OpenAI gives up on Hollywood dreams

TL;DR: OpenAI’s video generation app Sora is shutting down, the first casualty of the company’s reported plan to cull its “side quests.” This also means the end of Disney’s landmark $1 billion equity investment with the AI startup, which had always been a controversial coupling. Sora’s shuttering is a surprising twist after OpenAI spent the past couple years making Hollywood sweat, but it shows the company is serious about focusing its resources on enterprise and coding—for better or worse.

What happened: OpenAI announced this week that it would put an end to its video generation ambitions with the shuttering of Sora and its API. Also on the chopping block is Disney's historic $1 billion deal with OpenAI—in which the AI company could license its characters and other IP to appear in Sora videos (though sources say no money ever changed hands to begin with).

“We respect OpenAI’s decision to exit the video generation business and to shift its priorities elsewhere,” a Disney spokesperson said in an emailed statement to Tech Brew.

This frees up OpenAI’s resources as it reportedly focuses on a forthcoming model codenamed “Spud.” And the Sora team is pivoting to world simulation models for robotics, a common strategic move for video AI companies as this area of AI research heats up.

Sora’s 15 minutes: OpenAI launched Sora as a video generation tool for filmmakers and studios, then later expanded it into a TikTok-like social feed. The AI startup reportedly spent months courting Hollywood studios—despite lots of resistance—trying to get them to use the tool and even holding a film festival to show off Sora’s creations.

So where did it go wrong? Last week, the Wall Street Journal reported that OpenAI is narrowing its focus to enterprise and coding in the face of increasingly heated competition from Anthropic and Google. That means freeing up limited compute resources from “side quests” that don’t contribute to those comparatively lucrative areas—all those clips of cats playing musical instruments or deepfakes of Sam Altman require a huge amount of computing resources, more so than even large language models.

A love-hate relationship: Video AI remains a hot space—it reportedly drew $3 billion in venture funding last year—and companies regularly claim that Hollywood studios do tap their tools without drawing attention to it. But it’s also particularly fraught with legal landmines, which has limited how much studios and other companies are willing to use it.

The Disney deal drew criticism from creative professional unions, especially as it and other entertainment giants remain embroiled in various lawsuits against other AI companies for copyright infringement.

The Sora app social feed also brought content moderation headaches and legal issues that may have created more trouble for OpenAI.

Still, OpenAI competitors like Google and a host of well-funded startups remain focused on selling video AI to creators, filmmakers, marketers, and others.

Bottom line: OpenAI may have decided this “side quest” was not worth the trouble, despite what could have been $1 billion in guaranteed investment from Disney. To put that number in perspective, though, OpenAI just closed a $110 billion round last month, plus an extra $10 billion this week (after the internal announcement of its pivot). The company seems to be seriously betting that enterprise and coding are where the real revenue is as it scrambles to keep up with Anthropic and Google. —PK