OpenAI’s generative video app Sora is history. Here’s what this means for the company’s future

Just six months ago, OpenAI was promoting the latest version of its generative AI video model Sora as “the beginning of an entirely new era” for creators, saying it would “bring a lot of joy, creativity, and connection to the world.”

But Sora – a platform that can generate Breathtaking video of the long-extinct woolly mammoth As easily as it can whip Shampoo commercial starring Hitler – Was born in a different company than the one that exists today.

OpenAI decided to shut down this week, citing need to focus On other priorities. It also reduced some shopping features in ChatGPT and halted its development. much maligned The “Erotic Chatbot” promised sexually explicit conversations.

These changes offer a revealing look at a company that was AI was once the world’s disruptor, but It is now experiencing an identity crisis as it struggles to choose a lane on a busy road to profitability, according to experts who spoke to CBC News.

“Everyone sees them as an extremely talented organization with first-class technology that perhaps doesn’t have the focus of some of their AI frontier counterparts, like Gemini, like Anthropic,” said Toronto-based co-founder Sheldon Fernandez. From AI technology company Darwin AI.

OpenAI is on its way to a public offering, and Fernandez says that means they need to raise billions of dollars to pay for things like employees, data centers, and the computational power needed to train and run the AI.

“To do that, you need to present some financially coherent story to investors and the public.”

an identity crisis

Till now there have been many twists in that story.

in the beginning OpenAI, an open-source nonprofit since then Shifted towards creating closed-source models through its for-profit arm. CEO Sam Altman once the ad is called A “last resort for us,” but introduced them Last month at ChatGPT.

After a year of valuation-boosting, equity-pumping deals buoyed Wall Street, According to Nvidia CEO Jensen Huang, OpenAI’s partnerships with companies like Disney and Nvidia have either failed or failed to deliver on their initial promise. reportedly disappointed Due to the lack of business discipline in OpenAI.

it recently lost A big deal with Apple To Google; And its relationship with Microsoft has grown increasingly stressful.

and chatgpt The instant checkout feature, which led OpenAI to partner with Shopify, Walmart, Etsy, and PayPal, Now it is being withdrawn.

Fernandez says it’s normal for technology startups to change direction, but OpenAI has done just that It developed a reputation for “mind-boggling behavior” – and it has struggled to add and monetize the consumer-facing products included in those deals.

How did Sora land on the chopping block?

The decision to scrap Sora, which was first released in December 2024, came swiftly: Just a day earlier, OpenAI had updated its security policy for the video generation app.

Fernandez said that while Sora got off to a hot start and became king on app stores everywhere for a while, rival platforms like Google’s Veo, xAI’s Grok and Chinese-owned Cling AI have emerged to create videos that are equal to or better than Sora’s offering.

“It was almost like TikTok for AI-powered videos,” said Carmi Levy, a London, Ontario-based technology analyst and journalist. “And as it turns out, it doesn’t attract people much. There’s no virality, no community. It’s antisocial social media.”

By some accounts the platform was also an expensive flop. In November, an analyst suggested It costs OpenAI $1.30 US to create a 10-second video. Based on the 11.3 million daily videos produced by Sora, the analyst said this would cause the company to lose about $15 million every day.

Just a few weeks before that, Sora chief Bill Peebles accepted The economics of the platform were “completely untenable”.

---

Sora’s demise reportedly came as a surprise to Disney, which announced in December that it would invest US$1 billion in OpenAI, giving Sora users the power to create videos involving their favorite characters from the House of Mouse.

To that end, OpenAI is now taking notes from its main rival Anthropic, Levy explained, by focusing on a suite of products it can sell to businesses and developers.

This could put it on the path to profitability which it desperately needs ahead of its planned initial public offering (IPO).

“It’s very difficult for a company like OpenAI to make money with consumer products like Sora or Instant Checkout,” Levy said.

“It’s much easier for them to appeal to the enterprise market.”

public offering route

The company is aggressively preparing for an IPO that could As soon as 2026 ends – Racing to the finish line against Anthropic, which is Also planning a public offering.

But OpenAI needs to clean its financial house before doing so, Levy said.

Most importantly, investors need to be confident that OpenAI can actually deliver and justify its blockbuster deals. what now $730 billion valuation.

“So get rid of projects that aren’t making money, get rid of anything that isn’t growing, get rid of anything that isn’t core to the mission or that would cause investors to doubt the future of the company,” Levy explained.

A public offering, which would allow the company to be listed on public markets and sell its stock as an asset to everyday investors, would make a lot of sense for OpenAI “in terms of their financial viability,” Fernandez said.

But it will also make the business accountable to its shareholders, leading to greater discipline in spending.

“It requires a level of discretion that you haven’t seen from OpenAI a whole lot until now,” Fernandez said.