OpenAI Shuts Down Sora Video App After Six Months as Disney Pulls $1 Billion Investment and Resources Shift to Spud Model
OpenAI discontinues its Sora video generation app, ends a three-year Disney licensing deal, and redirects compute to a new model codenamed Spud ahead of a potential IPO.
Overview
OpenAI announced on March 24 that it is discontinuing Sora, the standalone video generation app it launched in September 2025. The iOS app, the API, and the Sora.com platform will all be wound down, according to NBC News. The shutdown also ends a three-month-old licensing agreement with Disney that had been valued at $1 billion. The freed compute capacity will be redirected toward a new language model codenamed Spud, which CEO Sam Altman has said is finished pretraining, according to The Decoder.
What We Know
Sora debuted its second-generation model in September 2025 and quickly became the most-downloaded application in the iOS App Store’s Photo and Video category within a single day, according to NBC News. Despite the viral launch, user engagement fell sharply: downloads dropped 70 percent from their November peak, and daily active users declined 34 percent, as CNN reported. The head of Sora, Bill Peebles, acknowledged on X in late October that the app’s economics were “currently completely unsustainable,” with Forbes estimating the service cost OpenAI roughly $15 million per day to operate, according to CNN.
OpenAI said it needed to make trade-offs on products with high compute costs, with computing chips limited and executives acknowledging the company cannot pursue everything simultaneously, as reported by NBC News. The company stated it will share specific timelines for when the app and API will go offline, as well as details on how users can preserve their work.
The Disney partnership, signed in December 2025 as a three-year licensing agreement, would have allowed Sora users to generate AI videos featuring more than 200 characters from Disney, Marvel, Pixar, and Star Wars properties. Disney responded by stating it “respects OpenAI’s decision to exit the video generation business,” according to NBC News. No money changed hands before the deal collapsed.
Altman told employees in an internal memo, first reported by The Information, that OpenAI has finished pretraining Spud and expects to have a “very strong model” within “a few weeks” that can “really accelerate the economy,” as detailed by The Decoder. Whether Spud will be designated GPT-6 or GPT-5.5 remains unclear. The model may also serve as the foundation for a planned desktop application that would unify ChatGPT, the Codex coding agent, and the Atlas browser into a single platform, according to The Decoder.
In the same memo, Altman said Fidji Simo’s product division is being renamed “AGI Deployment” and that he is stepping back from direct oversight of safety and security teams to focus on capital raising, supply chain management, and building data centers, according to The Decoder.
Rather than abandoning video generation entirely, OpenAI plans to integrate Sora’s capabilities into ChatGPT, consolidating features into a single application, as TechCrunch reported. The Sora research team will continue working on world simulation research aimed at advancing robotics, according to NBC News.
What We Don’t Know
OpenAI has not disclosed a specific shutdown date for the Sora app and API, saying only that timelines will be shared soon. The exact capabilities and release date of the Spud model remain undisclosed, as does its classification within the GPT naming scheme. It is also unclear what will happen to content already created by Sora users or whether any video generation features will be available through ChatGPT before Sora is fully retired.
The broader financial picture raises questions as well. OpenAI is preparing for a potential IPO as it redirects compute and capital toward core AI products, as reported by CNBC. Whether the Sora shutdown is partly motivated by the need to present cleaner financials to prospective investors remains a matter of speculation.
Analysis
The decision to kill Sora after just six months reflects a broader tension in the AI industry between the ambition to build consumer-facing creative tools and the punishing economics of generative video. Text and code generation offer far more favorable compute-to-revenue ratios, and OpenAI’s pivot suggests that even the best-funded AI company in the world found it difficult to sustain a product with costs vastly exceeding revenue.
The rebranding of OpenAI’s product division to “AGI Deployment” and Altman’s shift away from safety oversight toward infrastructure and capital signal that the company is entering a new phase focused on scaling its core language model business. Whether the Spud model delivers on Altman’s promise of something that can “really accelerate the economy” will likely determine whether that bet pays off.