Just six months ago, OpenAI was touting the latest version of its generative AI video model Sora as “the beginning of a whole new era” for creators, bringing “a lot of joy, creativity, and connection to the world.”
But Sora, a platform that allows you to generate breathtaking videos of long-extinct woolly mammoths as easily as you can create shampoo ads starring Hitler, was born by a different company than the one that exists today.
OpenAI decided to shut down this week, citing a need to focus. About other priorities. It also scaled back some of ChatGPT’s shopping features and paused development of a much-maligned “erotic chatbot” that promised sexually explicit conversations.
This change reveals what the company was like in the past. Once the disruptor of the AI world, now Experts who spoke to CBC News say the company is currently facing something of an identity crisis as it struggles to choose a lane on the busy road to profitability.
“Everyone sees them as a very talented organization with top-notch technology, but they may be missing the focus of some organizations on the AI frontier like Gemini and Anthropic,” said Toronto-based co-founder Sheldon Fernandes. AI technology company Darwin AI.
OpenAI is on the path to going public, which Fernandez says means it will need to raise billions of dollars to pay for things like employees, data centers and the computing power needed to train and run the AI.
“To do that, we need to present an economically coherent story to investors and the public.”
identity crisis
So far, that story has had many twists and turns.
At first OpenAI, an open source nonprofit organization, has since transitioned to creating a closed source model through its for-profit arm. CEO Sam Altman, who once called advertising “our last resort,” introduced it with ChatGPT last month.
After a year of boosting valuations and stock price-boosting trades that sent Wall Street soaring. OpenAI’s partnerships with the likes of Disney and Nvidia have either fallen through or not fulfilled their initial promises, with Nvidia CEO Jensen Huang reportedly frustrated by OpenAI’s lack of business discipline.
The company recently lost a major deal with Apple to Google. And the relationship with Microsoft is becoming increasingly strained.
and ChatGPT The instant checkout feature that led OpenAI to partner with Shopify, Walmart, Etsy, and PayPal; Currently being rolled back.
While it’s normal for technology startups to pivot, Fernandez said OpenAI The company has developed a reputation for “capricious behavior” and has struggled to juggle and monetize the consumer products included in these deals.
How Sora landed on the cutting board
The decision to retire Sora, which was first released in December 2024, was made quickly. Just one day earlier, OpenAI had updated its safety policy for video generation apps.
Sora debuted with much fanfare and briefly reigned at the top of app stores everywhere, but Fernandez noted that rival platforms such as Google’s Veo, xAI’s Grok and Chinese-owned Kling AI have since emerged and are producing videos as good or better than Sora.
“It was almost like the TikTok of AI-powered videos,” said Carmi Levy, a technology analyst and journalist based in London, Ont. “And at the end of the day, it’s not very appealing to people. There’s no virality, there’s no community. It’s anti-social social media.”
The platform was also, by some accounts, an expensive failure. In November, one analyst suggested that OpenAI costs US$1.30 to generate one 10-second video. Analysts estimated that this would cost the company approximately $15 million each day, based on the 11.3 million videos Sora produced each day.
Just weeks earlier, Sora head Bill Peebles admitted that the platform’s economics were “completely unsustainable.”
front burner32:33Inside OpenAI’s passionate pursuit of AI superiority
Sora’s death reportedly came as a surprise to Disney. Disney announced in December that it would invest $1 billion in OpenAI to enable Sora users to generate videos featuring their favorite House of Mouse characters.
To that end, Levy explained that OpenAI is now focusing on a set of products that it can sell to enterprises and developers, drawing on the influence of its main rival Anthropic.
This could put the company on track for much-needed profitability ahead of its planned initial public offering (IPO).
“It’s very difficult for a company like OpenAI to make money with a consumer product like Sora or Instant Checkout,” Levy said.
“It’s much easier to appeal to the corporate market.”
The road to public offering
The company is actively preparing for an IPO that could occur as early as the end of 2026, racing to the finish line with Anthropic, which also plans to go public.
But OpenAI needs to sort out its financial institutions first, Levy said.
Most importantly, investors need to be confident that OpenAI can indeed deliver large-scale deals and justify its current $730 billion valuation.
Sam Altman has been reinstated as CEO of OpenAI after being fired by the company’s board of directors. Andrew Chan explains why the man famous for bringing ChatGPT to the world was fired and then rehired, and what that means for the future of one of the world’s most powerful AI innovators.
“So get rid of projects that aren’t profitable, get rid of anything that isn’t growing, get rid of anything that isn’t core to your mission or that makes investors question the very future of the company,” Levy explained.
Fernandes said an initial public offering would have significant implications for OpenAI “in terms of financial viability,” as it would allow the company to list on the public market and sell its shares as assets to public investors.
But it will also make companies accountable to shareholders and force them to tighten spending discipline.
“It requires a level of discretion that we haven’t really seen with OpenAI before,” Fernandez said.
