Disney cancels $1 billion OpenAI partnership amid Sora shutdown plans

Disney cancelled its planned $1 billion licensing partnership with OpenAI following OpenAI's announcement to shut down its Sora video-generating app. The deal, announced in December, would have included a $1 billion equity investment from Disney in the AI company.

The three-year licensing agreement would have made over 200 Disney-owned characters available for Sora-generated videos. Disney CEO Bob Iger had discussed bringing Sora-generated content to Disney+ as daily short-form video.

According to Axios, a source familiar with the situation confirmed no money ever changed hands. The Financial Times reported the deal "never got off the ground" as OpenAI shifted its strategic direction.

A Reuters source described the Sora shuttering as "a big rug-pull" that blindsided the entertainment conglomerate. OpenAI had published updated Sora safety standards just Monday before the late Tuesday announcement.

Sora's mobile app peaked at approximately 3.3 million downloads across iOS and Google Play in November before falling to 1.1 million in February, according to Appfigures Intelligence. The app grossed just $2.14 million in revenue from 11.7 million total downloads.

Hollywood's attention has shifted to competing AI video apps like SeeDance 2.0 from ByteDance. Disney sent a cease-and-desist letter to ByteDance last month, calling the app a "virtual smash-and-grab" of Disney's IP.

Sources suggest Disney and OpenAI may still discuss alternative partnership or investment arrangements.