OpenAI is discontinuing its video generation model Sora and ending the $1 billion agreement with Disney just four months after it was announced. The app, launched last September, allowed users to generate short video clips from text prompts. CEO Sam Altman said demand for Disney characters on the platform was "off the charts," but the deal never materialized as the companies diverged strategically.

Disney shares jumped 2.5% when the deal was announced, but the entertainment giant never committed the investment. Sora struggled with disappointing uptake and challenging economics, consuming substantial computing resources. The collapse comes after Altman declared a "code red" at OpenAI in December, urging staff to focus on core priorities amid intensifying competition with Anthropic for business customers.

OpenAI will refocus its team on advanced robotics and AI models that can navigate the physical world, while maintaining ChatGPT's image generation function. Disney stated it "respect[s] OpenAI's decision to exit the video generation business" and will continue exploring AI technologies. The abrupt end to this high-profile partnership reflects the rapidly evolving priorities in the generative AI space.