OpenAI just killed Sora as company readies IPO and new 'Spud' model

Sora is dead.

OpenAI debuted the sequel version Sora 2 just this past fall, even if it proved to be everything wrong with AI. Additionally, the company is shelving plans to ship video capabilities in ChatGPT.

The move comes just as prospectus documents leaked indicating OpenAI and CEO Sam Altman are pursuing an IPO.

Now, a new report from the Wall Street Journal claims the move to deactivate Sora is part of a major strategy shift to "redirect the company's resources and top talent toward so-called productivity tools."

Sora was derided as a difficult app to maintain that takes up too much of the company's computational resources, even as Altman invests in evermore datacenters.

Bye, bye Disney deal

Instead, according to the WSJ, the Sora team will be moved to focus on longer-term projects like robotics. All of these moves are in response to increased competition from rival Anthropic and its Claude platform.

Apparently, the disillusion of Sora caused Disney to pull out of a three-year licensing deal centered around allowing Disney characters in Sora.

"We will continue to engage with AI platforms to find new ways to meet fans where they are while responsibly embracing new technologies that respect IP and the rights of creators," A spokesperson for Disney told Screen Daily concerning OpenAI and Sora.

A new model

The Information reported today that OpenAI recently completed development of a new AI model, codenamed Spud. The model should be revealed in the next few weeks, and allegedly Altman told OpenAI staff that it "can really accelerate the economy."

It's not clear what capabilities this new Spud model contains. However, the company's pivot is meant to create more productivity tools. OpenAI is already planning to combine ChatGPT, its coding tool Codex and its browser into a "superapp." Spud might help accelerate that process.

Sloppy moves

OpenAI has been in an active "code red" state since at least December of 2025 as rivals Claude and Gemini caught up and in some cases outpaced ChatGPT.

Between that and controversies surrounding deals with the Pentagon and AI slop featuring Martin Luther King, Jr., the company is in need of stability and a path to profitability.

On the surface, this seems like a move designed to show future shareholders that OpenAI is profit-driven and able to sustain rather than continuing to rely on massive investments from Microsoft and other investors.

Or OpenAI could be burning cash faster than a California wildfire and the bubble is close to popping.

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