Where is the actual financial modelling? This is pure speculation?<p>I understand being bearish and frightened of AI but this accounts for absolutely NOTHING, and especially doesn't include any projections on potential ad revenue which is likely going to be huge given their DAU and what you can extrapolate their ARPU to be based on other big tech advertisers.
>Where is the actual financial modelling? This is pure speculation?<p>Every doom and gloom article about OpenAI is almost always speculation, with no actual evidence backing the claims. The issue is that people love a good "AI is going to fail" story, so it gets shot up to the front page. Unfortunately, some journalists now know that it can rake in clicks, so they will happily reduce their journalistic integrity to ride the wave.
As the article pointed out, there is no moat. There’s no reason to think they’ll be more successful with ads than MySpace was versus Facebook.
From what I understand of the advertising market, companies like Google and Facebook make bucketloads of ads primarily because they own so much of the vertical integration of ad markets. Meanwhile, the way OpenAI appears to be integrating ads makes it seem to me that they're positioned only to take the smallest slice of the pie--a place to hoist ads--which means they're revenue-per-user I would estimate to be a lot closer to, say, a newspaper website than the biggest of social media sites, or maybe along the lines of Twitter or Tumblr, which never posted spectacular profits.
Altman saying they are going to spend a Trillion+ is (if anything) an anti signal to what the actual financial plan looks like. He is way out front as the hype man and booster. Most of what he says is wishful thinking or an outright lie.
One problem with OpenAi advertising is that users are already moving towards Gemeni, which isn't advertising.<p>Chatgpt is mostly worse than Gemeni too (arguably) and isn't nearly as rate limited. So they're already losing users and making their product a worse experiance than their competition.<p>Sure OpenAI will make some money from ads but will it be anything close to what it takes to quench the amount of money they're burning? It seems unlikely to me. They really need to be bought out by a sugar-momma who can afford to play this kind of game like MSFT.
OpenAI hit 800M weekly average users and communication to OpenAI investors from this week state:<p>> "Both our Weekly Active User (WAU) and Daily Active User (DAU) figures continue to produce all-time-highs (Jan 14 was the highest, Jan 13 was the second highest, etc.)"<p>This does not indicate that they're losing users, at all...
Ahh, maybe they're not losing users after all. I was thinking about market share as reported in several articles. I assumed if they were losing big lumps of market share they had to be losing users too, but I guess you can still grow even so.<p><a href="https://www.bleepingcomputer.com/news/artificial-intelligence/chatgpt-is-losing-market-share-as-google-gemini-gains-ground/" rel="nofollow">https://www.bleepingcomputer.com/news/artificial-intelligenc...</a>
How do we know that ad revenue will be huge? 80% of the questions that I ask can't be monetized because they're not about purchase intent. And even if they could, has OpenAI built an auction system to bid on keywords? How exactly will all this work and be streamlined in the next 18 months to the point that it could generate the revenue they need to keep with the ridiculous investment requirements in infrastructure?
The thing i keep coming back to is that an LLM backed query is so, so much more expensive than a typical web request. What kind of advertising is going to align in the value necessary to cover those costs, plus margin? Chatbots aren't YouTube, users aren't going to sit through 30 second ads, I don't think.
OpenAI have signed something like $1.5tn worth of future spending deals as of the end of last year whilst making something like $13bn of _revenue_ for the year. There's no way that any of this can add up
> ad revenue which is likely going to be huge given their DAU and what you can extrapolate their ARPU to be based on other big tech advertisers.<p>Ad revenue doesn't come out of thin air. Unless budgets and TAM in the ad space increase (hint: they won't), the spend has to mostly come from cannibalizing META and Google. In that regard, I wish them luck - that will be a long and bloody battle. And both the established players can fight it longer than OAI because they have actually revenue streams and strong cash balances.
It honestly doesn't matter.<p>Sometimes these "articles" are sent out as thinly veiled "press releases" prior to an new round of investment. Sometimes someone who thinks they are a "reporter" has what they think is an "exclusive" or a "hot take". Regardless, as someone who has spent all of his career in startups...this is...business as usual. Another round of funding/financing will commence. Open AI will be fine unless investors lose confidence in AI. We won't know how it will play out until it plays out. Media outlets reporting on this are playing off the AI bubble hype for clicks. (Yes, we are in a bubble. No, nobody knows when it will pop, nor how bad it will be, ad driven company just wants more ad revenue, nothing to see here, move along.)