Despite efforts in the development of GPT-3.5 and GPT-4 models, OpenAI is yet to achieve a revenue level that covers its expenses. The company might face financial difficulties by 2024
OpenAI, a leading AI studio known for initiating discussions about AI among individuals without technical backgrounds, is grappling with significant challenges. In its attempt to establish itself as a frontrunner in generative AI through its AI chatbot, ChatGPT, led by Sam Altman, the AI development studio is on the brink of potential financial crisis, as revealed in a report by Analytics India Magazine.
Reportedly, sustaining just one ChatGPT in OpenAI’s AI services costs approximately $700,000 (over ₹5.8 crore) per day. Consequently, OpenAI, under Sam Altman’s leadership, is swiftly depleting its financial resources. Despite efforts to monetize GPT-3.5 and GPT-4 models, the company has not yet reached a revenue level that covers its expenses.
While OpenAI and ChatGPT initially experienced a robust launch with record-breaking adoption during their early phases, recent months have shown a gradual decline in user engagement. According to SimilarWeb data, July 2023 witnessed a 12% decrease in user base compared to June, dropping from 1.7 billion to 1.5 billion users. This data specifically pertains to users visiting the ChatGPT website and doesn’t include users utilizing OpenAI’s API.
OpenAI’s API also contributes to this situation. Several companies, initially concerned about using ChatGPT for their employees, have now started gaining access to OpenAI’s API, enabling them to build their own AI chatbots for various workflows.
However, as highlighted by Analytics India Magazine, the issue lies in the availability of open-source large language model (LLLM) frameworks like GPT. These can be freely and independently used without the constraints of usage and licensing hurdles. Consequently, these outlines can be cautiously prepared and tailored to fulfill specific organizational use cases.
In December 2022, a few months after its launch, Altman acknowledged the significant operational costs associated with the AI company and ChatGPT. This led to the adoption of monetization strategies. Presently, these costs are being underwritten by recent investors, including Microsoft. However, the ongoing operational costs, coupled with OpenAI’s sluggish revenue generation, present a formidable challenge until the company manages to effect substantial changes.
While giants like Google and Meta are often seen as OpenAI’s primary competitors, attention should also be given to Elon Musk and his xAI projects. Musk, long engaged in AI pursuits, particularly due to his association with Tesla, has made significant advancements in the AI domain since the viral success of ChatGPT. Musk publicly announced his intention to develop an opposing chatbot called “TruthGPT,” aiming to mitigate biases and misconceptions associated with OpenAI’s ChatGPT. Additionally, it was revealed that Musk invested over $10 million in over 10,000 NVIDIA GPUs for his AI initiative, besides significant expenditure on human resources and data center operations to train xAI algorithms.