Disney's incoming CEO Josh D'Amaro faces two significant blows to the company's technology strategy before he has even settled into the role: the collapse of a $1 billion OpenAI partnership built around the Sora video-generation tool, and deepening uncertainty over a $1.5 billion metaverse venture with Epic Games following Epic's decision to lay off 1,000 employees.
The two deals had been positioned as cornerstones of Disney's effort to modernize its streaming and entertainment businesses. The OpenAI agreement, announced earlier this year, promised to integrate Sora's AI-generated video capabilities directly into Disney+. The Epic partnership, struck in 2023, envisioned a persistent, Disney-branded world built inside the Fortnite ecosystem — an ambitious attempt to translate Disney's intellectual property into interactive, social entertainment.
OpenAI Pulls the Plug on Sora Before Disney Could Use It
OpenAI's decision to shut down Sora as a standalone product has left the practical future of the Disney collaboration unclear, according to reporting by The Verge. The announcement came only months after Disney publicly committed to the $1 billion deal, meaning the technology Disney was paying to integrate may no longer exist in the form that was agreed upon.
The technology Disney was paying $1 billion to integrate may no longer exist in the form that was agreed upon.
Disney could still pursue generative AI integration through other means — OpenAI's broader toolset remains available, and rival providers including Google, Adobe, and Runway offer competing video-generation platforms. But the public optics of a flagship AI deal unwinding so quickly are damaging, particularly for a company trying to convince investors and audiences that its technology ambitions are credible.
The episode also raises a structural question about how major entertainment companies negotiate technology partnerships. Locking a $1 billion commitment to a single, experimental product — rather than a broader capability or platform — exposed Disney to exactly this kind of product-discontinuation risk.
Epic's Layoffs Throw the Metaverse Deal Into Question
The Epic situation carries different but equally serious implications. When Disney announced its $1.5 billion investment in Epic Games in February 2024, it described a plan to build an entirely new "games and entertainment universe" connected to Fortnite's existing player base of hundreds of millions. The ambition was considerable: a persistent digital world where Disney, Pixar, Marvel, and Star Wars characters would coexist with Fortnite's native content.
Epic's subsequent layoff of 1,000 workers — roughly 16 percent of its workforce at the time — suggested the company was pulling back from its most expansive ambitions. Since the Disney deal was announced, there has been little public detail about what the metaverse project actually looks like, when it might launch, or how far development has progressed, according to The Verge.
Metaverse projects have a troubled recent history. Meta spent more than $36 billion on its Reality Labs division between 2021 and 2023 with limited consumer adoption. Microsoft shut down its industrial metaverse division in 2023. Disney itself previously disbanded an internal metaverse team in 2023 under then-CEO Bob Iger before pivoting to the Epic partnership as an alternative route.
A New CEO Inherits Unresolved Commitments
For D'Amaro, who spent previous years running Disney's parks and experiences division, the timing is particularly awkward. He steps into the CEO role with $2.5 billion in technology commitments whose near-term viability is now openly questioned, and with no obvious quick resolution to either situation.
Disney has not yet made public statements clarifying the status of either deal in light of recent developments, according to available reporting. The company may argue that both partnerships retain value — the OpenAI relationship could be restructured around different products, and Epic's layoffs do not necessarily halt the Disney-branded world project. But without concrete updates, the silence itself becomes part of the story.
The broader context matters here. Streaming economics remain difficult across the industry. Disney+ has been working toward sustained profitability after years of losses, and technology investments at the scale of these two deals require clear returns. If neither the AI integration nor the metaverse project delivers visible results within the next 12 to 24 months, the pressure on D'Amaro's technology agenda will intensify.
What This Means
For Disney and the wider media industry, these stumbles are a reminder that billion-dollar technology bets tied to specific, unproven products carry substantial execution risk — and that a change of CEO does not reset the clock on commitments already made.