Author: Deep Tide TechFlow

OpenAI officially shut down its AI video generation application Sora last week, just six months after the independent app went live. According to an investigation by The Wall Street Journal, Sora had an average daily operating cost of about 1 million dollars, with global active users dropping from a peak of around 1 million to less than 500,000, and total in-app purchase revenue over its lifetime was only 2.1 million dollars. Disney previously bet 1 billion dollars on Sora with investments and character licensing deals, but learned about the shutdown announcement less than an hour before it was made, leading to the immediate collapse of the deal. OpenAI is reallocating computational resources towards enterprise tools and programming products to prepare lightly for a possible IPO within the year.

OpenAI announced the shutdown of Sora on March 24, giving no lengthy explanation and only posting a brief farewell on the X platform.

This AI video generation tool, which once went viral in the tech circle, went from an amazing debut to a quiet exit in just six months. According to the latest investigation from The Wall Street Journal, the real reason was not the previously speculated data privacy issues, but rather a simple arithmetic problem: Sora was burning money too quickly, had too few users, and continuing operations would mean falling behind in the AI arms race.

Burning a million dollars a day, total revenue only 2.1 million: The economic deadlock of AI videos

Sora's cost structure was unsustainable from the start. According to The Wall Street Journal, Sora's average daily operating cost was around 1 million dollars. The computational consumption for video generation is far greater than for text, with each short video generated by a user consuming OpenAI's limited GPU resources.

Investment bank Cantor Fitzgerald analyst Deepak Mathivanan broke down the finer costs: generating a 10-second video approximately requires 4 GPUs working in parallel for about 40 minutes, with a single video costing about 1.30 dollars. This number seemed controllable when user numbers were low, but once expanded to millions of users generating multiple videos simultaneously, the daily bills quickly ballooned. According to estimates from Forbes and Cantor Fitzgerald, Sora's inference costs during peak usage could reach around 15 million dollars per day, equivalent to an annualized rate of about 5.4 billion dollars.

In stark contrast is the revenue side. According to mobile data analysis firm Appfigures, Sora's total in-app purchase revenue over its entire lifecycle amounted to approximately 2.1 million dollars. This is not 2.1 million per month, nor per quarter, but the total sum from launch to shutdown.

Bill Peebles, head of Sora, admitted on social media as early as October 2025 that Sora's economic model was "completely unsustainable."

Downloads plummeted 66% in three months, user enthusiasm waned faster than expected

Sora 2 was launched as an independent iOS application at the end of September 2025, with initial data being quite impressive. According to Appfigures data, first-day downloads exceeded 100,000, and within five days surpassed 1 million, even faster than ChatGPT's record from the previous year. Downloads peaked at about 3.33 million in November 2025.

However, the decline was equally rapid. December's downloads decreased by 32% month-on-month, January fell by another 45% to about 1.2 million, and by February 2026, it had dropped to about 1.13 million, a staggering decline of around 66% from peak levels. Consumer spending also fell: January revenue dropped to about 367,000 dollars, down 32% from December's peak of 540,000 dollars.

Regarding active users, according to The Wall Street Journal citing Similarweb data, Sora's global user count peaked at around 1 million, and then continued to decline to less than 500,000. Early users generated numerous controversial videos featuring well-known IP characters (such as Mario, Pikachu, etc.), which spurred a wave of viral spread, but this excitement did not translate into sustained retention.

Disney’s 1 billion dollar partnership collapses, notified less than an hour before shutdown

The shutdown of Sora directly triggered the collapse of a significant partnership.

In December 2025, Disney signed a three-year licensing agreement with OpenAI, allowing Sora and ChatGPT Images to use more than 200 Disney, Marvel, Pixar, and Star Wars characters. Disney also planned to invest 1 billion dollars in OpenAI. Then-Disney CEO Bob Iger stated in an interview with CNBC that this deal would allow Disney to participate in the rapid growth of AI.

According to The Wall Street Journal, Disney executives learned of the decision less than an hour before the shutdown announcement. The 1 billion dollar investment never materialized, and the partnership was immediately frozen.

A Disney spokesperson stated in a statement that the company "respects OpenAI's decision to exit the video generation business and shift priorities," and will continue exploring collaboration with other AI platforms. Reports indicate that under the leadership of new CEO Josh D'Amaro, Disney is negotiating new partnership agreements with over a dozen AI companies.

Anthropic closing in, Sora became an "unaffordable side business" for OpenAI

The deep-seated reason for Sora's cancellation is directly related to the competitive pressures OpenAI faces on its core battlefield.

According to The Wall Street Journal, while the Sora team was fully focusing on video generation, Anthropic quietly won a large number of software engineers and enterprise clients with its Claude Code programming tool. Anthropic's annualized revenue has surpassed 19 billion dollars, with about 80% coming from enterprise clients. Just in February 2026 alone, it added 6 billion dollars in revenue. In contrast, OpenAI’s annualized revenue of about 25 billion dollars includes about 10 billion from enterprise.

OpenAI Application Business CEO Fidji Simo candidly stated in an all-hands meeting on March 16 that Anthropic is a "wake-up call." In a subsequent internal memo, she wrote that the company was "spreading its efforts across too many applications and technology stacks" and needs to simplify and focus. Previously, OpenAI had intensively launched a series of products like Sora, the Atlas browser, hardware devices, and e-commerce features, leading internal employees to find it difficult to identify the company's core strategic direction.

CEO Sam Altman ultimately decided to shut down Sora and release computational power, focusing resources on more strategically valuable directions: enterprise productivity tools, programming assistance, and autonomous AI agents. OpenAI plans to integrate ChatGPT, the Codex programming platform, and the Atlas browser into a single desktop "super application."

Countdown to IPO, cutting off a 54 billion dollar "money-burning black hole"

All of this occurred while OpenAI was intensively preparing for its IPO. According to CNBC confirmation, OpenAI could potentially go public as early as the fourth quarter of 2026, having already completed a round of funding at 110 billion dollars, with a valuation of around 730 billion to 830 billion dollars.

A product that burns 1 million dollars a day but has total revenue of only 2.1 million dollars is the kind of figure that institutional investors dread seeing in an IPO prospectus. Insiders can see the problem through Sora's computational resource allocation dashboard: a large amount of GPU resources were allocated to a product with meager income that made no direct contribution to the core capabilities of language models.

Simo stated in the all-hands meeting: "Our opportunity is to turn 900 million users into high-computational users. The way to do this is to turn ChatGPT into a productivity tool."

The Sora team has not been disbanded, but has shifted to work on "world simulation research" to support robotic applications. According to OpenAI's announcement, the Sora app and website will be shut down on April 26, and the API will be offline on September 24. The Sora 2 model will still be available in the paid version of ChatGPT.

Other players in the AI video space are also shrinking. ByteDance's Seedance has suspended its global expansion plan due to copyright issues. The rise and fall of Sora may signal a fundamental reality in the entire AI video consumer sector: stunning demonstrations do not equate to a sustainable business model, and the gap between the computational costs of video generation and consumer willingness to pay is difficult to bridge in the short term.