Why OpenAI Shut Down Sora: The Hidden Financials

0:00Guys, 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. I think kind of the, I'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 Anthropic is kind of growing with like some of their cloud code features and some of their cloud code work features. So they're trying to more focus. 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 gonna get into on this podcast before we do. I wanted to mention, if you wanna 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. We have over 200 members in here and this is basically the place where we share all of our inside tips, tricks, strategies, workflows. This week I just recorded a 20 minute long tutorial on all of my workflows and a lot of the skills and projects I'm doing with cloud co-work.

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2:01I was a little bit surprised at first until we got into the numbers, but they had just struck a deal for, I think a billion dollars with Disney, so they were gonna 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, I said 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, but 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 low number to me, but from my perspective, because I was making some AI video content, but I would never use Sora because it was primarily vertical.

3:02And the stuff I was doing was for websites and things like that. So I was using Google VO3. So I don't know, Jane, 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 Day 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 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 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. So it wasn't making a lot of money and it was costing an insane amount of money. As 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

4:04was 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 focused thing, right? They're concerned that it's taking too much focus and anthropic is beating them kind of the text, which was their original area that they were winning in. But 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 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 opening I can't make this an economical product, how is everybody else doing it? And 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,

5:04which is rolling out inside a cap cut, right? So like a huge bit, 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. They Nvidia's kind of chips are getting stifled to ship to China. So 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 GROC. Imagine apparently their video editor or their video AI tool is one of the, has the most market share, which is interesting. But then there's also Google and Google definitely can afford to burn money. But their VO3 is an amazing model as well

6:07for video generation. I don't think that's going anywhere anytime soon. Yeah, I mean, I really think the biggest thing with OpenAI is they're the way they positioned Sora is kind of like this fun social media type sharing video. That was kind of the way it was portrayed, especially with, you know, in a first launch, 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 it kind of was just kind of a, gimmick if you will. So I think that's maybe a big reason they fell off or 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 a Google VO3, for example, is I think really great tool for anyone who's doing real video work. Like if you are doing, for example,

7:08real 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. It'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 that 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 Kill Patrick. I've interviewed him and had him on my different shows a bunch of times. He was working over at Google as a member of the technical staff and he said, videos here to stay introducing VO3.1 light are most cost efficient video generation model to date. On April 7th, we're all so reducing the price for VO3.1 fast. So it feels like Google isn't really slowing down. Their models are, they're 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 opening I must have just had a horribly

8:09inefficient 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 open AI $133. Wow. This 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 kind of just sat there regenerating over and over again and racking up a $100,000 bill. Like I should be paid for that. That's great. 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 fake ring camera video. So 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 the AI generated video, especially Sora, it wasn't 100% like you could generate

9:11as many as you wanted on their platform. But 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 nine million views in under a week. So if you were generating, my brother was telling me, he's like, yeah, I would always make these like karma videos. We're like a neighbor who 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. Oh my god. 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 or 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.

10:12But 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 when 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. All right, guys, thanks for tuning into the podcast. We will catch you all in the next episode.