More Coding, Less Slop? Why OpenAI Ditched Sora

0:00Hey, everyone. It's Jess. And Ryan, do you have plans on April 28th? If so, you should cancel them and come to our next Journal Live event, which is taking place in Los Angeles on April 28th. And we all know that L.A. is great in April. So come on out. It's going to be at the El Rey Theater. Jess and I are going to interview some really interesting people. We're going to have a lot of fun on stage. And then we'll stick around afterward to hang out and chat with all of you. Tickets are still available, but not for long. So grab yours now via the link in our show notes.

0:36If you're plugged into the AI zeitgeist, you've probably heard of Sora.

0:41Berber Jin:So Sora is named after the Japanese word for sky, and it's OpenAI's AI model that is able to generate high-quality video from text. Our colleague Berber Jin covers the AI industry. He distinctly remembers when the public first got a glimpse of Sora back in 2024. Is this the future of content creation? Meet OpenAI's Sora 2. So it was kind of a magical and also a bit of a scary moment. At the time, it was the first really sophisticated video generation tool that a company had previewed to the world. With just a few words, you can create hyper-realistic videos of literally anything you can imagine.

1:24Berber Jin:and it really just kind of showed the power of the technology. That video is not real. It's completely AI. If that watermark wasn't there, I genuinely would have thought this was real. I remember OpenAI posted these actually really beautiful clips. There's one that always sticks in my mind, which is like a pack of woolly mammoths, like galloping through a snowy field. I remember. Because I used to love watching Ice Age as a kid. So it was one of those like wow moments I had covering AI where I really just realized that this was more than just about building a chatbot. People were so impressed with Sora's videos that many wondered if it would change the entertainment industry forever.

2:08Berber Jin:All the conversations about whether we'd be watching AI-generated movies and there'd be no more actors and actresses and like no more screenwriters. That was because of Sora.

2:22But then, just a few weeks ago, OpenAI did a 180 on Sora. All right, we got some breaking news out of the business world.

2:29Berber Jin:OpenAI saying it's shutting down its video generation platform, Sora. You see the post here on Sora's... This was a shock, I think, for everyone. Sora felt really integral to Sam Altman's vision for the company to kind of branch into the realms of popular culture and entertainment. And so when they shut it down, it was this very abrupt, sudden, unpredictable moment that I think also kind of speaks to just how quickly opening eyes identity is changing as a company.

3:03Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza. It's Tuesday, April 7th.

3:16coming up on the show the end of Sora and what it says about the future of the AI industry

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4:37For OpenAI CEO Sam Altman, products like Sora were key to his vision for the technology.

4:44Berber Jin:A lot of Silicon Valley companies were built around making HR workflows easier or building software that can make it easier for you to do note-taking or the slacks of the world, like communicate with colleagues. That was never really his belief in what Silicon Valley could be. And Sora was part of this broader vision that he had to kind of take these more ambitious moonshot bets with the technology. When Sora first launched, it was only available to paid ChatGPT subscribers. But in September of last year, OpenAI launched a Sora app with a social media feed where people could make and post videos.

5:26Berber Jin:That's where some of the more like AI slot videos came in, where people were splicing their faces into different scenes and kind of using it for more silly, goofy videos. It's like, I met Bigfoot or whatever type of videos. Yes, and then the one that was kind of not great for open AI was a lot of users started using Martin Luther King Jr.'s likeness. I have a dream that Xbox Game Pass Ultimate was still$20. and having him do kind of very silly things. I have a dream that Sam Altman saves humanity instead of making AI slop. Which was a bit of a PR nightmare for OpenAI. King's estate complained about the videos, which led the platform to announce that it had removed his likeness.

6:19Did the company expect to make money from Sora?

6:23Berber Jin:So the bet that they were making was that they really wanted this thing to go viral and then figure out how to chart it into a money-making business afterwards. And Sora was generating a lot of hype. So much so that even Disney wanted in. The entertainment giant announced it would partner with OpenAI to license hundreds of Disney characters so people could generate videos with them. For Disney, I think it was an important moment for them because they felt like AI was going to change the way that entertainment companies operated and change their creative processes. And for Disney, the deal with OpenAI was a landmark moment that kind of showed that there was a future where they could coexist and work with an AI company in a way that they felt respected their own IP.

