 that they would be looking at restructuring their staff to try
and make their investment capital last longer (Pullar-Strecker, 2022). While Soul Machines has
some challenges to navigate, the potential size of their future market and early entry means their
future looks bright.