Disney CEO Josh D'Amaro Faces OpenAI Sora Collapse and Second Crisis in First Week

D'Amaro took over as CEO from Bob Iger on March 18. By Tuesday, his seventh day on the job, two of the biggest technology partnerships in Disney's recent history had crumbled within hours of each other, sending Disney shares down.

The decision stunned Disney executives, who just 30 minutes earlier had been meeting with OpenAI teams about Sora's future. "It was a big rug-pull," a person familiar with the matter told Reuters, describing how the media giant learned of the shutdown moments before it became public. OpenAI announced on Tuesday, March 24 that it is shutting down its Sora app, with the company refocusing its efforts on coding and other business ahead of a planned IPO.

Under that three-year agreement, Disney had pledged a $1 billion equity investment in OpenAI, and the two companies planned to license more than 200 characters from across Disney, Marvel, Pixar, and Star Wars for use on the Sora platform. The deal also included plans to distribute curated AI-generated clips on Disney+, a rollout expected in early 2026 that will no longer move forward. It appears no actual money changed hands, as the deal was never finalized.

Disney responded diplomatically. A company spokesperson said: "As the nascent AI field advances rapidly, we respect OpenAI's decision to exit the video generation business and to shift its priorities elsewhere. We appreciate the constructive collaboration between our teams and what we learned from it, and 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."

The Sora collapse was not the only blow. On the same day, Epic Games announced that it was laying off 1,000 employees after new versions of Fortnite failed to connect with fans, threatening Disney's separate $1.5 billion investment in Epic that involves the creation of a whole new digital universe tied to Disney characters and stories. Just hours later came the OpenAI news.

D'Amaro was the driving force behind Disney's $1.5 billion Epic Games investment and had joined Epic's board as an observer. In a memo to staff on Tuesday, Epic founder Tim Sweeney said a downturn in Fortnite engagement had left the company spending more than it was making, adding that some $500 million in cost cuts should position the company for "huge launch plans towards the end of the year."

Disney shares closed down 1.6 percent on Tuesday.

At the company's annual shareholders meeting on March 18, D'Amaro had sketched out his vision for a Disney more connected with fans, partly by harnessing new technologies, describing Disney+ as a portal to engage with not just movies and TV shows, but games and experiences. That vision now requires a new roadmap. Bob Iger had previously expressed a desire to introduce user-generated AI content onto Disney+, and it is not out of the question that Disney under D'Amaro pursues a new, similar deal with a different AI company. Runway AI, Pika AI, and Google are among the companies making similar products to Sora.

D'Amaro has maintained that innovation remains central to his Disney. "Innovation has always been part of Disney's DNA," he said. "Used thoughtfully, it can empower our storytellers, strengthen our capabilities, and help us create more immersive, interactive, and personal ways for people to experience Disney." Whether the marketplace gives him the time and the partners to act on that conviction is now the defining question of his early tenure.