When OpenAI’s text-to-video model Sora first debuted over two years ago, it amazed the public and even sparked concerns in Hollywood about potential industry disruption. However, this once highly anticipated product is now being officially “retired” by OpenAI.
Recently, OpenAI announced the news in a brief statement on X, bidding farewell to the Sora app and acknowledging, “We know this news is disappointing.” Although no detailed reason was given, the move is widely believed to stem from cost control and investment return considerations. Despite its powerful technical capabilities, Sora never managed to find a suitable market position. After its official release in October 2025, app downloads surged briefly but quickly declined, reflecting a classic case of short-lived hype. Internet users appear to have grown weary of AI-generated short videos lacking practical utility, and the technology has yet to achieve a clear commercial application scenario.
High operational costs were another major reason Sora proved unsustainable. It is reported that Sora’s daily operating costs reached as high as $15 million, while its total historical revenue was only $2.1 million. For OpenAI, cost optimization is an inevitable step for a rapidly growing startup, but discontinuing Sora still highlights the challenges it faces amid intense competition. Currently, OpenAI is contending with fierce competition from leading large model players such as Anthropic and Alphabet (GOOG, GOOGL). Anthropic has gained an edge in the enterprise software space with plugins like Claude Code and Claude Cowork, and some observers believe Google’s Gemini model has surpassed ChatGPT. Late last year, OpenAI CEO Sam Altman even declared a “code red” in response to Google’s progress with Gemini.
The termination of Sora is just one sign of OpenAI’s difficulties. A month ago, when OpenAI partnered with the Pentagon on the eve of the Iran war, Anthropic saw its Claude app become the most downloaded by rejecting related terms. Additionally, OpenAI promised investors a minimum return of 17.5% on preferred shares for a new joint venture, a high cost that may indicate investors are uneasy about its losses and are demanding higher returns to continue funding.
In contrast, Alphabet appears to be the biggest winner. OpenAI’s widening losses underscore Alphabet’s financial advantage in the AI race. Alphabet’s advertising business generated over $100 billion in total profit last year, allowing it to invest heavily in AI projects like Gemini. Currently, Alphabet is making significant investments in AI infrastructure, with projected capital expenditures reaching $175 billion to $185 billion. Moreover, Sora could have been a potential competitor to YouTube, and its termination removes that threat. Should Alphabet launch a similar application in the future, it will no longer face competition from OpenAI.
At the same time, Alphabet is an investor in Anthropic, which has significantly narrowed the gap with OpenAI in recent months. With OpenAI expected to burn through more than $17 billion in cash this year, the shutdown of Sora further signals its financial strain, which will also benefit Anthropic. Overall, Alphabet has made substantial progress since the initial failure of its Bard chatbot and has gained market recognition. If OpenAI encounters further setbacks, it will only strengthen Alphabet’s position in the AI field and increase its chances of success.
