* OpenAI ends $1 billion deal with Disney ( DIS ), Sora project

halted

* OpenAI shifts focus to coding tools, corporate clients

and AGI

* Disney ( DIS ) had not yet invested in OpenAI - sources

(Rewrites with details on timing of OpenAI announcement, status

of Disney's ( DIS ) $1 billion investment)

By Dawn Chmielewski and Deepa Seetharaman

March 24 (Reuters) - On Monday evening, Walt Disney Co ( DIS )

and OpenAI teams were working together on a project

linked to Sora, OpenAI's AI video tool. Just 30 minutes after

that meeting, the Disney ( DIS ) team was blindsided with word that

OpenAI was dropping the tool altogether, a person familiar with

the matter said.

OpenAI announced the move publicly on Tuesday.

"It was a big rug-pull," according to the person, who

requested anonymity to discuss the matter.

The move is the first big step by the ChatGPT maker to focus

its business on potentially more lucrative areas such as coding

tools and corporate customers.

But the abrupt cancellation of Sora illustrates how messy

the streamlining process may become as OpenAI prepares for a

stock market debut that could come as early as later this year.

The Sora decision means the end of a blockbuster $1 billion deal

between Disney ( DIS ) and the ChatGPT maker that was announced a little

more than three months ago. As part of the three-year deal,

Disney ( DIS ) said it would invest $1 billion in OpenAI and lend more

than 200 of its iconic characters to be used in short,

AI-generated videos.

But the transaction between the companies never closed, two

other people familiar with the matter said, and no money changed

hands.

OpenAI executives have been debating Sora's fate for some time.

Running the AI video app required significant computational

resources, a fourth person with knowledge of the matter said,

and left other teams with less firepower.

Even so, some OpenAI staffers on the Sora team were surprised

when they were informed of the changes Tuesday morning, one of

the people and another source said. The announcement was made

just a day after OpenAI published a blog post about Sora safety

standards.

"We're saying goodbye to Sora ... we know this news is

disappointing," the Sora team said in a post on X, adding that

timelines for the app and API, as well as details on preserving

user work, would be shared later.

OPENAI FOCUSES ON A SUPER-APP

OpenAI executives are now focusing on other research areas,

including robotics and building artificial general intelligence.

The company is rolling more of its capabilities into a single

super-app. To reflect that shift, Fidji Simo's title was changed

from CEO of applications to CEO of AGI deployment.

Separately, CEO Sam Altman said OpenAI's security and safety

teams would no longer report directly to him.

A spokesperson for Disney ( DIS ) said that the media giant respects

"OpenAI's decision to exit the video generation business and to

shift its priorities elsewhere."

The two sides are discussing if there is another way they

can partner or invest with one another, one of the people

familiar with the matter said.

OpenAI first introduced Sora in early 2024, stunning the tech

world with software that could generate high-quality, feature

film-like videos based on text prompts. The launch prompted AI

companies across the U.S. as well as China to ramp up releases

of their own AI video-generation models.

The company launched the standalone Sora app in September

2025, letting users create and share AI videos that can be spun

from copyrighted content and shared to social media-like

streams.

Sora's cancellation comes as OpenAI faces intensifying

pressure to ramp up its enterprise and coding products, as

competition from rival AI startups and tech giants heats up.

Anthropic's focus on training its models on coding has

helped its Claude Code product gain strong traction among

developers, giving the company an edge over OpenAI and other

competitors in the enterprise AI market.