OpenAI’s ChatGPT, a popular language model-based chatbot, is reportedly facing financial challenges, raising concerns of a potential bankruptcy by the end of 2024. The user base for ChatGPT has declined in the last two months, and the operational costs are adding up to a staggering $700,000 (Rs 5.80 crore) per day for OpenAI.
Analytics India Magazine has claimed that the drop in users and the high operational expenses are draining OpenAI’s financial resources. To sustain its operations, OpenAI is currently being supported by investments from Microsoft and other investors. However, if the company fails to become profitable soon, these investments could be depleted.
Despite launching paid services for GPT-3.5 and GPT-4, OpenAI is struggling to generate sufficient revenue to cover its costs. This puts a strain on the company’s financial health, and it heavily relies on the $10 billion (Rs 83,000 crore) investment from Microsoft. OpenAI anticipates annual revenue of $200 million (Rs 1660 crore) in 2023 and $1 billion (Rs 8200 crore) in 2024. However, given the current situation, achieving these revenue targets appears unlikely.
ChatGPT was introduced by OpenAI in November 2022, but since its launch, the company has incurred a loss of $540 million (Rs 4479 crore) by May 2023. Additionally, there has been a noticeable decline in the number of ChatGPT users, with a 12% drop in July 2023 compared to June. The user count fell from 1.7 billion to 1.5 billion.
ChatGPT is renowned for its ability to assist users in various tasks, such as writing emails, creating CVs, providing Reel suggestions, and offering ideas for making videos go viral. Developed by OpenAI, ChatGPT is based on the GPT-3.5 and GPT-4 models from OpenAI’s proprietary generative pre-trained transformer series. It utilizes supervised and reinforcement learning techniques to fine-tune the models for conversational applications.
Initially released as a freely available research preview, ChatGPT now operates on a freemium model. Free users can access the GPT-3.5 version, while paid subscribers, under the name ChatGPT Plus, gain access to the advanced GPT-4 version and priority features.
OpenAI, founded in 2015, is an AI research laboratory consisting of both a non-profit organization, OpenAI, Inc., and its for-profit subsidiary, OpenAI, L.P. The company’s primary focus is on developing safe and beneficial artificial general intelligence. Their goal is to create highly autonomous systems capable of outperforming humans in economically valuable tasks.
The financial struggles faced by OpenAI, specifically related to ChatGPT’s declining user base and accumulating expenses, raise concerns about the company’s solvency. With the support of its investors, including Microsoft, OpenAI hopes to turn the tide and improve its financial situation. However, the road to profitability may require significant changes and adjustments to ensure sustainability in the long run.
