Generative AI has reframed the enterprise understanding of artificial intelligence from a tool for pattern classification to an engine of content generation. This reframing has reshaped the landscape for automation, opening up a wealth of opportunity in areas such as media production, product design, translation, and summarization. The recent advancement in the field is perhaps less about technology – many of the most prominent model families have been in development for years – and more around productization and accessibility, although the latter has created a virtuous cycle with the former.

The popularity of ChatGPT, released to the public as a research preview by OpenAI in November and achieving over a million users within a week, spawned an array of startups and kicked off a race by major technology providers to compete for mindshare. S&P Global Market Intelligence’s Market Monitor Generative AI explores this emerging market, measuring and forecasting revenues for the over 260 companies providing Generative AI products. In aggregate, forecasted revenues for generative AI technology offerings are expected to exceed $3.7bn by 2023. As figure 1 illustrates below revenues may exceed $36bn by 2028, which represents a CAGR of around 58% from 2023 to 2028.

Figure 1: Forecasted Generative AI Market Revenues

In addition to these aggregate figures, the report looks at seven distinct media generation segments; foundation models, alongside generators of text, images, audio, video, code and structured data. Over time these markets are likely to coalesce. Intersections are already being seen between text generators and image generators, often brought together when generating copy, and in the expansion of Large Language Models to address programming use-cases. In addition, the integration of these models into other software products – as a conversational interface in many instances – is blurring the boundaries of the market. At its current stage of emergence however, each segment demonstrates distinct market characteristics and competitive dynamics.

The text generator space is particularly vibrant, with lower-than-expected costs of foundation model APIs contributing to a burgeoning ecosystem of startups, many targeting sales and marketing use-cases. As explored in the report the text generator market has a lot more participants than other media generation segments, with lower levels of revenue concentration. Consolidation is likely to start however, despite the ongoing flood of new entrants. The lack of differentiation between many of these specialist technology providers is one driver of this prediction. Another is the limited feature set many of these text generator startups offer, and the growth of tooling – some arising from the Large Language Model providers themselves – which incorporates many of these features.

Code generation represents a less mature market, with fewer monetized projects or established vendors. With a CAGR of almost 73% between 2023 and 2028 however, S&P Global Market Intelligence’s model indicates that it may represent the fastest growing Generative AI segment. The image generation space is also forecasted to have a robust growth trajectory growing at 147% for 2023, with its five year CAGR at almost 66%. The sector contains some high profile startups and more recently the entrance of established technology providers with large curated image libraries. It has proven an early target for copyright infringement lawsuits.

A slower, but more stable, trajectory is predicted for structured data generation – with generative AI techniques just one of a number of approaches to building artificial datasets, which can protect privacy or bolster training sets. The bottom-up analysis reveals that few vendors currently productize generative AI-based synthetic data services, but a number of prominent startups have emerged to drive growth in the embryonic space.

^{451 Research is part of S&P Global Market Intelligence.}