7:13Was any other AI company doing anything like Sora at that point?

7:18Berber Jin:Google has invested a lot of money into video generation. And there are some startups that are also working on video generation technology. But very interestingly, Anthropic, OpenAI's biggest startup rival, avoided going into video generation, particularly because it just costs a lot of money. It costs more money to train and run video models than it does to run the language models that power chatbots. And so OpenAI was really the face of it. So OpenAI decides it's going to double down on Sora. Its rival Anthropic decided to go in a different direction. Can you say more about that? Yeah, so Anthropic, obviously this startup rival for OpenAI that's putting them on their back heels.

8:08Berber Jin:They are really focused on building AI tools for businesses that are looking to integrate AI into their workforce. Anthropic's approach was more focused on agentic AI, the kind of AI that's like an assistant. It does the boring stuff for you, like scheduling emails, developing software, or analyzing data. How do you think about the contrast between these two companies, OpenAI and Anthropic? Like, would it be fair to say that in this AI race, they define themselves in opposition to each other? They very much do. We've reported the very ugly history between Sam Altman and Dario Amadei, who is the CEO of Anthropic.

8:50The most high-profile rivalry in tech is heating up in 2026 as both OpenAI and Anthropic race ahead. Anthropic released a series of ads that directly mocked ChatGPT. Two of AI's biggest rivals, Anthropic's Dario Amadei and OpenAI's Sam Altman, are going viral after a public snub. So that's OpenAI's Sam Allman and Anthropik's Dario Amadei, not holding hands.

9:15Berber Jin:And, I mean, in Silicon Valley, it just depends on who you talk to. Like, it's almost like they're two different camps in terms of who people are kind of sympathetic or allied to. Berber says the distinction really came into focus when OpenAI launched the Sora app. That same month, Anthropik came out with a new version of its coding model. And starting last fall, they kind of took Silicon Valley by storm with the release of a new version of CloudCode, which is their AI coding agent. If you talk to any software engineer in Silicon Valley, they will rave about CloudCode, about how they don't have to work anymore, how AI is becoming so much smarter than them, how they think their jobs are going to be obsolete.

9:59Berber Jin:And Anthropic really was driving that conversation. The two rivals are both planning to go public, potentially even this year. And Berber says going into 2026, the huge success of Anthropics' Claude Code sparked panic inside OpenAI. They've been very much in code red mode for the past few months because they were seeing that they were losing the enterprise race. and they realized that their models were just not as good as Anthropics when it came to coding. And as a result, they just began taking a much more critical look at all the other projects that they had previously greenlit at OpenAI. So how did Altman's vision for AI video end up on the chopping block?

10:49That's next.

10:59K-Pop Demon Hunter's Saja Boys Breakfast Meal and Huntrix Meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi? It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day.

11:13Berber Jin:It is an honor to share. No, it's our honor. It is our larger honor. No, really. Stop. You can really feel the respect in this battle. Pick a meal to pick a side. And participate in McDonald's while supplies last.

11:35Open AI has a reputation for taking big swings. Altman has described the company's approach as startups within a startup.

11:43Berber Jin:There's the team that's working on the new hardware device. There was the Sora team. There was a team working on like an AI-powered browser. And it kind of made sense because like, you know, AI is very unpredictable. and like they wanted to empower their researchers to be able to spin up different techniques for improving AI. But all of those experiments and projects use a processing power and the company only has so much of it. All the labs are basically rationing chips. Like every team inside OpenAI is like begging for more computing resources. And what employees who were there at the time would say is that the way the AI chips were allocated between teams was very unpredictable.

12:26Berber Jin:Like you could wake up one week and it would become very clear that like some new team had received a massive amount of computing resources. Sora was one of those teams because video generation uses a lot of computing resources. When we talk about it uses a lot of compute, like do we have kind of like X number versus like a chat GPT? We don't and the company doesn't disclose it. But what I can say is that if you talk to researchers at OpenAI, I mean, a lot of them were a little bit surprised by the amount of computing resources that the Sora team got. So Sora was this really interesting case study for that culture because the team worked separately from the research division.

