AI & Models
OpenAI shuts down Sora video tool after usage decline
OpenAI has shut down its Sora video tool six months after launch, citing high costs and declining usage as it pivots to compete with rivals like Anthropic.
OpenAI decided last week to shut down Sora, its AI video-generation tool, just six months after releasing the product to the public. According to an investigation by the WSJ, the real explanation for the shutdown is that Sora was a money pit that nobody was using, and keeping the tool alive was costing OpenAI the AI race. The company chose to shut down the product due to high operational costs and low user engagement.
After its initial launch, Sora’s worldwide user count peaked at around a million and then collapsed to fewer than 500,000. Meanwhile, the application was burning through roughly $1 million every day. This high burn rate was not because of high user engagement, but because video generation is exceptionally costly to run. Every user who generated video was drawing down a finite supply of compute—defined as computational resources like AI chips—making the service unsustainable to maintain.
While an entire team inside OpenAI was focused on making Sora work, competitor Anthropic was quietly winning over the software engineers and enterprises that drive revenue. Anthropic’s software engineering tool, Claude Code, was eating OpenAI’s lunch. In response to this competitive pressure, OpenAI CEO Sam Altman made the decision to shut down Sora. This move allows the company to free up compute and refocus its resources on core areas where it faces direct competition from rivals like Anthropic.
The sudden decision also abruptly ended a major corporate alliance. The entertainment giant Disney had committed $1 billion to its partnership with OpenAI. However, according to the WSJ, Disney found out Sora was being shut down less than an hour before the public announcement. The $1 billion deal died along with the tool, illustrating how quickly the decision was made and executed.
Why it matters
OpenAI’s decision to shutter Sora underscores the intense resource pressure and competitive landscape of the AI race, as evidenced by the collapse of a $1 billion partnership with Disney.