What you need to know
- OpenAI could reportedly bring ads to ChatGPT to generate more revenue amid bankruptcy reports.
- Sarah Friar, OpenAI CFO, says the AI firm will thoughtfully ship the ads, potentially retaining the chatbot’s minimalist UI.
- CEO Sam Altman seems to be against the idea, referring to it as a “last resort.”
As a tech enthusiast with decades of experience under my belt, I must say that the potential integration of ads into ChatGPT by OpenAI has left me somewhat divided. On one hand, I understand the financial struggles that such a cutting-edge AI company might face, and the need to generate revenue in innovative ways. However, as someone who values clean, uncluttered interfaces and hates intrusive advertising, the idea of ads in my beloved ChatGPT feels like a bitter pill to swallow.
It’s possible that you’ll see advertisements on ChatGPT by OpenAI in the future. During an interview with the Financial Times, their Chief Financial Officer, Sarah Friar, mentioned that they are considering adding ads to the platform as part of a new business model. She emphasized that if this happens, it will be done carefully, meaning the ads will be strategically placed within the chatbot’s user interface.
Although Friar clearly said OpenAI currently has no intention of pursuing advertising, there’s a chance this idea might be implemented down the line, considering their recent hire of Shivakumar Venkataraman, a seasoned expert in Google Search Ads. This leads us to speculate that OpenAI may capitalize on Venkataraman’s advertising knowledge for their own growth and development.
I don’t oppose the idea that OpenAI might entertain advertisements, but personally, I dislike ads overall, and the concept of ads combined with AI strikes me as particularly disturbing.
Nevertheless, there could be a significant obstacle in the way of these plans. During a recent interview at Harvard Business School, OpenAI CEO Sam Altman expressed reservations about incorporating ads into ChatGPT. When asked if OpenAI might consider ads as part of its business model to boost revenue amid bankruptcy rumors, Altman suggested it would be a measure taken only when all other options had been exhausted.
A much-needed last resort
Over the last few months, various reports suggested that OpenAI was close to bankruptcy, predicting a potential loss of $5 billion over the next year. Yet, investors like Microsoft, NVIDIA, Thrive Capital, SoftBank, and others injected $6.6 billion into the company through funding, which boosted ChatGPT’s manufacturer’s market value to $157 billion and gave it more time to operate.
Although the recent funding round appears to have eased OpenAI’s immediate difficulties, it seems further challenges lie ahead. A recent forecast suggests that OpenAI could incur a loss of around $44 billion before turning a profit in 2029. This prediction is partially due to OpenAI’s partnership with Microsoft, as assessed by market analysts and experts.
Since its inception, OpenAI has gone through eight rounds of funding. Yet, the question arises as to why this tech company is rapidly consuming so much money. Despite generating an estimated annual income of around $3.5 – $4.5 billion from ChatGPT and subscription fees for Large Language Models (LLM), a significant portion of its expenses outweighs its revenue. The company spends approximately $7 billion on training its AI models and another $1.5 billion on personnel costs.
Despite the current excitement surrounding generative AI among investors, eagerly spending substantial amounts to secure a share, market experts foresee it as a fleeting trend. A startling report hints that around 30% of AI-focused projects could be abandoned by 2025 following proof of concept, suggesting a potential wane in investor enthusiasm for AI. Consequently, investors may shift their focus and investments to other areas.
Currently, companies such as OpenAI might face potential threats from hostile takeovers or outside intrusions. Notably, experts speculate that Microsoft could purchase OpenAI within the subsequent three years.
It’s well-known that pursuing advancements in AI can be quite expensive. For instance, operating ChatGPT from OpenAI costs approximately $700,000 each day. Sam Altman estimated the cost to realize his AI vision, which includes constructing 36 semiconductor plants and additional data centers, would amount to around $7 trillion and require several years of effort.
As an analyst, I recognize that in order for OpenAI to maintain its operations and growth, it’s crucial to explore alternative revenue streams beyond investments as interest dwindles. Advertising appears to be a promising option at this point. However, it will undeniably be intriguing to observe how the integration of these new revenue sources might influence ChatGPT’s user experience and overall acceptance among its users.
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2024-12-04 13:09