(Bloomberg) — Walt Disney Co. Chief Executive Officer Josh D’Amaro hasn’t even been 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.
On Tuesday 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. Disney announced a $1.5 billion investment in Epic two years ago that involves the creation of a whole new digital universe tied to Disney characters and stories.
Just hours later, OpenAI announced it was shutting down Sora, its AI video generator. The company was ending a partnership with Disney that would have seen the entertainment giant make a $1 billion equity investment in OpenAI and use its technology for content creation. The move to shutter Sora coincides with a push by OpenAI to streamline its product lineup.
D’Amaro took over as CEO from Bob Iger on March 18. At the company’s annual meeting that day, D’Amaro sketched out his vision for a Disney that would be more connected with fans, in part by harnessing new technologies. The company’s Disney+ streaming service, 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.”
Disney shares closed down 1.6% on Tuesday.
The Epic deal was led by D’Amaro, who ran Disney’s theme parks, consumer products and gaming businesses. In announcing the partnership, Disney showed off illustrations of an online Fortnite world that looked a lot like a theme park. D’Amaro joined Epic’s board as an observer.
In a memo to staff and fans on Tuesday, Epic founder Tim Sweeney said a downturn in Fortnite engagement had left the company spending more than it was making. Some $500 million in cost cuts should position the company for “huge launch plans towards the end of the year,” Sweeney said. He didn’t address the new Disney product.
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 announced plans just four months ago to let fans create short social videos based on the company’s famous characters by uttering just a few words in an app. Some 200 characters from Star Wars, Marvel and other brands would be available, costumes and vehicles included. Disney even planned to put some of the fan-created videos on its namesake streaming service.
