Big Changes at OpenAI
Happy Friday, everyone! This week, we’re going to explore why OpenAI suddenly shut down their buzzy video generation app, Sora. We’ll also talk about other changes at OpenAI related to commerce and what it could mean for retailers and brands going forward. Let’s get to it!
The Sudden Fall of OpenAI’s Most Hyped Product Since ChatGPT (Wall Street Journal - LINK)
TL:DR – Last September, OpenAI launched Sora — a standalone app that allowed users to create videos based upon whatever prompts they could imagine (I mean who doesn’t want to see Spongebob Squarepants cooking crystal meth?!) Today, a little more than 6 months post launch, the once promising app has been killed as OpenAI looks to refocus their business model, and in turn, their finite computing resources.
Matt’s Hot Take™ - OpenAI is facing intensifying competition and a looming IPO but there is a bigger issue here that I believe is playing into this decision: trust. Alongside all of the excitement around what is possible with AI, there is an undercurrent of skepticism. While adoption has spiked in the US with nearly 3/4 of adults using the tools in their daily lives, 76% say they trust the responses they get rarely or only sometimes (TechCrunch - LINK.) We’re also seeing brands go out of their way to communicate that their creative is “not AI” to effectively virtue signal to these same consumers who are displaying growing fatigue with “AI Slop” (Wall Street Journal - LINK.) We’ll see how this continues to play out but I believe the winners in the AI race won’t be the ones that create the most “wonder,” but rather the ones who can create the most trust.
Walmart Brings Sparky to ChatGPT as OpenAI Rethinks Instant Checkout (Retail Dive - LINK)
TL;DR – While OpenAI may have sunset their “Instant Checkout” experience inside of ChatGPT after only 6 months, Walmart is still betting on AI chatbots as a source of future demand. That’s why they are bringing their Sparky chatbot inside of ChatGPT to take users from discovery in ChatGPT directly into a Walmart environment that supports account linking, loyalty and payment.
Matt’s Hot Take™ - This looks to be a good thing for everyone long term as the data was showing us that conversion rates for purchases made inside ChatGPT were 3x lower than when users clicked through to checkout in Walmart’s owned environment (Search Engine Land - LINK.) For all of the excitement around AI-driven commerce and agentic commerce, it’s beginning to appear that a better positioning may be “AI-driven discovery” given the continued importance of the retail shopping experience to consumers. AI is incredibly powerful and is making a real impact to the consumer journey, but in the near term, it is looking more likely that AI platforms will become increasingly influential stops along the journey vs becoming the final retail destination.
Quick Hits
Google is Launching Search Live Globally (TechCrunch - LINK) - After launching in the US and India last summer, Google is expanding its AI-powered conversational search feature, Search Live, globally to all languages and locations where AI Mode is available. What is so cool about this product is that Search Live not just enables a realtime back-and-forth conversation with the chatbot, but it is a multimodal search experience that also allows users to point their phone camera at objects to add visual context to their queries. While behavior change is always challenging to affect, one use case comes to mind that I could see this tool fundamentally changing — in person shopping. It’s not uncommon for consumers to visit a physical store and use online listings to research product reviews, learn about features, or look for better prices. Search Live could take this “showrooming” behavior to the next level by allowing shoppers to engage in a conversation with a chatbot to guide their browsing of store shelves to find the best product for their needs. What a time to be alive.
TikTok Now Lets Apple Music Subscribers Play Full Songs Without Leaving the App (TechCrunch - LINK) – TikTok has partnered with Apple Music to allow subscribers of the streaming service to play full songs without leaving its social network. Apple Music subscribers who discover a song they like on their TikTok “For You” page or Sound Detail Page can tap the new “Play Full Song” button to open up an Apple Music player to listen to the full track. Perhaps even cooler, TikTok and Apple Music are also introducing “Listening Party,” a new feature that lets fans listen to songs while interacting with each other and with artists during the session. This is on top of their partnership with iHeart to bring trending music and creators to their stations and podcasts (Variety - LINK.) I really like the bets TikTok are making on music because trends come and go but music will always be relevant and engaging for users.
Meta Starts Testing a Premium Subscription on Instagram (TechCrunch - LINK) - Meta is testing a premium subscription on Instagram called Instagram Plus which gives subscribers access to exclusive features. Some of the most interesting features are the ability extend a Story for an extra 24 hours and choose to spotlight a Story up to once per week, increasing its visibility by bringing it to the front of the Stories tray for followers. There are also features like the ability to view stories without the poster knowing it was viewed as well as the ability to see who has rewatched your stories. The premium social model has been proven out by Snap who now boasts 25MM subscribers and is on pace to generating north of a billion dollars annually for Snap+ (TechCrunch - LINK) but it will be interesting to see if Meta can replicate the value to users to attract spending inside of a product that has been free for it’s entire existence. If successful though, this could be an offramp to new, less problematic business models as the heat continues to get turned up on social media’s impact on mental health.
Nicely reported!