|
|
 |
| (NurPhoto via Getty Images) |
|
|
Earlier this week, OpenAI confirmed it's shuttering its Sora consumer app, adding that the move is part of a larger redirection of its resources to other projects "as compute demand grows."
While the decision—just three months after Disney agreed to invest $1 billion in OpenAI and license some of its characters to Sora—seemed abrupt, a closer look at video generation economics provides some answers. OpenAI is also barreling toward an eventual IPO, so a tougher look at its cash flow is in order.
Sora's initial consumer acquisition was strong: monthly App Store downloads peaked in November at more than 3.3 million. But by February, downloads had dropped to around 1.1 million, signaling low user retention, according to mobile intelligence firm Appfigures.
To industry observers, Sora seemed to rely on novelty to attract users but couldn't figure out how to make them stick.
I'm Rosie Bradbury, and this is The Weekend Pitch. You can reach me at rosie.bradbury@pitchbook.com or on X @_RosieBradbury.
"Models like Sora, they're amazing, but they're slow to generate the video," said Alberto Taiuti, the former CTO of AI video model startup Luma AI, who is now building Reactor, a stealth-stage startup working on real-time video AI. "So people who are not full enthusiasts, they're not going to engage."
At the same time, the cost of running Sora has been hefty. OpenAI mostly subsidized queries to drive more users to the platform. Forbes estimated that the company was burning $15 million per day for a period of time last year on its AI video generation product alone.
Because every image in the frame is processed individually, generative video is currently many orders of magnitude more cost-intensive than text-based models. "At minimum, every second is 60 times more expensive than running a single image model, which is itself more expensive than voice," said Eylul Kayin, partner at Gradient Ventures.
Passing on the full inference cost to the consumer is a tricky proposition. "At the end of the day, just turning on a single Nvidia H100 is like, $2 an hour. For you, a regular user, that can still be expensive," said Michael Lingelbach, co-founder of AI video generation startup Hedra. |
|
|
|
|
|
| |
|
|
| Put your brand in front of the private market professionals who matter most |
|
PitchBook helps companies reach investors, executives, and dealmakers through high-impact advertising and bespoke research. Partner with our analysts to create data-driven content or connect with our audience through targeted placements across newsletters, reports, and PitchBook.com.
Clear insights. Trusted data. Meaningful reach.
Explore advertising and custom research opportunities |
|
|
|
|
|
| |
 |
| (NurPhoto/Getty Images) |
|
|
After Arizona's attorney general filed the first-ever criminal charges against Kalshi, the prediction market startup was in talks for a $1 billion round at a $22 billion valuation, The Wall Street Journal reported. Sports betting app FanDuel was acquired by Flutter Entertainment last year in a deal that valued the company at how much?
A) $11 billion
B) $21 billion
C) $31 billion
D) $41 billion
Find your answer at the bottom of The Weekend Pitch! |
|
|
|
|
|
A selection from our most-read articles of the past few days.
- Larry Fink says Social Security needs a revamp. The BlackRock chief executive called for Social Security funds to be invested in a broader range of wealth-generating asset classes. Read more
- SPACs are narrowing in on quantum computing. Finland-based IQM and France-based Pasqal both announced SPAC mergers within weeks of each other, signaling a broader trend of SPAC activity in deep tech. See the article
- What does the White House's AI regulation framework mean for AI startups? Federal laws could significantly impact the future of VC investments in AI, including a potential ban on US states regulating AI. Get the analysis
|
|
|
|
|
|
“I see Europe being a major player in the global AI space and doing it in the next few years, driven by physical AI. One could look at the LLM space and say that the race is already won. But, in physical AI, the race is wide open, and Europe has a chance to play.”
—Luke Alvarez, the London-based founder of Hiro Capital, who co-led Yann LeCun's physical AI startup AMI Labs’ $1 billion seed round. As AI innovation moves past LLMs and into physical world models, some investors think European startups can take the lead. Read more. |
|
|
|
|
|
Keep an eye out for these insights and research reports coming out this week:
- Q1 2026 PitchBook-NVCA Venture Monitor First Look
- 2025 South Korea Private Capital Breakdown
- 2025 Annual US PE Lending League Tables
- Analyst Note: AI Impact on Automotive Manufacturing
- Analyst Note: Impact of High Oil Prices on Private Markets
- Analyst Note: European AI
- March 2026 Global Markets Snapshot
|
|
|
|
|
|
Answer: C
Sports betting company FanDuel was acquired for $31 billion by Flutter Entertainment in 2025. The current wave of regulatory concerns hitting prediction market startups is not dissimilar to what sportsbooks like FanDuel faced in the mid-2010s. Read more about regulatory hurdles for prediction market startups here. |
|
|
|
|
|
Sign up for our newsletter
|
|
This edition of The Weekend Pitch was written by Rosie Bradbury and Nadine Manske. It was edited by Kia Kokalitcheva and Ron Prichard.
Were you forwarded The Weekend Pitch? Sign up at pitchbook.com/subscribe. |
|
|
|
|
|
| |
| Since yesterday, the PitchBook Platform added: |
|
9
Deals
|
163
People
|
98
Companies
|
|
|
|
|
|
| |
|
|
|
|
| |
