A $20/month user costs OpenAI $65 in compute. AI video is a money furnace

Terr_

> generating a 10-second AI video costs roughly 160 times more than generating an equivalent amount of text Hold up, "equivalent" how? It can't be based on "cost" of generation, or else it would be a 1x factor, by definition. Perhaps "costs" in this case refer to the unprofitable gap between revenues and expenses? > Table 2 Weird, so it looks like some person just arbitrarily decided that 1K GPT-4 text tokens "is equivalent to" 10s of Sora 2 video? That doesn't seem very rigorous.

pjdesno

Look up the Osborne 1, the first "portable" (i.e. luggable) computer. They went out of business not only because they lost money on each unit, but because of how many they sold. Then they pre-announced their next model, which killed all demand for the existing one, and they were toast.

motbus3

Some friends and I did a "just for fun" calculation on what price AI should really have using some of business and infrastructure experience. The three of us have a decent amount of years in adjacent fields, still this is more like a "trust me bro comment". Anyway, we came to a subscription price of 120-150 USD/mo and we did this 6 months ago when the world wasn't yet the chaos it is right now. If those number had to be adjusted, a quick calculation would put it already close to the 200 USD/mo mark so there a decent margin after taxes. That said, of we are anywhere close to be correct on this, I think that increase the price of the product by 10x will drastically reduce the number of users which will then drastically reduce the hardware required. And even if we are off by the double, it would still be a 5x price increase would cause similar effect. Speculation on my part is that it needs to be cheap because they need as much as human generated content as possible as they are running out of data and the models have plateau'ed. We don't see that thing of models getting 10x smarter anymore and maybe we see they are getting smaller or more specialised. Ofc, disruptive research might come up, but my guess is that this price is both a incentive and a requirement for this business to not break apart.

davikr

A $20/month Codex user probably costs thousands of dollars in compute (for multiple providers). I think they just want to weather it over until compute is eventually cheap enough, has to be, otherwise it'll always be unsustainable.

asdff

Sounds like a great way for an AI company to kill off a competing AI company. You can probably do this "organically." Take your $20/mo user just use that money directly to buy that user a subscription for the competitor product and serve them a wrapper. Not sure if it would work but it would at least been a great plot for Silicon Valley if that show were still around.

mandeepj

Could OpenAI have released a local paid version, instead of shutting down Sora? Maybe. A lot of users have beefy machines.

yalogin

Do we have similar numbers for Claude code? Wonder how much it costs them?

999900000999

I’ll take a wild guess that Deepseek without access to magical funny money, can’t really operate at a massive loss. If either US AI mega corp is at risk of failing I suspect they’ll receive generous bailouts. Some places have affordable healthcare, we have AI slop

exabrial

I think the technical term is incinerator, but I digress.

danjl

The economics work if you generate the video locally, using your own compute and a pretrained model provided for a fee. The compute bit is the expensive part. Local users could trade time for money. They just don't have a business or security model that allows them to distribute the model for people to use locally. Sure, you might need to wait all night for 10 seconds of video generated on your 4090, but you could do it, and folks might even pay for the privilege of using the pretrained model. Licensing for local compute might even pay back the cost of training the model with enough time and users.

sheepscreek

The title is misleading. It should be read as “Some $20/month users who made videos on Sora costed OpenAI $65 in compute.” OpenAI is most definitely in a position to be profitable. They are spending less than a third of their revenue on compute (all infrastructure costs combined).

dwohnitmok

This seems to have a healthy helping of AI editing help (if not fully generated by AI). The links don't quite go to the sources that they should and there's a lot of AI-isms. Anyways, the calculation for the costs seem crazy high (and are pulled from an ft article). In particular they are based off a calculation that assumes Sora videos take 10 min to generate (which seems simply wrong; I've personally generated Sora videos that take less than 10 min to return fully formed), fully saturate 4 H200s at once (this seems wrong with batching; I would assume they're batching a lot of tokens together per forward pass), and, crucially, that OpenAI is paying full spot , end-user pricing for an H200 (at $2 an hour). As an individual, I can rent an H200 for $2 an hour on e.g. vast.ai (and sometimes even cheaper than that!). There is absolutely no way OpenAI is spending anywhere near that number. I also have no idea where the Appfigures $2.1 million comes from. As far as I can tell it doesn't exist at all in the linked website. I don't really trust the numbers here.