Disney has pulled out of a US$1 billion investment in OpenAI after the artificial intelligence start up suddenly ended its video generation app, Sora in a surprise end to what was arguably the most visible partnership between the entertainment industry and the AI sector.
OpenAI has announced that it is shutting down the standalone app, which was a surprise for Disney, as they had only agreed on a deal just a few months ago.
As reported, OpenAI and Disney had a meeting on Monday evening regarding a project related to the app and only 30 minutes after the meeting ended, the Disney team was notified that OpenAI was pulling the plug on the app.
This is a surprise end to a deal that was agreed on only three months ago, whereby the app was supposed to produce videos prompted by users.
This was supposed to be hosted on the Disney Plus platform, with the feature being available in early 2026.
It appears no actual money changed hands, as the deal was never finalised.
In a tactful response, a Disney representative stated that the company respected OpenAI’s decision to exit the video production industry and would keep looking into collaborations with other AI platforms that uphold creators rights and intellectual property.
An expensive experiment
Fidji Simo, OpenAI’s head of applications, recently informed employees that the company was making a significant shift toward high productivity use cases, especially coding tools and enterprise services.
The company stated that the Sora research team would refocus on world simulation research to advance robotics and acknowledged that it had to make trade offs on products with high computing costs.
However, the excitement surrounding Sora was short lived.
The app attracted increasing criticism from various groups and experts over the issue of deepfakes and the availability of copyright infringing content.
The high computational requirements for the creation of the videos were also a concern for the company. OpenAI has been scaling down expensive projects as the company readies for a potential IPO.
According to a report, the move to shut down the app is part of a larger strategy to move away from video model products.
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However, for Disney, the question now is what is next. Former CEO Bob Iger, who was replaced last week by Josh D’Amaro a longtime Disney executive, had been a strong advocate for the integration of AI generated content into the Disney Plus user interface.
Although the OpenAI partnership is over, the entertainment giant may still consider a similar deal with another AI company.
The rise and fall of the AI platform from viral sensation to shut down in less than six months may be a harsh lesson for the AI space.
