OpenAI Shuts Down Sora While in Talks with Former Head on Partnership, Possibly Trading Technology for Equity

Beating AI News Flash: OpenAI is in talks with the company founded by former Sora head Bill Peebles, considering having it deeply overhaul the discontinued Sora model to develop software and services for filmmakers. If the partnership is reached, OpenAI will receive equity in the new company. However, the two sides have not yet finalized an agreement, and it is uncertain whether the model weights will be open-sourced.

Behind this potential deal is the cost that OpenAI once bet on with great fanfare but ultimately could not bear. In March of this year, Sora's global user count continued to fall from a post-launch peak of about 1 million to fewer than 500,000, losing about $1 million per day. Facing high computing costs, OpenAI decided to shift resources to ChatGPT, coding, and enterprise business, and therefore announced it was abandoning Sora, shutting down the app and web version on April 26 and terminating the API service on September 24. Even Disney's planned collaboration to invest $1 billion and license more than 200 characters fell apart before the funds were transferred.

Now, the person once responsible for Sora may take over this technology again. Peebles is the first author of the Diffusion Transformer (DiT) paper. When he left OpenAI in April, he said exploratory research needs room to diverge from the company's core product roadmap. He started a company together with DreamWorks co-founder Jeffrey Katzenberg and former Dropbox CFO Sujay Jaswa. In September, this company also planned to train a video model from scratch and was in talks with investment institutions including a16z for financing. A month later, it began seeking to directly use Sora. If a deal is reached, there is an opportunity to save part of the investment required to train a model from scratch.

Katzenberg once founded the short-video platform Quibi, raising $1.75 billion, but because of insufficient paying users, it announced closure just half a year after launch. Now, he is betting on video again, with the goal shifting from competing for general audiences to serving professional filmmakers. For OpenAI, this means an opportunity to turn shelved R&D results into equity returns; for the new company, it can combine ready-made model technology with Hollywood resources to seek professional clients with stronger willingness to pay.