What OpenAI scrapping its Sora video generator tells us about AI

By Nora Redmond

Monthly active users of Sora peaked at about 6 million in December, according to Sensor Tower.

OpenAI scrapping its Sora artificial-intelligence video generator shows us that the technology still has a long way to go before it can replicate any vertical, according to one analyst.

Sora, which allows users to create video clips based on prompts, images or existing videos, announced in a post on its X account on Tuesday that it would be shutting down the platform. The model, which was first launched by the ChatGPT maker in December 2024, did not share why it was being dropped or a timeline, but said more details would be shared soon.

According to reports from the BBC and the Financial Times, the decision also brings an end to OpenAI's $1 billion deal with Disney, announced just over three months ago. The three-year agreement allowed users of the AI application to create videos using popular Disney characters like Mickey Mouse and Simba from "The Lion King."

A team of KeyBanc Capital Markets analysts, led by Justin Patterson, wrote Tuesday that the closure of the tool is a sign that developing new internet apps remains difficult and AI is not yet capable of replicating all verticals.

"We believe this is a step toward reducing fears around all Internet business models being disintermediated by AI," they said. While there are legitimate concerns about what internet tools may look like in the future, the narrative that any person can develop a scaled social, video, music or marketplace business has been exaggerated, they said.

The analysts said it takes time to duplicate "engagement, trust and safety, monetization, and handling physical world problems."

"While it is true that there are billions of smartphone owners to reach, it is also true that a company must deliver a better end user experience to attract and retain users, and achieve durable growth," they wrote. Investors should feel all the more comfortable with many of the major tech companies with significant user figures, including Meta, Netflix and Spotify, the note said.

According to Sensor Tower, which provides insights on app data, monthly active Sora users peaked at about 6 million in December and have since slumped below 5 million.

The analysts noted that OpenAI's move away from Sora was a clear sign of its shift to core products, especially as the company announced last week that it plans to combine its web browser, ChatGPT app and Codex app into one platform.

"OpenAI is positioned to iterate faster on its consumer and enterprise initiatives. In our view, OpenAI is demonstrating a similar operating philosophy to mega-caps Alphabet, Amazon, and Meta where management will reallocate resources when better opportunities arise," they wrote.

-Nora Redmond

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03-25-26 0717ET