Why OpenAI Shut Down Sora: The Hidden Financials

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0:34If you're into podcasts, chances are you have something to say too. With RSS.com, starting your own podcast is free and easy. Upload an episode and we distribute it to Apple Podcasts, Spotify, Amazon Music, and more. Track your listeners, see where they're from, and start earning from ads just like this. If you've been thinking about starting a podcast, this is your sign. Start your new podcast for free today at RSS.com. Guys, there is some huge news that you've probably heard, which is that OpenAI is shutting down Sora. There is some crazy new numbers that have just been released on why OpenAI is shutting down Sora and how much money it was bleeding the company.

1:17I'd be curious what you heard about it, Jamie, but a lot of the things that I heard at the beginning were like, oh, they're just trying to focus on text because Anthropik is kind of growing with some of their cloud code features and some of their cloud cowork features. So they're just trying to be more focused. I didn't realize how much of a money thing it was. But then there's the whole Google situation. There's a lot we're going to get into on this podcast. Before we do, I wanted to mention, if you want to grow and scale your business using AI tools, the number one way that Jamie and I recommend you do that is joining our AI Hustle School community.

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2:53Okay, Jamie, this whole Sora thing, what was your first impression on, I guess, hearing that it was getting shut down? I was a little bit surprised at first until we got into the numbers. But because they had just struck a deal for, I think, a billion dollars with Disney. So they were going to be able to license some of the Disney characters on Sora. So it seemed like they're really ramping it up and trying to really promote it. But as of last week, I think they released that they were losing a million dollars per day on Sora because they had so few users that were actually using it. And so, yeah, so they had the peak users on Sora were around a million dollars or sorry, a million, which I don't know if that means per day or per week, whatever that is.

3:40But now it's down to around 500 ,000. So really, no one was using this, which is, I don't know, a little bit surprising. That seems like a really, really low number to me. But, you know, from my perspective, because I was making some AI video content, but I would never use Sora because it was primarily vertical. And the stuff I was doing was for like websites and things like that. So I was using Google VO3. So I don't know, Jayden, is this a surprising thing to you? Or what are your thoughts on the whole thing? I've heard a bunch of different numbers, by the way, on this. So one of them is like from TechCrunch.

4:17They reported from, I think, maybe the Wall Street Journal that it was losing a million dollars a day. I actually saw another number that it was costing them 15 million dollars a day from a different report. It's hard because OpenAI hasn't come out with these numbers. People are just estimating and looking at some like internal stuff to try to figure it out. But what's crazy is, yeah, the usage went way down. and apparently it's only ever made$2 million of people just subscribing to Sora exclusively. So it's not a big revenue generator and it could be costing billions in compute costs every single year.

4:51So it wasn't making a lot of money and it was costing an insane amount of money. Some estimates I saw said it was costing them $5 billion a year or that's how much they were on track to spend if they kept it running for a full year. And so that's kind of why they shut it down was they wanted to move that compute to something more valuable, which is robotics is kind of the direction that they're moving it into. And so I think, yeah, it could be a focus thing, right? They're concerned that it's taking too much focus and Anthropik is beating them in kind of the text, which was their original area that they were winning in.

5:22But I think it's also like a money thing. Now, one crazy thing that you mentioned is the Disney deal had committed about a billion dollars to this partnership. They found out it was getting the plug pulled on it. And if Disney's committing kind of a billion dollars or if there's like a a billion dollar deal with Disney on this. I think that even still, this whole partnership did not make any sense. And so yeah, they had to shut it down, which is crazy. And it leads a bigger question, which I have been thinking about, which is like, what about all of the other video companies? Like if OpenAI can't make this an economical product, how is everybody else doing it?

5:55And it's actually interesting. I think there's a couple answers. Number one, I think you'll see like some of the Chinese models like Kling and Seed Dance, which is rolling out inside of CapCut, right? So like our huge video, the biggest video editor in the world is getting like an AI model built into it. And I think that a lot of these Chinese models have absolutely figured out more efficient ways to run these models. That's just kind of the nature of the game. They have all of these like chip export limitations. They don't have as many chips, the NVIDIA's kind of chips are getting stifled to ship to China.

6:25So I think they actually do figure out how to make these models more efficient. And I think that's probably a really good thing. And then you also have like other American companies like Runway, for example. And I recently saw an article about Runway and it is launching a$10 million fund to help fund other startups that are building with AI. So it doesn't feel like they're slowing down. They're kind of going full steam still. But I will say Runway's like usage of the AI video market is pretty small. I think one of the biggest players right now is Grok. Imagine, apparently, their video editor, or their video AI tool is one of the, has the most market share, which is interesting.

