OpenAI ends Disney partnership as it closes Sora video-making tool - BBC
OpenAI closed Sora on Tuesday, and with it went the largest single licensing bet ever placed on generative video: a $1 billion equity stake and three-year deal that would have brought Disney's full catalog of Marvel, Pixar, Star Wars, and Frozen characters into OpenAI's video generator. The closing paragraph of that chapter, though, is a leadership story as much as a product story. Bob Iger negotiated and announced the deal in December 2025. Josh D'Amaro, who succeeded Iger as Disney CEO less than two weeks before Sora's shutdown, is the one who confirmed its exit.
The $1 billion figure dominated coverage when it was announced — but it was always a headline number under construction. OpenAI's own announcement included the qualifying language: the transaction was subject to negotiation of definitive agreements, corporate and board approvals, and customary closing conditions. Nothing was signed. Nothing closed. Per Deadline, no actual money changed hands. The deal was a letter of intent dressed in a press release.
That's a meaningful distinction when assessing what actually collapsed here. Disney's new leadership team didn't unwind a live investment — they declined to pursue one that had been stuck in limbo for three months while OpenAI, still navigating its complicated nonprofit-to-commercial transition, tried to satisfy conditions neither side appears to have defined clearly.
The product dynamics made the deal harder to justify. Sora launched to significant attention last year, but the numbers softened quickly. The app peaked at roughly 3.3 million downloads in November 2025 across iOS and Google Play, according to Appfigures data reported by TechCrunch, then fell to 1.13 million by February — a two-thirds decline inside four months. Lifetime in-app purchases totaled around $2.1 million. For context: that's less than what a moderately successful mobile game makes in a bad week. OpenAI was burning whatever it cost to run the infrastructure behind a video model for what amounted to a niche creator tool.
The content moderation problems didn't help. Deepfakes of Martin Luther King Jr. and actor Robin Williams circulated on Sora, prompting both of their daughters to post on Instagram asking users to stop. OpenAI had already been forced to rename the Sora feature that let people generate videos of public figures — originally called Cameos, it became Characters after a trademark lawsuit from the cameo app. These are the second-order costs of a consumer product that couldn't stay inside its own guardrails.
At an all-hands meeting reported by Ars Technica, OpenAI head of applications Fidji Simo told employees the company needed to stop being distracted by side quests and orient toward high-productivity use cases. Sora, whatever its technical merits, was a side quest. A consumer video app at the frontier model price point — serving deepfakes, celebrity impressions, and viral downloads that didn't convert — wasn't going to be the vehicle.
A Disney spokesperson, quoted by Variety, said the company respects OpenAI's decision to exit video generation and shift priorities elsewhere. The phrasing — exit video generation, shift priorities — quietly acknowledges that OpenAI's retreat doesn't mean Disney is leaving AI. It isn't. The company's statement added that Disney will continue to engage with AI platforms to find new ways to meet fans where they are while responsibly embracing new technologies. That's corporate boilerplate with real substance underneath: Disney is still in the market for AI partnerships, just not this one, and not on Iger's terms.
Bob Iger, who remains on Disney's board through the end of 2026, is the one who staked that claim. He announced the deal at a December 2025 press event, and touted it again on Disney's February earnings call as a generational leap toward hyperspace. The pitch was coherent: bring the world's most valuable character catalog into the most talked-about AI video tool, and see what the creative community builds. Whether that pitch was ever technically or commercially sound — whether 250 characters in a video app was a product or a premise — is a question the market answered by February.
What's left is a structural gap in the AI video landscape. OpenAI's exit, combined with the absence of comparable licensing deals by any other frontier lab, puts Google in a notable position. As the Hollywood Reporter noted, Google is now essentially the only player in AI video generation at scale that hasn't inked IP licensing agreements with major rights holders. That may change. But for now, the field is Google's to lose or define — a quieter winner emerging from someone else's loudly announced failure.
D'Amaro, one week into the top job when he confirmed the exit, is drawing a line under his predecessor's most ambitious AI bet. The line was always more fragile than the press release suggested. Now it's gone.