ChatGPT unveils US$20 subscription plan: Why timing is crucial to success

ChatGPT unveils US$20 subscription plan: Why timing is crucial to success

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OpenAI is monetising its ChatGPT programme just over two months after launching the platform that has since overtaken the advertising and education space. The company launched a new pilot subscription plan for ChatGPT called ChatGPT Plus which will be priced at US$20 per month. Subscribers will also be able to unlock new features and benefits with ChatGPT Plus. A few of these benefits include general access to ChatGPT, a faster response time and priority access to other new features and improvements.

ChatGPT, which has amassed 57 million monthly active users in its first month of availability, according to CBS News, is currently one of the fastest-growing apps in history. In a report by analytics firm Similarweb and reported by Reuters, it was also revealed that an average of about 13 million unique visitors had used ChatGPT per day in January, more than double the levels of December.

The paid app is currently exclusively available in the United States, according to OpenAI in a statement on its site. It also revealed that it will begin inviting people to the paid system based on a waitlist Google form it has released and that was seen by MARKETING-INTERACTIVE. The company added that it will be expanding to other countries as well.  Additionally, the company hinted that this update might be the first of more plans that are in the works.

Don't miss: How ChatGPT exploded onto the scene with so little marketing spend

The statement also read that the company is “actively exploring” possible lower-cost plans, business plans and data packs. “We love our free users and will continue to offer free access to ChatGPT. By offering this subscription pricing, we will be able to help support free access availability to as many people as possible,” the company added. According to Reuters, OpenAI has projected US$1billion in revenue by 2024. Hence, there is pressure for the app to meet its projected earnings, explaining the launch of ChatGPT Plus.

A strategic move to start charging a subscription fee?

Considering how well ChatGPT is doing right now, it seems like a no-brainer that the platform would begin capitalising on its popularity by charging. However, its reason for demanding revenue might be deeper than just having a significant revenue growth, say industry players. 

"I believe the OpenAI team is learning from past products that became viral and fizzled out. In short, the OpenAI team is striking while the iron is hot for a couple of reasons," said Pramodh Rai, the CEO and co-founder of Cyber Sierra, a cyber security firm. "For one, its important to monetise the service at its peak of interest level, thereby increasing its chances of securing a reliable user base, especially before competition catches up. Secondly, it's good to identity serious users whom the team can study for product development opportunities."

Rai continued by saying that ChatGPT was likely looking at building a revenue stream to defray infrastructure costs and to diversify from its reliance on investors and partners such as Microsoft which recently invested $10 billion in OpenAI. 

"The timing for monetisation is crucial and ChatGPT is poised to win well now if its attempt succeeds. As of January 2023, ChatGPT reportedly has 100 million users. Assuming a conservative conversion rate of 1% at USD 20/month - that’s a whopping USD 240m annual recurring revenue. It’ll likely become the first product to reach such a level of revenue in record time," he said.

Agreeing with Rai, Hemant Menon, the client partner and performance marketing lead media group at dentsu Singapore said, "It is a natural progression for a product that has seen high growth in the last few months since its release, thanks to its intuitive responses. ChatGPT has a lot of use cases across industries including in digital marketing, especially in the content space. The subscription fee along with other investments, I believe, will fuel further research and development which in turn will make ChatGPT more intuitive."

Saying that, it's important to note that ChatGPT's position in the market is not guaranteed.

"I believe ChatGPT charging for its services is a serious attempt to cement its position early in the market, before the competition arrives to claim its stake in the global pie. But it’ll have to keep progressing in its core innovation as well as market share efforts to stay and not suffer the fate of past, viral products," he said.

True enough, it would look like ChatGPT might be facing new competition in the months to come. Recently, China's largest search engine company Baidu announced that it is reportedly planning to launch an artificial intelligence (AI) chatbot service that is similar to ChatGPT, according to Bloomberg

Due to debut in March, the application will be initially embedded into its main search services, according to the report. The tool will allow users to use conversation-style search results just as ChatGPT. A check by MARKETING-INTERACTIVE also saw on Weibo that netizens are curious about ChatGPT's functions as China has a censored domestic internet. Some asked if combining ChatGPT into web search engine Bing can allow them to use it in mainland China.

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