7:00But then there's also Google and Google definitely can afford to burn money, but their VO3 is an amazing model as well for video generation. I don't think that's going anywhere anytime soon. Yeah, I mean, I really think, I think the biggest thing with OpenAI is the way they positioned Sora as kind of like this fun social media type sharing video. That was kind of the way it was portrayed, especially with, you know, when it first launched, It was like, you could make yourself eating a pizza with Jake Paul, you know, like, and then we're going to introduce these Disney characters where that's not really something people, you know, when it comes to social media, people want authenticity and, and it kind of was just kind of a gimmick, if you will.

7:43So I think that's maybe a big reason they fell off where some of these other tools like are more specialized. Like I know there's one called Arc Ads. Yeah. They're specifically for UGC content for brands to be able to automate UGC and they're really good at it. Or Google VO3, for example, is I think a really great tool for anyone who's doing real video work. Like if you are doing, for example, real estate videography and you want to start with a pan around the house from a drone and then zoom into the house, into the kitchen with like a nice slow-mo, it can connect those frames for you. You know, you can choose your aspect ratio.

8:20It's just a lot more robust of a tool than the Sora stuck with the, you know, the vertical kind of cheesy video. Yeah. And one thing I'll say about all of that is that they're like video models. I don't think are slowing down. There's our friend of the podcast, Logan Kilpatrick. I've interviewed him and had him on my different shows a bunch of times. He was working over at Google. He's a member of the technical staff. And he said, videos here to stay introducing VO 3.1 light are most cost efficient video generation model to date. On April 7th, we're also reducing the price for VO 3.1 fast. So it feels like Google isn't really slowing down.

8:58Their models are releasing cheaper versions. They're releasing new versions. It seems like they're going all in. And so Google definitely could afford to bleed. But I feel like OpenAI must have just had a horribly inefficient architecture for this. And I hope that they're not gone. I actually heard a number from one report that every HD, 10-second HD video clip you were generating on Sora was costing OpenAI$133. Wow. That's insane. Which is horrible. That's insane. It's so crazy. I'm like, bro, they should have paid me for all the videos I didn't generate. I could have just sat there regenerating over and over again and racking up a$100 ,000 bill.

9:38Like, I should be paid for that. That's crazy. But it seems like Google's going all in. And one thing that I do think is funny, I did actually hear this one use case from my brother, I believe. He always has these like, the funny, crazy use cases. And he's like, dude, I love the Sora video model because you can make like fake ring camera videos. I'm like, what? So apparently there's a whole trend of creating fake ring camera videos. And I've seen it. I've actually found it over on X, which is, it makes me laugh. Because when you watch an AI generated video, especially Sora, it wasn't 100%. Like you could generate as many as you wanted on their platform.

10:13but they weren't that high quality. But if you made it look like it was a ring camera, then it didn't really matter. And so this one guy, he's got a ring camera where apparently it's like a girl and then she gets pooped on by like a bird. And apparently this got 9 million views in under a week. So people are generating, my brother was telling me, he's like, yeah, I would like always make these like karma videos where like a neighbor was like coming and yelling at the ring camera. And then when they're walking away, they would like trip and fall in the mud or something. And they would get like thousands of views.

10:39I'm like, oh my gosh. I don't really know what the point of these videos are. But people are racking up viral ring camera videos with Sora. One thing I'll say, as we are wrapping up this podcast, if you want to try Sora, because it's in April, so I mean, basically, when you're hearing this, it's this month. We're recording on the last day of March. In April, Sora is shutting down. You won't be able to use the app. You won't be able to use the platform. It's gone. Every$133 video that you usually are used to making will be gone. but if you want to try it out before it disappears because also the API is getting deleted it's on my platform AIbox.ai if you want to try it out maybe make yourself a viral ring camera video go try out AIbox.ai you get access to this but also all of the different Google models so even once Sora gets deleted you can save your prompts and use them on there so anyways go check out AIbox if you want to get the last taste of Sora before it's officially gone from the internet alright guys thanks so much for tuning into the podcast we will catch you all in the next episode You want to know the greatest thing ever?

11:43Download the game Animals and Coins. Seriously, I started playing it just to pass the time, and now I can't stop. It's fun, it's strategic, and honestly, kind of life-changing. Building my animal empire, collecting rare coins, it's the perfect escape after a long day. No wonder it's one of the most played games in the world. Animals and Coins isn't just a game. It's my daily dose of joy. If you haven't downloaded Animals and Coins yet, you're seriously missing out. Trust me, download Animals and Coins today. you're listening to a podcast right now driving working out walking the dog if you're into podcasts chances are you have something to say too with rss.com starting your own podcast is free and easy upload an episode and we distribute it to apple podcasts spotify amazon music and more track your listeners see where they're from and start earning from ads just like this if you've been thinking about starting a podcast this is your sign start your new podcast for free See today at rss.com.