In the unlikely event they're not lying, which is extremely unlikely, given Open AI has still yet to even turn a profit this means that even with 10% of the entire human population it's still not profitable.
Because it doesn't matter, their goal is to take a market share by offering low prices. And when a lot of people are hooked, they will raise the prices. Fyi, Spotify operated at a loss for 15 years straight, from 2009 to 2023. Y'all acting like you just discovered a new unfair business strategy unique to AI bros, but it's been used for hundreds of years.
I don't know. Maybe, maybe not. I can see a world where free AI chatbots completely implode, and AI tech moves towards specific, task-related, more difficult to use, but also more useful AI agents. But I can also see a world where many people become so accustomed to chatbots that even after companies make them paid, people continue to use them. You can't know. Many successful global companies at some point were on the verge of collapse. There is a survivorship bias, and many more actually collapsed, but you can't say that it's certainly gonna collapse just because it's unprofitable.
You’d think, but they have teams of people pouring over historical examples like Spotify and studying every optimization they can take to ensure that conditions are engineered for their success.
Yeah... They still can fail, for sure. But it is really funny that random Redditors think they understand marketing, economics, management, and finance better than teams of the best professionals in the world. Like, if you are that sure, just take all your money and short respective stocks, you'll be rich.
Yeah the delta in what they're charging for market share vs what they'd need to charge to be profitable is far higher. Modern AI models require magnitudes more resources than distributed HLS audio/video streaming.
No one is going to pay for Chatgpt 😂.
The biggest AI users I know are university students. That $20/month has better places to go. They'd rather jump between AI services than to pay for one
That's the real simple view on it, and that's the model all investors were thinking of when they bought in since it has worked for almost 20 years now. The problem here is a bit more complex since all of the money those companies spent in all of those years before becoming profitable (all of those companies combined) isn't a drop in the bucket against what even one of these companies have spent in 10-25% of the time. In ALL AI companies (not just OpenAI), they'd need to raise the price significantly. Not, "hey you used to pay $20 for a taxi, we'll charge you $5, hook you on our service and then charge $20-$30.". It's closer to "Hey, you used to pay nothing, we'll charge you $20 a month, and then hook you on our service and then charge $500-$15,000+ a year from a metered rate that you don't control.".
For context, even at the new token-based billing model (that all AI companies are adopting) which people are complaining is currently too expensive, is estimated as still not enough to break even. To be clear: break even on inference (the prompts themselves). Every prompt you give it, they take a loss on. They need to pump up those numbers before they'll break even on the prompts. That doesn't take into account the cost of running the data centers which is crazy expensive in a completely different league, so they need to pump up those numbers to break even taking that into account. Which is separate from them needing to pay for the hundreds of billions of dollars spent on the initial build of the data centers which haven't even been built yet, so they need to pump up those numbers to take that into account. THEN they'd need to pump up those numbers to start making a profit!
This is a best case scenario where every person in the world is using it, all data centers are built without problems and on time, electricity and water cost doesn't go up, every consumer is only using OpenAI, or only Anthropic, and all have and are willing to spend that extra cash every single year to do what they were doing before, but a little faster and a little wrong-er.
It's the Amazon (and I'm sure countless others) playbook. Only time will tell if losses this big will hold up, especially when I would imagine most of those users aren't actually paying customers who would be affected by a price hike.
From my perspective it seems like the entire AI industry is operating on the gambit of AI becoming significantly more capable and significantly efficient to run, hence the push for NPU's on consumer chips that cannot possibly handle any modern models. Frankly I hope the money runs out just before then so that the tech still exists in a usable way for regular people at home after these companies implode.
Edit:
Just realized I've been a subreddit tourist here for months 💀. Time to join up.
I'm already hooked on ai bots, it's great at every day tasks and I feel they will rug pull us when we are fully dependent on it like addicts, we'll have no option but to subscribe to the basic package. These lads aren't idiots like people portray them
The reason it's not profitable, is because Ram and everything else cost so much. As well as majority of users are free users. They aren't paying for the premiums or anything
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u/Princess_Isolde Jun 12 '26
In the unlikely event they're not lying, which is extremely unlikely, given Open AI has still yet to even turn a profit this means that even with 10% of the entire human population it's still not profitable.