On Tuesday afternoon, the bomb dropped. OpenAI was shutting down Sora, and Disney’s deal with it had ended. The big video generator that was supposed to turn Disney+ into a user-generated paradise — or a niche for funny music, depending on your point of view — no longer exists. And perhaps, with it, OpenAI’s Hollywood ambitions end, too.
Three veteran Hollywood Reporter The editors — managing editor David Katz and senior editors Steven Zaitchik and Julian Sancton — came together to make sense of the news.
Steven ZaitchikGentlemen, we have the biggest story in Hollywood and technology in several months. Sora is dead and Disney+ is not going to be a fan of Sora. What is your first reaction?
David Katz: From a Disney perspective I think of it [new CEO] Josh D’Amaro and what a crazy development for him. They probably sold this to Wall Street as a 100X futures opportunity. Now they have to explain why the opportunity disappeared.
sz: The next earnings call will be a ride – a giant incoming Gilda Radner-style “Don’t Care.” Of course he can just blame Bob Iger — gently — and say that was his predecessor’s questionable decision.
I don’t know: It is difficult for the new CEO to deal with, but it is true that he was not the man in charge when the deal was done. This at least gets him out of something that was not popular in Hollywood. They are supposed to get back their $1 billion investment, even if they can’t now earn that supposed amount and all the Valley-style growth they were looking forward to.
Julian Sancton: I think it’s clear how upset Disney is about this. They released a statement saying “We respect OpenAI’s decision to exit the video production business and shift its priorities elsewhere,” which seems like a pretty big mistake.
sz: The question is whether it’s just a bug with OpenAI or a bug with memeslop in general. To me, a company with this much IP doesn’t waste the opportunity to mine it with the help of AI and user-generated video.
I don’t know: The “make money doing nothing” approach.
Sz [laughs]: I mean, that’s what Wall Street expects from big companies these days. This might just be Mulligan’s chance. Like, well, we didn’t make it work with OpenAI. But if you want to swing from the tee again, Google and Byte Dance have a golf course waiting for you.
youth: Damaro has to wait until she removes the egg from his face.
I don’t know: But you can also see them sitting, at least for a while. Josh can use it as a talent toy. He tells all the writers, actors and directors, “My Disney doesn’t sell to big tech companies.”
sz: Sure, Disney isn’t a hero here to the creative community, but maybe they’re just…less than a villain. He could use it to recover some coins a little. I just wonder if, faced with the crossroads of writers and Wall Street, Disney will ultimately choose the writers.
I don’t know: If past were precedent, he would choose the street.
sz: And let’s not forget that no matter what Disney does, a competitor can now step in. David Ellison has talked about having more hours of interaction with and revenue from Paramount shows than the one or two hours a week that exist today. I can see them making a deal with someone and the arms race starting again.
youth: Yes, I think we could still see an escalation here. This is very tempting for them.
sz: It could be like the Nuclear Non-Proliferation Treaty. A country declares “no new weapons”! And everyone is excited. Then the country waits a minute and starts building a whole new arsenal. I want to focus and ask about OpenAI in everything. They have been very keen on making inroads into the media and Hollywood for a long time, dating back to ChatGPT and New York Times The lawsuit and continuing all of their studio meetings over the past few years. Is this really the end for them?
youth: Well, they say they won’t grow out of the video generation, if we believe them, and I’m not sure I do. They’ve announced “Code Red” and are trying to catch up with the Anthropists in business and defense and all that. I can see where this is a distraction from that priority. Or from memorizing other parts of the work.
I don’t know: The account is very expensive. They could have calculated that it wasn’t worth it.
sz: Even if it’s a cash-centric issue, I don’t understand how you spend a lot of billions building something and then abandon it before it becomes a business and you really start generating revenue. They have already made all the investment.
youth:But what are they good at? Mainly name recognition. I’m not sure that makes you any good at creating a viable business, even on memeslop.
sz: But all this name recognition has commercial value – see within ChatGPT. It’s crazy that a company with 900 million subscribers — a company that’s so popular with consumers — would say, well, we really don’t want to be in the business of how consumers interact with the Internet, which is video. And they had the best partner to do it with – the company that owns many of the most popular videos in the world. Something doesn’t add up.
youth: You say that OpenAI does not have a clear and well-chosen path and strategy.
Sz [laughs]: I guess it’s not surprising since they’re everywhere. I’m just surprised they get rid of it this line.
youth:We’ll see. There’s plenty of time for this to go all the way.
