Author: Shenchao TechFlow
Last week, OpenAI officially shut down its AI video generation app, Sora, just six months after its standalone app launched. According to an investigation by The Wall Street Journal, Sora’s daily operating costs averaged around $1 million, with global active users declining from a peak of approximately 1 million to fewer than 500,000, and in-app purchase revenue totaling only $2.1 million over its entire lifecycle. Disney, which had previously invested $1 billion in Sora and partnered on character licensing, was informed of the shutdown less than an hour before the public announcement, causing the deal to collapse immediately. OpenAI is now reallocating computing resources toward enterprise tools and programming products, preparing for a potential IPO this year.
OpenAI announced the shutdown of Sora on March 24, offering no lengthy explanation—only a brief farewell post on X.
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 concerns previously speculated by outsiders, but a simple arithmetic problem: Sora was burning through cash too quickly with too few users, and continuing operations would cause it to fall behind competitors in the AI arms race.
Burning millions per day, total revenue just $2.1 million: The economic dead end of AI video
Sora’s cost structure has been unsustainable from the start. According to The Wall Street Journal, Sora’s daily operational costs are approximately $1 million. Video generation consumes far more computing power than text generation, and every short video created by a user consumes a portion of OpenAI’s limited GPU resources.
Cantor Fitzgerald analyst Deepak Mathivanan broke down the finer costs: generating a 10-second video requires approximately four GPUs running in parallel for about 40 minutes, at a cost of roughly $1.30 per GPU. While this figure appears manageable when user volumes are low, scaling to millions of users simultaneously generating multiple videos causes daily costs to surge 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 an annualized cost of about $5.4 billion.
In stark contrast, the revenue side tells a different story. According to mobile data analytics firm Appfigures, Sora’s total in-app purchase revenue over its entire lifecycle amounted to approximately $2.1 million—not per month, not per quarter, but the cumulative total from launch to shutdown.
Sora's head, 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, with user enthusiasm fading faster than expected.
After Sora 2 launched as a standalone iOS app at the end of September 2025, its initial data was impressive. According to Appfigures, it surpassed 100,000 downloads on its first day and reached one million downloads within five days, even outpacing ChatGPT’s record at the time. Downloads peaked at approximately 3.33 million in November 2025.
But the downturn was equally swift. Downloads fell 32% month-over-month in December, then dropped another 45% in January to approximately 1.2 million, and by February 2026, they had declined further to around 1.13 million—a drop of roughly 66% from the peak. Consumer spending followed suit: revenue in January fell to approximately $367,000, a 32% decline from the December peak of $540,000.
At the active user level, according to the Wall Street Journal citing Similarweb data, Sora’s global user base peaked at approximately 1 million and has since declined steadily to under 500,000. Early users generated a surge of viral content featuring controversial depictions of well-known IP characters, such as Mario and Pikachu, driving initial popularity—but this momentum failed to translate into sustained user retention.
Disney's $1 billion partnership collapsed, with notification of shutdown just under an hour before closure.
Sora's shutdown directly triggered the collapse of a major partnership.
In December 2025, Disney signed a three-year licensing agreement with OpenAI, permitting Sora and ChatGPT Images to use over 200 characters from Disney, Marvel, Pixar, and Star Wars. Disney also plans to invest $1 billion in OpenAI. At the time, Disney CEO Bob Iger stated in a CNBC interview that this deal gives Disney the opportunity to participate in the rapid growth of AI.
According to The Wall Street Journal, Disney executives were informed of the decision to shut down Sora less than an hour before the announcement. The $1 billion investment was never actually made, 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 exploring partnerships with other AI platforms. According to reports, under the leadership of new CEO Josh D'Amaro, Disney is currently negotiating new collaborations with more than ten AI companies.
Anthropic is closing in, making Sora OpenAI’s “can’t-afford-to-lose side project.”
The deeper reason for Sora's cancellation is directly related to the competitive pressures OpenAI faces in its core battleground.
According to The Wall Street Journal, while the Sora team is fully focused on video generation, Anthropic has quietly gained a large number of software engineers and enterprise customers with its Claude Code programming tool. Anthropic’s annualized revenue has surpassed $19 billion, with approximately 80% coming from enterprise clients and $6 billion in new revenue generated just in February 2026 alone. In comparison, of OpenAI’s approximately $25 billion in annualized revenue, enterprise contributions amount to about $10 billion.
OpenAI’s CEO of Applications, Fidji Simo, bluntly stated during the all-hands meeting on March 16 that Anthropic is a “wake-up call.” In a subsequent internal memo, she wrote that the company had “spread its focus too thin across too many applications and tech stacks” and needed to simplify and concentrate. Previously, OpenAI had rapidly launched a series of products including Sora, the Atlas browser, hardware devices, and e-commerce features, leading internal employees to report difficulty discerning the company’s core strategic direction.
CEO Sam Altman has ultimately decided to shut down Sora and reallocate computing resources toward more strategic priorities: 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."
IPO countdown: Eliminate the $5.4 billion annual cash-burning black hole
All of this is taking place against the backdrop of OpenAI’s intensive preparations for its IPO. According to CNBC, OpenAI could potentially go public as early as the fourth quarter of 2026, following a $110 billion funding round that valued the company at approximately $730 billion to $830 billion.
A product that burns millions of dollars per day but generates only $2.1 million in total revenue is exactly the kind of number institutional investors dread to see on an IPO prospectus. Internal stakeholders could immediately spot the issue through Sora’s GPU allocation dashboard: vast amounts of GPU resources were being allocated to a product with minimal 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-power users. The way to achieve this is by transforming ChatGPT into a productivity tool.”
The Sora team has not been disbanded but has shifted focus to "world simulation research" to support robotics applications. According to OpenAI’s announcement, the Sora application and website will be shut down on April 26, and the API will be retired on September 24. The Sora 2 model will remain available in ChatGPT’s paid tier.
Other players in the AI video space are also scaling back. Seedance, owned by ByteDance, has paused its global expansion plans due to copyright issues. The rise and fall of Sora may reflect a fundamental reality of the entire AI video consumer market: impressive demos do not equate to sustainable business models, and the gap between the computational costs of video generation and consumer willingness to pay remains difficult to bridge in the short term.