(Bloomberg) — Walt Disney Co. Chief Executive Officer Josh D’Amaro hasn’t even been in his new job for one week and he’s already seen two, billion-dollar technology bets falter — with one of them unraveling entirely.
A watershed deal Disney struck with OpenAI late last year dissolved suddenly on Tuesday when the artificial intelligence startup announced it was closing down its Sora video generator app in an effort to streamline its product lineup. That abruptly ended what was supposed to be a three-year partnership, including a $1 billion investment, which would have seen some 200 Disney characters from Star Wars, Marvel and other brands populate short-form AI-generated videos and feed its streaming service, Disney+.
Earlier in the day, Epic Games Inc. announced that it was laying off 1,000 employees after new versions of its hit video game Fortnite failed to connect with fans. D’Amaro had been the chief architect of the $1.5 billion investment in Epic that Disney announced two years ago involving the creation of a whole new digital universe tied to Disney characters and stories.
As D’Amaro took over from Bob Iger on March 18, he sketched out his vision for a Disney that would be more connected with fans, in part by harnessing new technologies. Disney+, he said, will be a portal to engage with not just movies and TV shows, but games and experiences. His goal was to “deliver a more connected, personalized, and immerse experience to our consumers – wherever they are and whenever they would like to engage with us.”
The Sora partnership was supposed to be the start of something big. It was among the first initiatives between a legacy Hollywood studio and the new technology, which many in the industry fear will cost jobs and result in theft of their intellectual property.
“Disney will likely be hurt the most by OpenAI’s shuttering of Sora,” Bloomberg Intelligence analyst Geetha Ranganathan wrote in a note. “We expect Disney to find a new partner as it looks for ways to boost franchise monetization among younger audiences while also creating a pipeline for future franchise development.”
Disney shares were down less than 1% as trading got underway Wednesday morning in New York.
In a statement after Sora’s demise, Disney said the AI field is a nascent one, where change comes quickly. The company said it appreciated the collaboration it had with the Sora team and will “continue to engage with AI platforms to find new ways to meet fans.”
D’Amaro may still find a new AI partner. Runway Ai, Pika Ai and Google are among the companies making products similar to Sora.
