Author: Deep Tide TechFlow

OpenAI officially shut down its AI video generation app, Sora, last week, just six months after the standalone app launched. According to a Wall Street Journal investigation, Sora's daily operating costs were approximately $1 million, and its global active users plummeted from a peak of about 1 million to less than 500,000. In-app purchase revenue over its entire lifecycle amounted to only $2.1 million. Disney had previously invested $1 billion in Sora and secured character licensing partnerships, but only learned of the shutdown announcement less than an hour before the deal fell through. OpenAI is now reallocating its computing resources to enterprise tools and programming products, preparing for a potential IPO later this year.

On March 24, OpenAI announced the shutdown of Sora without a lengthy explanation, only posting a brief farewell message on the X platform.

This AI video generation tool, which once dominated the tech world, went from a stunning debut to a quiet exit in just six months. According to a recent investigation by The Wall Street Journal, the real reason was not the data privacy controversy that had been speculated by outsiders, but a simple arithmetic problem: Sora burned through cash too quickly and had too few users; the cost of continuing to operate was falling behind its competitors in the AI arms race.

Burning through millions of dollars a day, with total revenue of only $2.1 million: The economic dead end of AI video.

Sora's cost structure was unsustainable from the start. According to the Wall Street Journal, Sora's daily operating costs were approximately $1 million. Video generation consumes far more computing power than text generation; each user-generated short video devours OpenAI's limited GPU resources.

Cantor Fitzgerald analyst Deepak Mathivanan broke down the costs in more detail: generating a 10-second video clip requires approximately 40 minutes of parallel processing using four GPUs, with a cost of about $1.30 per GPU. This figure seems manageable when the user base is small, but once it scales to millions of users simultaneously generating multiple videos, the daily bill balloons rapidly. According to estimates from Forbes and Cantor Fitzgerald, Sora's inference costs during peak usage periods could reach approximately $15 million per day, equivalent to about $5.4 billion annually.

In stark contrast, the revenue side was different. According to mobile data analytics company Appfigures, Sora's total in-app purchase revenue throughout its entire lifecycle was approximately $2.1 million. This isn't $2.1 million per month, or per quarter, but the total amount accumulated from launch to shutdown.

Sora CEO Bill Peebles 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 faded faster than expected.

Sora 2 launched as a standalone iOS app at the end of September 2025, and its initial performance was quite impressive. According to Appfigures data, it was downloaded over 100,000 times on its first day and surpassed one million downloads within five days, even exceeding ChatGPT's record from years ago. Downloads peaked at approximately 3.33 million in November 2025.

But the decline came just as swiftly. Downloads fell 32% month-over-month in December, followed by a further 45% drop to approximately 1.2 million in January, and are projected to fall to approximately 1.13 million by February 2026, a plunge of about 66% from the peak. Consumer spending also declined: January revenue fell to approximately $367,000, a 32% decrease from the December peak of $540,000.

In terms of active users, according to Similarweb data cited by The Wall Street Journal, Sora's global user base peaked at around 1 million, before steadily declining to less than 500,000. Early users generated a large number of controversial videos featuring well-known IP characters (Mario, Pikachu, etc.), which fueled a wave of viral spread, but this popularity failed to translate into sustained user retention.

Disney's $1 billion partnership collapses ; company only notified of shutdown less than an hour before.

Sora's shutdown directly triggered the collapse of a major collaboration.

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

According to The Wall Street Journal, Disney executives were informed of the decision less than an hour before the announcement of Sora's shutdown. The $1 billion investment never actually arrived, and the partnership was immediately frozen.

A Disney spokesperson stated that the company "respects OpenAI's decision to exit the video generation business and shift its priorities" and will continue to explore collaborations with other AI platforms. It has been reported that under the leadership of new CEO Josh D'Amaro, Disney is in talks with more than ten AI companies regarding new partnerships.

With Anthropic closing in , Sora has become OpenAI's "cannot afford to lose side hustle."

The underlying reason for Sora's cancellation is directly related to the competitive pressure OpenAI faces in its core battleground.

According to The Wall Street Journal, while the Sora team focused on video generation, Anthropic quietly won over a large number of software engineers and enterprise clients with its Claude Code programming tool. Anthropic's annualized revenue has exceeded $19 billion, with approximately 80% coming from enterprise clients, including an additional $6 billion in revenue in February 2026 alone. In comparison, of OpenAI's approximately $25 billion annualized revenue, about $10 billion comes from enterprises.

At an all-hands meeting on March 16, OpenAI's Applications CEO, Fidji Simo, bluntly stated that Anthropic was a "wake-up call." In a subsequent internal memo, she wrote that the company was "spreading its energy across too many applications and technology stacks" and needed to simplify and focus. Previously, OpenAI had launched a series of products, including Sora, the Atlas browser, hardware devices, and e-commerce features, leading internal employees to report difficulty in discerning the company's core strategic direction.

CEO Sam Altman ultimately decided to shut down Sora, freeing up computing power to focus resources on more strategically valuable areas: 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 app."

With the IPO countdown underway, the company is cutting back on its $5.4 billion annualized "cash-burning black hole."

All of this is happening against the backdrop of OpenAI's intensive preparations for its IPO. According to CNBC, OpenAI may go public as early as the fourth quarter of 2026, having previously completed a $110 billion funding round with a valuation of approximately $730 billion to $830 billion.

A product burning through millions of dollars a day but generating only $2.1 million in revenue—that's the kind of figure institutional investors least want to see on an IPO prospectus. Insiders could see the problem by looking at Sora's computing power allocation dashboard: a large amount of GPU resources were being allocated to a product with meager revenue and no direct contribution to the core capabilities of the language model.

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

The Sora team has not disbanded, but has shifted its focus to "world simulation research" to support robotics applications. According to an OpenAI announcement, the Sora app and website will be shut down on April 26, and the API will be taken offline on September 24. The Sora 2 model will remain available in the paid version of ChatGPT.

Other players in the AI video arena are also scaling back. ByteDance's Seedance has suspended its global expansion plans due to copyright issues. The rise and fall of Sora may foreshadow a fundamental reality in the entire AI video consumer market: stunning demonstrations do not equate to a sustainable business model, and the gap between the computational cost of video generation and consumers' willingness to pay is difficult to bridge in the short term.

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