RIP Sora: An AI Stepchild Neither Disney Nor OpenAI Really Wanted | Analysis

Sora, the video app that let you put yourself and others into short, TikTok-style AI-generated clips, is going away — not that OpenAI or its biggest champion in Hollywood, the Walt Disney Co., are shedding any tears.

OpenAI on Tuesday made the shocking announcement that it would shutter Sora, with The Wall Street Journal reporting that it would refocus its business ahead of its initial public offering slated for the fourth quarter. For Disney, this meant scrapping its plan to bring Sora videos into the Disney+ app and walking away without making a $1 billion investment into OpenAI, according to a person familiar with the deal.

The news, coming just days into Josh D’Amaro’s new tenure as CEO, marks a stunning end to what was seen as a potential model for how media and AI companies could co-exist. The deal was viewed as a way for the two sides to get over the long-simmering tensions between entertainment companies that create the content and AI companies that use that content to make their large language models smarter and more effective.

Not that Sora was the most solid foundation to build that bridge, having initially drawn the ire of Hollywood before fading into irrelevancy — right as Disney anointed the app as part of its future.

When the Sora 2 model and video app emerged at the end of September, it took the world by storm, quickly surging to the top of Apple’s App Store. For a hot minute, it was everywhere, with people sticking themselves into AI-generated videos featuring everything from SpongeBob SquarePants to our WrapPro editor flying an X-Wing-like space craft. Sora stumbled upon AI’s massive potential by giving users free rein over popular characters — from “Rick & Morty” to Pikachu — in any scenario they can imagine.

But that, of course, was a nightmare scenario for studios protective of their IP, given beloved and valuable characters could be put into any number of R-rated or off-brand situations. Hollywood quickly slammed OpenAI for its approach of putting the onus on media companies to opt out of the platform, forcing the AI startup to backpedal.

Even as OpenAI promised to add IP safeguards, the hype was already subsiding and Sora usage waned. With those protections in place, those AI-generated videos were becoming more of a gimmick that was wearing thin. Its position in the App Store plunged out of the top list, with its sister app ChatGPT regaining its crown among free apps.

That’s when Disney threw it a lifeline.

Enter Disney

In December, then-Disney CEO Bob Iger said he had struck a deal with OpenAI to invest $1 billion into the startup. The partnership would also give Sora access to a library of some of its characters, like Iron Man and Elsa, to be used in its videos.

That aspect of the arrangement with Sora felt like an odd fit and, according to those close to the company, the desire to have users generate content with Disney characters — to then be shared across platforms like YouTube and Disney+ and over the array of Disney-owned social channels — never gelled with the protectiveness the company has always felt about its characters and franchises. Moreover, filmmakers and other creatives were none too pleased with the idea of Disney using their creations in fan-made content that was then distributed widely on social media without their permission or consent.

Whatever people were going to do with the characters would be a stark reversal of literal decades of infrastructure governing the interaction of Disney characters. For instance, when the Disney Princesses consumer products line was developed, there were rules, like the fact that the Princesses couldn’t look at each other (if you look at any material developed for that line, they’re never making eye contact).

After the deal was announced, Dana Terrace, who had created the critically acclaimed animated series “The Owl House” for Disney, tweeted, “Remember, any fan content created like this will not even be yours. They’re not paying you to make anything for them, you’re paying them. This is open grifter s–t.”

The ultimate goal of the Sora videos was to bring them into the Disney+ app, part of a broader strategy to make it more mobile-friendly with vertical content, a la TikTok. But even that had its detractors, with critics accusing the company of bringing AI slop into the service’s highly curated experience.

Some at the company felt that it would keep grade-A talent away. What’s the incentive for a great filmmaker or showrunner to sign on if their creations are going to be put into weird 15-second marketing clips on the internet without their approval?

Now, Disney doesn’t have to deal with this AI controversy and gets to walk away from OpenAI.

“As the nascent AI field advances rapidly, we respect OpenAI’s decision to exit the video generation business and to shift its priorities elsewhere,” a Disney spokesperson told TheWrap in a statement. “We appreciate the constructive collaboration between our teams and what we learned from it, and we will continue to engage with AI platforms to find new ways to meet fans where they are while responsibly embracing new technologies that respect IP and the rights of creators.”

For D’Amaro, whose background as a parks executive means he doesn’t have the relationship with creatives that Iger had, it’s an easy win, according to Needham & Co. analyst Laura Martin. “It lowers friction with talent, which is smart when you’re in the middle of union negotiations,” she said.

What of OpenAI?

As odd a fit as Sora was with Disney, it was an equally unusual one for OpenAI. The Sora video model was supposed to be OpenAI’s way into Hollywood, but the debut of Sora 2 and the pivot to a TikTok-like video app was a signal that it wasn’t serious about getting into the studio system. At the same time, other video models like Google’s Veo had rapidly improved. Last month, Bytedance showed off the progress made with its video model, Seedance 2.0, much to the horror of many in Hollywood.

Even with that Disney deal, Sora usage likely wasn’t anything to write home about.

“My bet is that user engagement has decreased significantly from the initial moment when people were just messing around with it,” said Carolina Milanesi, an analyst at Creative Strategies. “So is the cost of running it worth it to OpenAI or could it turn to more useful use cases that can drive revenue?”

Rather than a grand announcement, OpenAI let people know via a tweet.

“We’re saying goodbye to Sora. To everyone who created with Sora, shared it and built community around it: thank you. What you made with Sora mattered, and we know this news is disappointing,” the official Sora X account said in a statement. “We’ll share more soon, including timelines for the app and API and details on preserving your work.”

It’s not just Sora. The Wall Street Journal said OpenAI is shuttering all of its video initiatives, including letting users create video from ChatGPT.

“It’s possible that OpenAI doesn’t have a clear business model for AI video,” said one AI filmmaker.

Martin noted that OpenAI likely realized it couldn’t dedicate the resources need to overcome Google, which greatly prioritizes video because of YouTube. “Google has to win there,” she said.

Representatives for OpenAI did not immediately return TheWrap’s request for comment.

It’s a critical moment for OpenAI. In December, CEO Sam Altman declared a “code red” pivot to improve the core competitiveness of ChatGPT, particularly against Google’s Gemini model. Also in the AI race is Anthropic’s Claude, which has won a lot of positive attention in the last month over its stand off with the Defense Department over AI safety guardrails.

With the prospect of a massive public offering on the horizon, OpenAI is focused on its immediate path ahead — one in which Hollywood doesn’t have a role.

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