By Natalie Lung, Bloomberg
In a significant market shift, OpenAI announced it will discontinue its AI video generator, Sora, effective April 26, 2023. This decision has already allowed competitors like Kling AI and RunwayML to gain traction in a rapidly evolving sector. Following OpenAI’s announcement, Kling AI, a video generation app owned by China’s Kuaishou Technology, saw its global weekly active users rise by 4%, reaching an average of 2.6 million, according to market intelligence firm Sensor Tower.
Before the shutdown of Sora was confirmed, Kling AI was already outperforming it in terms of user engagement, boasting an average of 7.8 million global monthly active users in March, compared to Sora’s 4.7 million. Sora’s impending closure, including the discontinuation of its developer platform set for September 24, is indicative of the challenges that AI video generators face, particularly regarding operational costs and technological demands.
Other competitors also reported increases in user activity: RunwayML and Vidu each experienced a 1% rise in weekly active users during the same period. Runway AI Inc.’s app is exclusive to Apple’s app store, while Vidu, developed by Beijing Shengshu Technology Co., is available on both iOS and Android platforms. Both companies secured new funding in February, reflecting investor confidence in their technologies.
The shutdown of Sora creates opportunities for smaller rivals to capture market share, especially as demand for AI video tools surges among creatives, filmmakers, and marketers. Major tech players, including Alphabet Inc., Meta Platforms Inc., and Elon Musk’s xAI, have also integrated text-to-video and image-to-video capabilities into their chatbots over the past year, although they have not disclosed specific usage metrics for these features. Most of these companies provide their video generation models as developer tools for individual or enterprise use, with the exception of Meta’s offering, which is only accessible through its AI platform.
Sora was launched as a standalone application to significant acclaim last fall, attracting users with its user-friendly interface and social features for sharing creations. It experienced a remarkable 4,400% spike in downloads within the first month, reaching nearly 5 million, according to Sensor Tower data. However, this initial popularity was fleeting, as Sora’s monthly active users have consistently declined since January 2023.
The discontinuation of Sora highlights the operational challenges inherent in AI video generation, which demands substantial computing resources and is often costly to maintain. OpenAI noted it is shifting its focus toward robotics research, as Sora has represented a small fraction of its revenue—reporting $1.4 million in global net in-app revenue since its launch, compared to $1.9 billion earned by the ChatGPT app in the same timeframe.
The exit of a major player like OpenAI may prove beneficial for Kling AI. Following the news, Kuaishou’s management informed analysts during an earnings call that they anticipate Kling AI’s annual revenue to more than double this year. The app generated revenue of 340 million yuan ($49.3 million) in the fourth quarter, a rise from over 300 million yuan in the previous quarter. Kling AI is contributing positively to Kuaishou’s overall sales, as the company seeks to compete more effectively against ByteDance Ltd.’s TikTok in the short video streaming market.
As the landscape shifts, these rival firms will need to navigate the delicate balance between user demand and the computing expenses associated with delivering AI-driven tools. The future of Kling AI’s growth in Kuaishou will depend on its ability to sustain this momentum, especially as analysts express concerns over the returns on the company’s increasing investments in artificial intelligence.
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