Despite its half-a-trillion-dollar valuation, the reality is that OpenAI is almost certainly burning through cash at an alarming rate.
According to recent filings, the ChatGPT maker lost a whopping $12 billion last quarter alone. Yet, it wants to spend well over $1 trillion over the next several years, once again stoking fears over an AI bubble that could wipe out the entire US economy if it were to burst.
Even its AI video-generating app, Sora, which debuted in late September, is likely costing the company an astronomical amount of money to run, as Forbes reports. The app — which is currently being used to spew a disturbing quantity of largely meaningless AI slop onto the web, but is still only available for a minuscule number of early users — could already be costing the firm $5 billion a year, or roughly $15 million per day, according to the publication’s estimates.
A single ten-second clip could cost OpenAI roughly $1.30, Cantor Fitzgerald analyst Deepak Mathivanan told Forbes.
Even OpenAI’s Sora lead Bill Peebles admitted in an October 30 tweet that the “economics are currently completely unsustainable.”
While we don’t have a strong sense of the accuracy of Forbes’ estimates, as they rely on “several moving targets,” such as fluctuating prices of AI chips, efficiency, and the number of users and videos being generated, the bottom line is that it’s staggeringly expensive to run a large-scale video-generating app.
Using AI to generate video is vastly more resource-intensive than having a tool like ChatGPT output text, which already requires vast amounts of resources.
Besides an enormous and growing carbon footprint, making financial sense of OpenAI’s foray into AI video slop remains difficult. In an early October blog post, OpenAI CEO Sam Altman admitted that the company launched the app in the absence of a sound financial plan to recoup the enormous costs of running Sora, let alone meaningfully address glaring copyright infringement issues that persist to this day.
“It’s a classic internet playbook to not focus on the costs initially so much as building an audience and building an engagement because we’ve seen time and again, these companies can figure out ways to monetize this engagement,” financial group Mizuho analyst Lloyd Walmsley told Forbes.
Late last month, OpenAI started limiting users to 30 free videos per day and started charging $4 for roughly ten additional videos beyond the daily limit.
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