Excessive compute, excessive competition, and skeptical investors.
On Tuesday morning, events at OpenAI were routine. But by day’s end, the company announced it would discontinue its video-generation app, Sora, abandon plans for video integration within ChatGPT, end a $1 billion Disney agreement, restructure a senior executive role, and seek an additional $10 billion from investors, totaling over $120 billion in its latest funding round.
OpenAI is scrambling to become profitable or at least reduce losses. Sora apparently consumed significant compute resources without sufficient financial returns. Sources told *The Verge* that it lagged behind competitors in video generation. Despite its brief existence, it leaves behind a legacy of diminished trust in discerning reality.
As investors question OpenAI and competition from Anthropic and Google heats up, executives agree on changing direction. “We must focus on productivity, both generally and especially in business,” said Fidji Simo, OpenAI’s CEO of AGI deployment, moving from her previous role as CEO of applications. This involves stepping back from projects like Sora and deprioritizing the “adult mode” sexting capabilities previously explored for ChatGPT.
Industry insiders like Trevor Harries-Jones, board member at Render Network Foundation, note Sora was struggling in AI video generation. “The amount of choices makes it easy for users to switch platforms. Without being top at anything, mass user adoption is difficult,” he explained. OpenAI’s decision stems from rapid innovation in AI video generation and fierce competition, including from Google and Kling.
Harries-Jones noted Sora lacked an edge despite an impressive launch and early marketing. Initial buzz didn’t match the reality, he said, with a gap between promotional material and product performance.
Sora’s downloads reflect its struggles. According to Seema Shah, VP of insights at Sensor Tower, Sora was initially a fast-growing app but later plummeted, possibly due to competition. After launching strong in October with 4.8 million downloads and 6.1 million in November, it dropped sharply: 3.2 million in December, 2.1 million in January, 1.4 million in February, and only 1.1 million in March so far.
“Despite entering new markets, download growth should’ve followed, indicating stronger expansion,” Shah remarked.
Video generation required enormous computational resources, which became a burden when OpenAI needed to conserve them. At OpenAI’s annual DevDay, the company stressed the need to increase revenue and the risk compute constraints posed to scaling efforts. CEO Sam Altman remarked on the necessity of eventual profitability while being in an aggressive investment phase. Meanwhile, president Greg Brockman emphasized the endless demand for more compute to maximize output.
The revenue push was further complicated by the loss of the Disney deal. Disney’s $1 billion investment in OpenAI was intended to make Disney a significant customer, leveraging OpenAI products for Disney+ and more. It also meant Sora could feature a range of Disney-owned characters in AI-generated videos to stream on Disney+. Reportedly, Disney was caught off guard by Sora’s discontinuation soon after both companies collaborated on a related project.
The abrupt end of the OpenAI-Disney partnership, merely three months into a planned three-year agreement, surprised many. While some speculation points to a broader AI failure in entertainment, Dave Davis, chief content officer at Protege, believes Disney remains open to similar agreements with other firms working on video-generation AI, potentially including Google, Runway, Luma, or Seedance.
“We see significant licensing momentum as companies like Disney strive for innovative fan engagement,” Davis stated. “The Disney-OpenAI deal was just one example, and Disney is evidently welcoming further character licensing opportunities.”
The Sora shutdown news followed a blog post offering tips on using Sora safely and mentioned strengthening its content filters, particularly for videos involving minors. OpenAI also reportedly considered integrating Sora into ChatGPT earlier but abandoned this idea.
“We’re discontinuing Sora for consumer apps and API,” OpenAI spokesperson Kayla Wood told *The Verge*, pointing to a forthcoming announcement with more details on app closure timelines. “The Sora team is refocusing on world simulation research to advance robotics.”
OpenAI emphasizes reallocating compute resources toward AI agent objectives, with Sora marking progress in world simulation and robotics research. The original Sora wind-down announcement may have been edited to align with OpenAI’s long-term artificial intelligence goals, potentially leveraging Sora’s technology for future initiatives.
As OpenAI pivots from various profit-driven initiatives — such as in social media, web browsers, subscription plans, advertising, and government contracts — and channels resources into coding and business tools, it faces heightened rivalry with Anthropic, known for its robust enterprise focus and dominance in coding tools.
Witness nonprofit director Sam Gregory criticized the impact of Sora, calling it an “AI slop” generator and highlighting the absence of genuine investment and concern towards harm