OpenAI is sunsetting its video generation tool Sora, and winding down its content partnership with Disney, according to multiple reports this morning. Following a flurry of product launches in recent years, the AI firm is reportedly refocusing its strategy on business and coding functions. The move comes ahead of a potential initial public offering (IPO) later this year.
Sora made waves upon its announcement in 2024 with its ability to create realistic video through basic prompts. But when the app launched in September, OpenAI employees were surprised by the amount of computing resources given over to the project without clear demand for the product, according to the WSJ.
The report suggests the company’s various product roll-outs created a complicated organisational structure with competing priorities. Earlier this month, the company’s applications chief Fidji Simo said employees should not be distracted by “side quests”, and called for a greater focus on building agentic capabilities into its products.
On Tuesday, CEO Sam Altman told staff that products which use its video models will be shut down. In addition to the Sora consumer app, OpenAI will shutter the version of the product for developers, as well as video functionality inside ChatGPT.
Generating revenues (not copyrighted characters)
OpenAI is planning to launch an IPO as soon as Q4 this year, but AI tech stocks have been hit in recent months due to concerns around overspending and slow consumer uptake. The company is seemingly seeking to shore up its business model to win the business of coders and enterprise users.
Sora was also exposed to legal action from media companies due to the lack of guardrails to prevent copyright infringement. Rival AI startup Midjourney was sued by Disney, Universal and Warner Bros. Discovery (WBD) alleging illegal use of their content, while Disney and Paramount threatened ByteDance with legal action over copyright violations by its Seedance video tool. The TikTok owner has put the global launch of Seedance 2.0 on hold as a result.
But in December, Disney announced a deal to invest $1 billion in OpenAI, and as part of the agreement the company licensed more than 200 Disney, Marvel, Pixar and Star Wars characters to become available on Sora. In light of Sora’s closure, the entertainment giant has reportedly walked away from the deal. A Disney spokesperson told the BBC, “We respect OpenAI’s decision to exit the video generation business and to shift its priorities elsewhere.”
A key priority for OpenAI now appears to be advertising, as the business shifts its strategy towards generating revenues. The AI firm is rolling out ads in ChatGPT in the US, and this week announced the appointment of former Meta ad executive Dave Dugan to lead ad sales for the company. The strategy marks a different path to other AI startups such as Perplexity, which abandoned plans to introduce ads in its chatbot last month, and Anthropic, whose own Super Bowl ads mocked the idea of advertising within AI chatbots.
Follow VideoWeek on LinkedIn.
