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Notes -
Sora is dead
It turns out that spending hundreds of millions for users to make useless slop videos was having a meaningfully negative financial impact. The bizarre thing is that Disney signed a $1b deal with OpenAI just a few months ago - who fucked up here? Of course, there are many more video AI tools out there, with fewer considerations for copyright law. But for now, Hollywood doesn't have much to worry about, at least on this front.
This may be a canary in the coalmine because it's the apex of structural problems for transformers as a product.
First, the operating costs must have been enormous. Video processing is some of the most costly things you can do on a computer, full spectrum, and it's involved at every layer of processing here. YouTube has famously been a loss leader forever on the storage costs alone, though the usage pattern is vastly different I can't imagine operating the datasets, training and distributing video models is much different.
Second, open weight (or just Chinese) models eat up your moat and don't have the limitations a company is ultimately tied to for PR or legal reasons. In a funny twist or fate, it seems pretty easy to steal back all the knowledge one has stolen by pirating all the movies in the world through "distillation attacks". So innovating on public models can end up just spending money for your competition.
Third, finding product market fit can be tricky even for something as technically impressive as generative AI. It's not clear how this is useful at all for anything but shitty memes and fraud, and hybrid approaches that don't rely on fully generative techniques like DLSS5 could end up being far more practical both to use and to make.
All these are problems every lab is having right now and must solve before the money runs out. That we see people cutting back where they hit hardest may be a sign that at least the money no longer feels infinite.
I don’t see why video generation is a canary. The ideal use case for AI is in business applications, not generating weird videos of copyrighted characters doing random things. Sora was at best a sort of novelty act, something to show off the potential of a technology, much like the chatbots. When even non-tech people are able to use it, and do kind of cool stuff with it, it generates demand for the product in other contexts. Getting sora to generate Garfield in a fighter jet, eating sushi in seconds puts it in the heads of people making business decisions that AI can do a lot of creative and inventive things quickly.
The point is that every end user AI product is subsidized and video was just the most subsidized (because indeed it didn't really have a huge consumer market) so it goes first.
I would expect the next thing to go to be the more extravagant loss leaders in less intensive applications.
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