OpenAI recently decided to discontinue Sora, its AI-powered video generation tool, just six months after its public debut. This move sparked immediate speculation, with some suggesting the app’s request for users to upload their faces was a covert data collection effort. However, the true reason behind the shutdown is far less sensational.
In reality, Sora was a costly venture with dwindling user engagement, straining OpenAI’s resources in the competitive AI landscape. Following an initial surge, the global user base peaked at approximately one million but quickly dropped to under 500,000. Despite this decline, the app continued to incur expenses of nearly $1 million daily. This high cost was not driven by overwhelming demand but by the inherently expensive nature of video generation technology, which consumes a limited supply of valuable AI processing chips with each user-generated scene.
While a dedicated team at OpenAI worked to sustain Sora, rival company Anthropic was steadily attracting key software engineers and enterprise clients, gaining ground in the AI market. Anthropic’s Claude Code, in particular, was rapidly expanding its market share at OpenAI’s expense.
In a significant development, OpenAI CEO Sam Altman decided to terminate Sora to reallocate computing resources and concentrate the company’s efforts elsewhere. The decision was so sudden that Disney, which had committed $1 billion to a partnership involving Sora, was informed less than an hour before the public announcement, resulting in the collapse of the deal along with the app.