13:12Berber Jin:A lot of other OpenAI employees didn't really know what Sora was up to. Berber says this sort of compute power could be justified for an AI model or app that was bringing in money or new users. But Sora wasn't really doing either. Sora had a very brief moment in the sun. The week after it was released, it rocketed to the top of the app store and stayed there for a short while after. But then it immediately plummeted and kind of flatlined out at around a little bit under 500 ,000 users a day from a high of over a million. And I think OpenAI has realized that recreating that ChatGPT moment has been a lot harder than they expected.

13:56Berber Jin:OpenAI was hoping that people would love using the app, refer their friends. It would kind of ingrain itself in the pop culture. And that just never really happened. This was all especially problematic with OpenAI tightening its purse strings ahead of that potential IPO later this year. And so Sora's fate was sealed. The Sora team was about to start another very expensive training run to basically build the next more sophisticated version of Sora. And then OpenAI executives saw how much it would cost and were just like, we can't really afford to make this tradeoff. And so let's just kill the whole thing.

14:39Berber Jin:And that's the thing that was really surprising because it wasn't a huge business for them. But just because it was so tied to the company's identity, like, I think it would have been hard to predict them getting rid of video generation altogether. After the announcement, Altman wrote a message to employees explaining the decision. He said the move was a necessary sacrifice for the good of the company, a, quote, difficult tradeoff. And it's interesting. I mean, he very much seemed to realize just this new moment that OpenAI was in where ahead of an IPO with tremendous competitive pressure, they had to kind of ditch a vision for the company that he really believed in.

15:21Was it kind of an L for Altman?

15:25Berber Jin:Yeah, it was an L for Altman. Because, I mean, he was really personally invested in Sora.

15:35What about OpenAI's big partnership with Disney? When OpenAI pulled the plug on Sora, what did it mean for that deal?

15:42Berber Jin:That whole vision for Sora, it was kind of whiplash for them, right? Because that's what they thought would be the future of this partnership. And that just went away overnight. And I think for Disney, they just have to, they're kind of back to square one in terms of thinking about how they're going to live in this AI world. now that their main partner in Silicon Valley has basically done a 180 and pulled back. So if OpenAI was sort of on the cutting edge of this and now they're pulling out, what does that mean for AI-generated video? It's not like the whole world of AI video generation tools is dead, but it definitely kind of reshuffles the playing field a bit.

16:22Berber Jin:And it's just like raising these questions again of like, how soon is this technology coming? Who now is going to be bringing this technology to us if not OpenAI? And like, what's our strategy now for making sure that we are prepared for that world? Meanwhile, Berber says OpenAI is now all hands on deck building a super app. It would combine ChatGPT with an AI browser and the company's coding tool, Codex. It's interesting, though, it sounds like with this pivot, OpenAI and Anthropic are going to be focusing on kind of the same things, which is clarifying their core business models. So are these two rivals essentially just going to be walking in the same direction, doubling down on a very similar suite of products?

17:08Berber Jin:The short answer is yes. The money now is in these agentic tools, specifically agentic coding. And that's a huge focus area for them. Chad Chibiti is still a much larger business than the consumer version of Claude. And so that's the advantage that OpenAI has. But right now, they are both very actively battling for the same set of customers. And I think compared to a year ago, they were obviously still competing, but they were focused on different areas of the AI market. But OpenAI is still trying to find ways to differentiate itself from its rivals. Last week, the company announced that it's purchasing a popular video podcast about Silicon Valley, which executives hope will help them shape the narrative around the company.

17:57They've also said that the show will remain editorially independent. And investors seem excited about the direction OpenAI is going. The startup recently closed a historic funding round of$122 billion.

18:13So OpenAI is going strong. With that said, what do you think this moment means for the company?

18:19Berber Jin:At the level of OpenAI's identity, I think it kind of represents the death of a vision that Sam Altman had for OpenAI that was kind of about using AI not just as like a basic productivity tool, but to change the way people interacted with technology and specifically AI as an enabler of creativity. Are we just generally having to reorient on the promise that we, the consumer, have been told about how amazing and fun this tech is going to be? And actually, we're just going to be seeing it at work all the time. Yeah, I think it's definitely this weird moment where the kind of vision that people have of AI is actually a little bit different than how these companies want us to use these tools.