According to Futurism, OpenAI lost a staggering $12 billion last quarter alone while its Sora video generation app could be costing $5 billion annually, or roughly $15 million per day. The company’s Sora lead Bill Peebles admitted in an October 30 tweet that the “economics are currently completely unsustainable” as each ten-second clip costs about $1.30 to generate. Despite these massive losses, OpenAI wants to spend over $1 trillion in coming years while currently limiting users to just 30 free videos daily before charging $4 for additional clips. CEO Sam Altman acknowledged they launched Sora without a solid financial plan to recoup costs, and the company now faces copyright infringement complaints from major Japanese publishers including Studio Ghibli and Square Enix.
The Unsustainable Math
Here’s the thing about AI video generation: it’s exponentially more expensive than text. We’re talking about processing requirements that make ChatGPT look like a pocket calculator. At $1.30 per ten-second clip, you’re looking at nearly $8 for a single minute of AI-generated video. Now multiply that by millions of users and you start to understand why even OpenAI‘s own team is openly admitting the economics don’t work.
And get this – the current “generous” free limits are temporary. Peebles straight up said they’ll need to “bring the free gens down to accommodate growth” because they simply won’t have enough GPUs otherwise. So basically, they launched a product they can’t afford to give away, knowing they’ll have to pull back the free access that built their user base. That’s some risky business strategy.
The Bigger Picture
OpenAI’s financial filings show this isn’t just a Sora problem – it’s a company-wide cash incineration situation. Twelve billion dollars in one quarter? That’s not just “burning cash” – that’s launching it into the sun. And they want to scale this to trillion-dollar spending? It makes you wonder who’s actually footing this bill and what happens when the music stops.
The copyright issues are another massive problem they’re kicking down the road. When major rightsholders like Studio Ghibli are sending cease-and-desist letters, you know the legal bills are about to get even more astronomical. They’re building this entire empire on content they don’t own, and the bill is coming due.
What Comes Next?
So where does this leave us? We’re watching a company valued at half a trillion dollars basically admit they have no sustainable business model for their flagship new product. The “build now, monetize later” internet playbook might work for social media apps, but when you’re burning $15 million daily just on compute costs? That’s a whole different ballgame.
Analysts like Mizuho’s Lloyd Walmsley argue this is just classic internet strategy – build engagement first, figure out money later. But honestly, has that ever worked with infrastructure costs this insane? I’m skeptical. And meanwhile, what are we getting for all this money? Mostly what Futurism accurately calls “AI slop” – SpongeBob cooking meth and other nonsense clogging up the internet.
The real question is how long investors will tolerate this level of spending without seeing a path to profitability. Because right now, it looks less like building the future and more like the most expensive science experiment in history.
