Disney pulls $1 billion deal as OpenAI axes major project six months after launch

Disney pulls a $1 billion deal after OpenAI axes a major project just six months after launch.

Remember when Disney and OpenAI shook hands on what sounded like the most exciting AI deal ever? Well, that's seemingly all gone out the window now.

Back in December, the tech giant announced what it called a 'landmark agreement' with the Walt Disney Company.

The $1 billion, three-year deal was going to let OpenAI users choose from over 200 licensed Disney, Marvel, Pixar and Star Wars characters and create realistic AI videos of them on the platform Sora.

Disney made history as the first major studio to license its IP to OpenAI for use in AI video tools.

However, after OpenAI announced it was shutting down its artificial intelligence (AI) video-generation app Sora less than two years after its unveiling, Disney has now cancelled their deal with OpenAI.

“We’re saying goodbye to Sora. To everyone who created with Sora, shared it, and built [a] community around it: thank you. What you made with Sora mattered, and we know this news is disappointing,” OpenAI’s Sora team posted on X on Tuesday (24 March). "We’ll share more soon, including timelines for the app and API and details on preserving your work."

Speaking to BBC News, OpenAI said it's shutting down Sora to focus its development on other tech areas, like robotics, to 'help people solve real-world, physical tasks.'

A spokesperson for The Walt Disney Company added: "We respect OpenAI's decision to exit the video generation business and to shift its priorities elsewhere."

As reported by the Wall Street Journal, CEO Sam Altman is said to have informed staff of the decision, with the tech giant confirming it would discontinue not only the consumer app but also a developer version of Sora and all video functionality in ChatGPT.

“As the nascent AI field advances rapidly, we respect OpenAI’s decision to exit the video generation business and to shift its priorities elsewhere," a Disney spokesperson told Variety. "We appreciate the constructive collaboration between our teams and what we learned from it, and we will continue to engage with AI platforms to find new ways to meet fans where they are while responsibly embracing new technologies that respect IP and the rights of creators.”

Sora generated huge hype when it launched in 2024 for the quality of its realistic AI-generated video output.

However, the platform faced challenges, including the creation of non-consensual imagery, the spread of realistic misinformation, and copyright infringement concerns.

"The platform struggled to prevent the creation of non-consensual imagery and realistic misinformation, not to mention major copyright infringement," Forrester analyst Thomas Husson told BBC News.

Closing down a product carrying those kinds of risks, he suggested, could be a strategic decision to 'minimise the associated risks' ahead of a potential stock market listing.