Microsoft needs to open up more about its OpenAI dealings

It's more of a question if it will ever actually be profitable or marketable without subsidizing most of the cost of running it.

We're seeing the same with streaming services right now. 5-10 years ago, everyone thought they needed their own streaming service and heavily invested into building one and acquiring licenses or producing content for it. Now we're seeing the part where they are trying to make it profitable by raising prices/adding ads or both.

I'm not sure if OpenAI will ever be able to just run by themselves. Without major outside investments to subsidize the cost of actually having users use their services.

They’re shuttering half their studios, cancelling half their games, and firing game devs by the thousands as they hand halo over to PlayStation lol. You’re technically right but they clearly aren’t taking that part of their business seriously anymore. IIRC Gamepass has plateaued on subscribers for years now even prior to their very aggressive price hikes over the last 18 months.

I saw an article the other day that said Microsoft is telling developers they have to have a 30% return on their games, which is almost double the industry standard. That’s just absurd.

Edit: worth mentioning that you have people openly speculating at this point that they might not even make another Xbox. I’m not quite in that camp, but I also think it is a distinct possibility given the back slide they are clearly in right own when it comes to gaming. Fun fact: It’s been 4 console cycles, almost 25 years, since we saw a major player drop out.

Suddenly Microsoft has gone from being some software to being everywhere. I know that Azure is huge, but you don't see Azure.

More and more OpenAI is drawing parallels to the Danish scandal of IT Factory. Self-proclaimed world leading innovation and technology in the front, financial sorcery in the back.

There is much more manipulation potential with LLMs than typical ads. I am worried. It gets more and more difficult to distinct ads and the neutral information.

They should've made so much money on direct response and yet somehow they messed it all up.

Just like they should have been a few times as large in terms of users, but they executed really, really badly.

So I'm not sure Twitters failures imply anything about OpenAIs prospects.

> There’s a famous Sam Altman interview from 2019 in which he explained OpenAI’s revenue model [1] :

>> The honest answer is we have no idea. We have never made any revenue. We have no current plans to make revenue. We have no idea how we may one day generate revenue. We have made a soft promise to investors that once we’ve built this sort of generally intelligent system, basically, we will ask it to figure out a way to generate an investment return for you. [audience laughter] It sounds like an episode of Silicon Valley, it really does, I get it. You can laugh, it’s all right. But it is what I actually believe is going to happen.

> It really is the greatest business plan in the history of capitalism: “We will create God and then ask it for money.” Perfect in its simplicity. As a connoisseur of financial shenanigans, I of course have my own hopes for what the artificial superintelligence will come up with. “I know what every stock price will be tomorrow, so let’s get to day-trading,” would be a good one. “I can tell people what stocks to buy, so let’s get to pump-and-dumping.” “I can destroy any company, so let’s get to short selling.” “I know what every corporate executive is thinking about, so let’s get to insider trading.” That sort of thing. As a matter of science fiction it seems pretty trivial for an omniscient superintelligence to find cool ways make money. “Charge retail customers $20 per month to access the superintelligence,” what, no, obviously that’s not the answer.

> On a pure science-fiction suspension-of-disbelief basis, this business plan is perfect and should not need any updating until they finish building the superintelligent AI. Paying one billion dollars for a 0.2% stake in whatever God comes up with is a good trade. But in the six years since announcing this perfect business plan, Sam Altman has learned [2] that it will cost at least a few trillion dollars to build the super-AI, and it turns out that the supply of science-fiction-suspension-of-disbelief capital is really quite large but not trillions of dollars.

> [1] At about 31:49 in the video. A bit later he approvingly cites the South Park “underpants gnome” meme.

> [2] Perhaps a better word is “decided.” I wrote the other day about Altman’s above-consensus capital spending plans: “'The deals have surprised some competitors who have far more modest projections of their computing costs,’ because he is better at this than they are. If you go around saying ‘I am going to build transformative AI efficiently,’ how transformative can it be? If you go around saying ‘I am going to need 1,000 new nuclear plants to build my product,’ everyone knows that it will be a big deal.”

A quick search seems to indicate that the porn industry has a $100B in revenue per year, 20% of which is from subscriptions. If OpenAI consumed the entire global market for subscriptions, $20B, would that cover their yearly operational cost?