In today’s episode of the podcast “Daily Variety”, variety‘s Todd Spangler and Gene Madaus examine why OpenAI suddenly stopped plugging in its generative AI video creation model, Sora, and why Disney officials are relieved that the Mouse House’s character licensing agreement with Sora has been terminated and Disney’s plans to invest $1 billion in OpenAI have ended. Maddaus and Spangler explain what happened and why SAG-AFTRA deserves a victory lap.
News of OpenAI’s decision to shut down Sora, which launched to much fanfare in early 2024, took the media and tech industry by surprise. The general consensus is that this was not so much due to legal or technical challenges in implementing Sora or the Disney character licensing agreement announced in December, but rather because OpenAI needed to focus on its core AI apps and products amid intense competition in its core business.
“One of the important things here is that this type of generated AI for video is very computationally intensive. It requires a lot of processing power. I think that’s where OpenAI happened. They were looking at their business prospects. They’re reportedly looking at an IPO in 2026. So they’re going to need to show investors what they’re spending on and what they’re actually making money on,” Spangler said. “So with a product that’s very expensive like this, there are these kinds of rights issues involved that probably won’t resolve very cleanly. There wasn’t necessarily a clear path to monetization either. So I think they refocused on the parts of the business that they thought would be the most profitable.”
Madaus points out that SAG-AFTRA can take some credit for influencing the rights parameters surrounding the Disney-Sola deal, thanks to the consent and indemnity clauses SAG-AFTRA hammered into the hotly contested 2023 Master Agreement agreements with major Hollywood studios and streamers. Despite Sora’s death, the thorny issue surrounding generative AI remains unresolved for the union.
“I think it’s because of the method. [the Disney-Sora deal] It’s like catching your boyfriend trying to cheat on you. The fact that he didn’t actually pull it off doesn’t really matter. “The fact is he wanted to do it,” Maddaus said. That means this version version didn’t work. I think the threat still exists. I’m a bit confused as to what actually happens. ”
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