OpenAI recently achieved a remarkable feat of surpassing 1 million subscribers, with each subscriber paying around $20 (or potentially more for Teams and Enterprise offerings). However, astonishingly, despite this substantial number of subscribers and their payments, it doesn’t seem to be sufficient to keep the company financially stable given that hundreds of millions of people freely utilize the chatbot.
According to The Information, there are reports indicating that OpenAI is currently contemplating a substantial increase in its subscription prices to an astonishing $2,000 per month for access to its latest models. Amidst rumors of potential bankruptcy, this move is being mulled over. Citing early internal discussions, The Information reveals that OpenAI is reportedly considering a whopping 9,900% hike in the price of access. Yet, there is no official word as of yet regarding the rationale behind such a significant step. It remains unclear whether this price increase would apply to the current ChatGPT service running on the GPT-4 model or to the upcoming Strawberry and Orion models.
Anyone can freely utilize OpenAI’s ChatGPT service. However, subscribers enjoy priority access to the AI model during peak usage periods, early access to new features, and the ability to create custom GPTs. Notably, the company only recently unveiled its Dall-E image generator from behind the paywall. Considering the various aspects involved, between hardware procurement, data center infrastructure, energy consumption, and cooling requirements, not to mention the substantial cost of actually training a large language model, generative AI is indeed a costly endeavor. OpenAI, arguably the industry’s benchmark, has reportedly spent a whopping $7 billion on training its models (compared to a relatively modest $1.5 billion on staffing). It is projected to face losses of $5 billion (with a “B”), and based on projections, could potentially be filing for bankruptcy within the next year. However, a recent round of funding from investors is likely to postpone the need for drastic financial actions.
OpenAI is also contending with increased competition from the rest of the generative AI field. Google and Anthropic are continuously refining more proficient and capable chatbots while matching OpenAI’s current subscription pricing. Additionally, Apple Intelligence is expected to start rolling out to mobile devices and the desktop next month. This news arrives at a time when investors are growing increasingly anxious about the amount of money companies like Google and Microsoft are investing in AI technology without clearly seeing a highly lucrative path to profitability.