Disney has withdrawn from its planned partnership with Disney following the sudden shutdown of OpenAI’s Sora video application, a move that has intensified uncertainty across Hollywood’s rapidly evolving artificial intelligence sector.

OpenAI confirmed it is discontinuing the Sora AI video app just months after its launch, saying it will instead refocus on integrating video-generation tools across its broader ecosystem. The company thanked early creators and said more guidance would follow on preserving user-generated content.

The decision effectively collapses a high-profile agreement that industry sources valued at around $1 billion, which would have allowed Disney to license select characters for use in Sora and explore future integration into Disney+.

A person familiar with the matter said Disney will not proceed with the deal in light of the platform’s closure, marking a significant setback for one of entertainment’s most closely watched AI collaborations.

Sora had drawn attention for producing highly realistic AI-generated video, including material resembling well-known intellectual property, raising concerns among studios and performers about rights and likeness protections.

Disney said it respects OpenAI’s strategic shift. “We value the collaboration and will continue exploring technologies that respect intellectual property and creators’ rights,” a spokesperson said.