OpenAI is still struggling to find a profitable business model. Even the new, relatively expensive ChatGPT Pro costs more than it brings in.
OpenAI CEO Sam Altman said on Sunday that the company is currently making a loss on its $200-a-month ChatGPT Pro subscription. This is because people are using it more than the company previously thought. Altman himself admitted on X that he personally set the price at launch. He expected then that the subscription fee would be enough for OpenAI to make money with the service.
Faster version of ChatGPT
ChatGPT Pro, launched late last year, provides access to an upgraded version of OpenAI’s o1 reasoning AI model, the o1 pro mode, and lifts limits on several of the company’s other tools, including the Sora video generator. In addition, the Pro version is able to look at generated content (more) carefully, which should reduce hallucinations.
As Techzine has written many times before, OpenAI is not profitable. This is despite the fact that it has raised about $20 billion in investment since its inception. The company reportedly expected losses of about $5 billion last year on revenue of $3.7 billion.
CNBC reported that OpenAI, the maker of ChatGPT, expects losses of about $5 billion this fiscal year on revenue of $3.7 billion. Expenses such as personnel costs, office rent, and AI training infrastructure are to blame. At one point, ChatGPT cost OpenAI an estimated $700,000 a day.
Restructuring the company
Recently, OpenAI admitted that the company needs more capital than it had imagined. This is as it prepares to restructure to attract new investment.
That restructuring would turn the company into a “normal” profit-oriented business. Currently, the organization still has a non-profit board. However, this proposed transition is leading to much criticism, including from Elon Musk.
More expensive subscriptions
To achieve profitability, OpenAI is reportedly considering raising the price of its various subscriptions. The company optimistically projects that sales will reach $100 billion by 2029, equivalent to Nestlé’s current annual sales.
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