On Tuesday afternoon the bomb dropped. OpenAI was closing down Sora, and its Disney deal was over. The big video-generation tool that was supposed to turn Disney+ into a user-generated paradise — or a field of memeslop, depending on your point of view — is no longer. And maybe, with it, OpenAI’s Hollywood ambitions are gone too.
Three veteran Hollywood Reporter editors — editorial director David Katz and senior editors Steven Zeitchik and Julian Sancton — convened to make sense of the news.
Steven Zeitchik: Gentlemen, we have the biggest story in Hollywood and tech in many months. Sora is dead and Disney+ won’t be Sora-fied. What’s your first reaction?
David Katz: From a Disney perspective I’m thinking of [new CEO] Josh D’Amaro and what a crazy development it is for him. They probably sold this to Wall Street as a future-proofing 100X opportunity. And now they have to explain why the opportunity went away.
SZ: The next earnings call is going to be a trip — giant Gilda Radner-style “never mind” incoming. Of course he can just put the blame on Bob Iger — gently — and say this was his predecessor’s questionable decision.
DK: It’s a lot for a new CEO to deal with but it’s true he wasn’t the man in charge when the deal was done. And at least it does get him out of something that was unpopular in Hollywood. They will — presumably — get their billion-dollar investment back, even if now it can’t earn that supposed multiple and all that Valley-style growth they were eyeing.
Julian Sancton: I think it’s clear how much Disney was annoyed by this. They put out a statement saying “we respect OpenAI’s decision to exit the video generation business and to shift its priorities elsewhere,” which seems like a pretty big screw-you.
SZ: The question is whether it’s just a screw you to OpenAI or a screw you to memeslop generally. To me a company sitting on that much IP doesn’t just walk away from the chance to mine it all with the help of AI and user-generated video.
DK: The “make money without doing anything” approach.
SZ [laughs]: I mean, that’s what Wall Street expects from a conglomerate these days. This could just be a chance for a mulligan. Like, OK, we didn’t make it work with OpenAI. But if want to swing from the tee again, Google and Byte Dance have a golf course waiting.
JS: D’Amaro just has to wait until the egg clears from his face.
DK: But you can also see them sitting it out, at least for a beat. Josh can use it as a talent play. He tells all the writers and actors and directors “my Disney isn’t selling out to Big Tech.”
SZ: Ya Disney is definitely not a hero here to the creative community, but they’re maybe just a … little less of a villain. He could use it to get some currency back a little bit. I just wonder if faced with the crossroads between writers and Wall Street, Disney will ultimately really choose writers.
DK: If past is precedent, it will choose the Street.
SZ: And let’s not forget regardless of what Disney does a competitor can now jump in. David Ellison has talked all about having many more hours of engagement with, and revenue from, Paramount shows than the hour or two a week they presently have. I could see them making a deal with someone and the arms race is back on.
JS: Yeah I think we could still see an escalation here. This is too tempting for them.
SZ: It could be like a nuclear non-proliferation treaty. A country proclaims “No new weapons!” and everyone gets excited. And then the country waits a minute and go builds a whole new arsenal. I do want to pivot and ask about the OpenAI of it all. They’ve been so eager to make inroads in media and Hollywood for so long, dating back to the ChatGPT and The New York Times lawsuit and continuing with all their studio meetings over the last few years. Is this really the end for them?
JS: Well they say they’re not getting out of video-generation, if we believe them, which I’m not sure that I do. They have declared the “code red” and trying to catch up to Anthropic on enterprise and defense and all of that. I can see where this is a distraction from that priority. Or from saving others parts of the business.
DK: And the compute is so expensive. They could have just made a calculation it wasn’t worth it.
SZ: Even if it’s a cash-centric issue, I just don’t understand how you spend so many billions building something and then ditch it before it could become a business and start to really spin off revenue. They’ve already made all the investment.
JS: But what are they good at it? Mainly name recognition. I’m not sure that makes you good at creating a viable business, even in memeslop.
SZ: But all that name recognition has a business value — see under ChatGPT. it’s just crazy that a company with 900 million subs — a company so massively popular with consumers — would say, eh, we really don’t want to be in the business of how consumers interact with the Internet, which is video. And they had the best partner to do it — the company that owned a lot of the most popular video in the world. Something is not adding up.
JS: You’re saying OpenAI doesn’t have a clear, well-chosen lane and strategy.
SZ [laughs]: I guess it’s not that surprising given how all over the place they’ve been. I’m just surprised they’re ditching this lane.
JS: We’ll see. There’s a lot more time for this to go all over the road.
Source:
www.hollywoodreporter.com
