OpenAI discontinues Sora: The end of ever more and bigger
The end of Sora marks OpenAI's strategic shift. Developers and companies are now to ensure revenue, analyzes Eva-Maria Weiß.
(Image: Novikov Aleksey/Shutterstock.com)
OpenAI is putting a period on its generative video AI: The company is shutting down the standalone app Sora and also closing access via API. It is still unclear whether ChatGPT will have similar functions again in the future. The image generator Dall-E had flown out of the chatbot because the multimodal AI model GPT-4o could create images itself. It would therefore be possible for a future model to also create videos.
Currently, by discontinuing the application, OpenAI is sending a clear signal to investors and future shareholders. Companies and developers now want to fix what has been going wrong so far: the financial situation and a lack of focus. The strategic change initially leaves individual users behind.
OpenAI is burning money and losing the Disney deal
One thing is clear: at OpenAI, things are apparently not going to continue as before. This “before” was primarily characterized by constantly new, ever-so-slightly better AI models and new services. All of this costs money – both development and operation. It has long been known that the AI company has a discrepancy between expenses and income. Every video created with Sora has cost OpenAI money. Money that has so far been recouped a little with subscriptions, but mainly from investors. In the future, advertising in ChatGPT is intended to play another significant role.
Even when Sora was introduced, one had to ask how and who should pay for it. Another answer until now: large companies that use the service. OpenAI and Disney had concluded a contract worth one billion US dollars. The agreement included, in addition to the investment in OpenAI, the licensing of Disney characters, and Sora-Disney videos were to be shown in Disney theme parks. Of course, Disney's non-public use of Sora remains possible. However, it is also possible that Disney was not satisfied with Sora's performance and the deal was already shaky. It is currently said that the collaboration has failed. The revenue stream – gone.
New target group “Developers and Companies” is supposed to fix it
Fittingly, on the same day that the end of Sora was announced, OpenAI's CFO Sarah Fried told the news magazine CNBC that there are new investments amounting to ten billion US dollars. From where? Unclear. OpenAI plans to go public later this year.
Investors and shareholders are also observing OpenAI and the entire AI industry. At times, there was talk everywhere about the possible bursting of the AI bubble. The big bang has not happened so far. However, the discontinuation of Sora could represent a small puncture in a balloon that is slowly but surely losing air.
Corporate customers and developers are now supposed to serve as a plaster. They are the new target group for all AI providers. Recently, OpenAI, Anthropic, and Google have released new AI models and functions explicitly aimed at developers. In many companies, it is also evident that AI has arrived somehow, but providers are still looking for use cases, integration is lacking, and employees don't really know what it's all for. A good opportunity for OpenAI, then.
There is certainly more money to be made in the corporate sector than through subscriptions from users who can just as easily use Google's AI Mode or Gemini. However, once deeply integrated into companies' systems and fed with their data, an AI application is difficult to decouple or replace. Applications like the AI coding tool Codex cost only a fraction of what a short Sora video consumes in resources to create.
The money that OpenAI saves by discontinuing Sora is to benefit other teams, the company writes. At least one obvious money burner is thus history. Investors are likely to be very happy with the decision and the strategic change in the end. Sam Altman once said he didn't care how much money was burned to develop artificial general intelligence. But perhaps the funders do care.
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Business models collapse
While Disney will likely manage well without Sora, it's more difficult for others. Anyone who thought they could build a career as a Sora expert is facing the end. There are likely numerous people in the film industry who have tried to acquire expertise and experience, investing time and possibly money. According to OpenAI, users of the API can download and secure their projects. Details are to follow later. “Thank you for generating with Sora, for being part of the community and the journey.” Goodbye. Betting on OpenAI and AI is risky. This was also evident, for example, when everyone suddenly had to develop GPTs and apps for ChatGPT – a lot of work for nothing.
At least: Affected users can fall back on other video generators. As is well known, Google's Veo has recently been received even better by users. And Google has the advantage of financing its AI applications through advertising revenue from other products. This also applies to Meta. OpenAI and Anthropic have a major disadvantage because they are both dependent on AI applications and have no other sources of income, no already functioning products, no loyal users, and no data about them.
Super App, Super Future
Recently, OpenAI announced a “Super App”. The big dream of Silicon Valley, especially Elon Musk, who wanted to build such an all-in-one app with X. It is intended to be a kind of personal gateway to the internet. In OpenAI's plan, this future initially includes ChatGPT with its browser, agent, and coding platform. Other services are then to be controlled and used via ChatGPT. The recurring example: If you want to reserve a table at a restaurant, you can do so via ChatGPT – whether through an AI agent or a former GPT connection to OpenTable. The main thing is that no one should have to visit OpenTable's website anymore. Which, of course, would be a problem for that provider.
I won't even start talking about the problematic security standards that could also lead to the failure of this endeavor. The fact that OpenAI published a blog post about the safety features of the video generator on the day before announcing the discontinuation of Sora – a cruel irony.
(emw)
