Comment by skeezyboy 3 days ago
>I have an overwhelming feeling that what we're trying to do here is "Netflix over DialUp."
I totally agree with you... though the other day, I did think the same thing about the 8bit era of video games.
Most growth is actually logistic. An S shaped curve that starts exponential but slows down rapidly as it reaches some asymptote. In fact basically everything we see as exponential in the real world is logistic.
At what cost though? Most AI operations are losing money, using a lot of power, including massive infrastructure costs, not to mention the hardware costs to get going, and that isn't even covering the level of usage many/most want, and certainly aren't going to pay even $100s/month per person that it currently costs to operate.
This is a really basic way to look at unit economics of inference.
I did some napkin math on this.
32x H100s cost 'retail' rental prices about $2/hr. I would hope that the big AI companies get it cheaper than this at their scale.
These 32 H100s can probably do something on the order of >40,000 tok/s on a frontier scale model (~700B params) with proper batching. Potentially a lot more (I'd love to know if someone has some thoughts on this).
So that's $64/hr or just under $50k/month.
40k tok/s is a lot of usage, at least for non-agentic use cases. There is no way you are losing money on paid chatgpt users at $20/month on these.
You'd still break even supporting ~200 Claude Code-esque agentic users who were using it at full tilt 40% of the day at $200/month.
Now - this doesn't include training costs or staff costs, but on a pure 'opex' basis I don't think inference is anywhere near as unprofitable as people make out.
My thought is closer to the developer user who would want to have their codebase as part of the queries along with heavy use all day long... which is closer to my point that many users are less likely to spend hundreds a month, at least with the current level of results people get.
That said, you could be right, considering Claude max's price is $100/mo... but I'm not sure where that is in terms of typical, or top 5% usage and the monthly allowance/usage.
> True, but adoption of AI has certainly seen exponential growth.
I mean, for now. The population of the world is finite, and there's probably a finite number of uses of AI, so it's still probably ultimately logistic
Speaking of Netflix -
I think the image, video, audio, world model, diffusion domains should be treated 100% separately from LLMs. They are not the same thing.
Image and video AI is nothing short of revolutionary. It's already having huge impact and it's disrupting every single business it touches.
I've spoken with hundreds of medium and large businesses about it. They're changing how they bill clients and budget projects. It's already here and real.
For example, a studio that does over ten million in revenue annually used to bill ~$300k for commercial spots. Pharmaceutical, P&G, etc. Or HBO title sequences. They're now bidding ~$50k and winning almost everything they bid on. They're taking ten times the workload.
Fwiw LLMs are also revolutionary. There's currently more anti-AI hype than AI hype imho. As in there's literally people claiming it's completely useless and not going to change a thing. Which is crazy.
Yeah the conversation on both extremes feels almost religious at times. The pro LLM hype feels more disconcerting sometimes because there are literally billions if not trillions of dollars riding on this thing, so people like Sam Altman have a strong incentive to hype the shit out of it.
You're right, and I also think LLMs have an impact.
The issue is the way the market is investing they are looking for massive growth, in the multiples.
That growth can't really come from trading cost. It has to come from creating new demand for new things.
I think that's what not happened yet.
Are diffusion models increasing the demand for video and image content? Is it having customers spend more on shows, games, and so on? Is it going to lead to the creation of a whole new consumption medium ?
> Is it going to lead to the creation of a whole new consumption medium ?
Good question? Is that necessary, or is it sufficient for AI to be integrated in every kind of CAD/design software out there?
Because I think most productivity tools whether CAD, EDA, Office, graphic 2d/3d design, etc will benefit from AI. That's a huge market.
I guess there are two markets to consider.
The market of the AI foundation models itself, will they have customers long term willing to pay a lot of money for access to the models?
I think yes, there will be demand for foundational AI models, and a lot of it.
The second market is the market of CAD, EDA, Office, graphic 2d/3d design, etc. This market will not grow because they integrate AI into their products, or that is the question, will it? Otherwise, you could almost hypothesize these market will shrink as AI is going to be for them an additional cost of business that customers will expect to be included. Or maybe they manage to sell to their customers a premium for the AI features where they take a cut above that of what they pay the foundational models under the hood, that's a possibility.
I see the point at the moment on “low quality advertising”, but we are still far from high quality video generated for AI.
It’s the equivalent of those cheap digital effects. They look bad for a Hollywood movie, but it allows students to shot their action home movies
You're looking at individual generations. These tools aren't for casual users expecting to 1-shot things.
The value is in having a director, editor, VFX compositor pick and choose from amongst the outputs. Each generation is a single take or simulation, and you're going to do hundreds or thousands. You sift through that and explore the latent space, and that's where you find your 5-person Pixar.
Human curated AI is an exoskeleton that enables small teams to replace huge studios.
It's quite incredible how fast the generative media stuff is moving.
The self-hostable models are improving rapidly. How capable and accessible WAN 2.2 (text+image to video; fully local if you have the VRAM) is feels unimaginable from last year when OpenAI released Sora (closed/hosted).
As long as you do not make ads with four-fingered hands, like those clowns ... :)
https://www.lapresse.ca/arts/chroniques/2025-07-08/polemique...
https://www.npr.org/2025/06/23/nx-s1-5432712/ai-video-ad-kal...
Typical large team $300,000 ad made for < $2,000 in a weekend by one person.
It's going to be a bloodbath.
> Kalshi's Jack Such declined to disclose Accetturo's fee for creating the ad. But, he added, "the actual cost of prompting the AI — what is being used in lieu of studios, directors, actors, etc. — was under $2,000."
So in other words, if you ignore the costs of paying people to create the ad, it barely costs anything. A true accounting miracle!
Cheaper poorer quality ads means a bad time for us, people who are being incessantly targeted by this crap.
Websites are already finding creative ways around DNS blocklists for ads serving.
It's a logical fallacy that just because some technology experienced some period of exponential growth, all technology will always experience constant exponential growth.
There are plenty of counter-examples to the scaling of computers that occurred from the 1970s-2010s.
We thought that humans would be traveling the stars, or at least the solar system, after the space race of the 1960s, but we ended up stuck orbiting the earth.
Going back further, little has changed daily life more than technologies like indoor plumbing and electric lighting did in the late 19th century.
The ancient Romans came up with technologies like concrete that were then lost for hundreds of years.
"Progress" moves in fits and starts. It is the furthest thing from inevitable.