When OpenAI announced last week that it was killing Sora, the industry was caught off guard. The AI video tool had launched just six months earlier with enormous fanfare. Users could even upload their own faces and insert themselves into fantastical scenes. Was it all just an elaborate data grab?
A new WSJ investigation paints a more mundane picture: Sora was simply a money pit that nobody was using.
The Numbers Are Brutal
After launch, Sora peaked at around one million users worldwide. Sounds decent. Then numbers collapsed to fewer than 500,000 — while the app was simultaneously burning through roughly one million dollars per day in compute costs. Not because people loved it, but because video generation is absurdly expensive to run.
Every user who dropped themselves into a fantastical scene was drawing down a finite supply of AI chips. The cost-to-value ratio was completely upside down.
Claude Code Is Eating OpenAI’s Lunch
While an entire team at OpenAI was trying to make Sora work, Anthropic was quietly winning over the software engineers and enterprise customers that actually drive revenue. Claude Code, as TechCrunch puts it, “was eating OpenAI’s lunch.” That’s a remarkable assessment from one of the most influential tech publications.
CEO Sam Altman made the call: kill Sora, free up compute, refocus.
Disney Found Out One Hour Before
Just how sudden this was? Disney had committed one billion dollars to a Sora partnership. The entertainment giant learned about the shutdown less than an hour before the public announcement. The deal died with the product.
My Take
The Sora shutdown is more than just a failed product. It’s a reality check for the entire AI video industry. If even OpenAI — with virtually unlimited capital behind it — can’t make the economics of video AI work, who can?
At the same time, the decision shows where the real battle is happening: code assistants and enterprise tools. That’s where the money is being made, not with pretty videos.
Sources: