On OpenAI & Sora: The End Of Two Industries
A $1 trillion disruption is coming to the storytelling, filmmaking, and advertising industries on a global scale. That's the power of OpenAI's new technology. Let the battle begin!
In a week marked by innovation and financial milestones, OpenAI has unveiled Sora, a groundbreaking text-to-video AI poised to completely disrupt creative industries. Alongside this unveiling, OpenAI has soared to an unprecedented $80 billion valuation, underscoring its dominance in the realm of artificial intelligence. What a week!
Now, working in the field that I do, I’ve had countless conversations over the years about the best way to turn creative ideas into actual output. I’d argue its the most complicated, frustrating, and expensive part of what we do. That’s why I was so excited to see Sora in action this week. If you haven’t already seen some of the clips the AI model has produced, check these out.
Prompt: A movie trailer featuring the adventures of the 30 year old space man wearing a red wool knitted motorcycle helmet, blue sky, salt desert, cinematic style, shot on 35mm film, vivid colors.
Prompt: Animated scene features a close-up of a short fluffy monster kneeling beside a melting red candle. The art style is 3D and realistic, with a focus on lighting and texture. The mood of the painting is one of wonder and curiosity, as the monster gazes at the flame with wide eyes and open mouth. Its pose and expression convey a sense of innocence and playfulness, as if it is exploring the world around it for the first time. The use of warm colors and dramatic lighting further enhances the cozy atmosphere of the image.
I think this stuff is amazing. And considering this is the worst this technology is going to be, so much disruption is around the corner. We could be on the verge of unlocking one-person creative studios, one-person film houses, and so many other possibilities.
OpenAI's Rise to an $80 Billion Valuation
OpenAI's ascent to an $80 billion valuation marks a watershed moment in the tech industry. Unlike conventional fundraising rounds, OpenAI executed a tender offer, allowing early investors and employees to cash out their shares. This move, spearheaded by venture capital giant Thrive Capital, underscores OpenAI's commitment to rewarding its early supporters while maintaining financial flexibility.
Despite not injecting new capital into OpenAI, this strategic maneuver underscores the company's financial prowess and stability, bolstered by Microsoft's substantial $10 billion investment in 2023. With a valuation surge of 172% from its early 2023 valuation of $29 billion, OpenAI is not just a player in the AI landscape—it's a juggernaut poised for transformative impact.
How Large is OpenAI vs Public Market Comps
Disrupting the Entertainment and Advertising Industries
Because Sora is capable of generating hyper-realistic videos from mere text prompts, I’m convinced Sora stands poised to redefine storytelling, filmmaking, and advertising on a global scale.
What’s the potential scale of disruption on the movie industry? Here’s some numbers:
In 2023, the global box office raked in a hefty $87 billion, marking a significant rebound from pandemic lows.
The United States and Canada remain the top dog, accounting for 44% of that share, followed by China at 23%.
Streaming services are making their mark, with platforms like Netflix and Disney+ collectively spending $30 billion on content acquisition in 2023 alone.
In the US, the average cost of producing a major studio film sits around $100 million, with blockbusters soaring even higher.
Despite the costs, ticket sales still account for the majority of revenue, generating 53% in 2023. Streaming follows closely behind with 24%.
The industry employs over 2 million people in the US alone, contributing significantly to the local economy.
And what about advertising and creative?
Globally
Market size: The global advertising market reached a staggering $629 billion in 2018, according to eMarketer, and is expected to continue growing.
Digital dominance: In 2023, 63% of global ad spending was directed towards digital advertising, surpassing traditional mediums like television for the first time. This number is expected to reach 68% by 2026.
Growth sectors: Mobile gaming ad revenue in the US is projected to reach $7.3 billion in 2023, growing by nearly 13%. Digital out-of-home (DOOH) advertising is also on the rise, with its share of US ad spend expected to surpass 41% by 2026.
US-Specific
Total spending: The US advertising market accounted for 31% of global spending in 2022, totaling $240 billion.
Top spenders: Procter & Gamble, Alphabet (Google), and Amazon were the top three advertisers in the US in 2022, collectively spending $42 billion.
Employment: The advertising industry employs over 264,000 people in the US alone.
Combined, we’re looking at nearly $1 trillion in potential disruption from Sora’s capabilities. And while the dollar values are enormous, and the number of impact jobs is potentially staggering, a look at the specific roles most likely to be impacted is also interesting:
Film Industry: Roles directly involved in video production, like camera operators, editors, and special effects artists, could see automation, especially for lower-budget projects. Screenwriters and directors might need to adapt their skills to work alongside AI for story development.
Advertising Industry: Scriptwriters, storyboard artists, and video editors involved in ad creation could face disruption, as Sora automates parts of the ad production process. However, roles focused on strategy, campaign management, and audience analysis might see increased demand.
Supporting Staff: Jobs supporting film and ad production, like set designers, costume makers, and marketing assistants, could be indirectly affected as projects become more automated and potentially smaller in scale.
Related Industries: The impact might extend to roles in animation, video game development, and even journalism, as video content creation becomes more accessible.
Sora For Dummies (Like Me)
But how does Sora work its magic? At its core, Sora employs a sophisticated neural network architecture to interpret text prompts and translate them into cohesive video narratives. By meticulously analyzing characters, actions, settings, and temporal dynamics, Sora constructs intricate video patches imbued with pixel-perfect detail. These patches, assembled seamlessly by a masterful coherence network, culminate in captivating video narratives that transcend the bounds of imagination.
Despite its transformative potential, Sora is not without its limitations though. Occasional inaccuracies and a limited scope of subject matter pose challenges to widespread adoption. Nevertheless, Sora's emergence heralds a new era of creativity and innovation, offering tantalizing prospects for industries ranging from animation to education and beyond.
OpenAI's introduction of Sora marks a pivotal moment in the annals of artificial intelligence. As OpenAI's valuation skyrockets and Sora disrupts entrenched industries, the world braces for a paradigm shift—one defined by boundless creativity, technological innovation, and the relentless pursuit of possibility. I just cannot envision a world where new creativity is unleashed - at a fraction of the cost that it currently does - and that’s extremely exciting.