Less than a week into his tenure as Disney’s newly-appointed CEO, Josh D’Amaro is already dealing with two separate crises that have cast a shadow over the company’s future plans. OpenAI is shutting down its Sora image-generation program just months after Disney announced a $1 billion dollar collaboration to bake the tech into Disney Plus.

And Epic Games, maker of Fortnite, has laid off 1,000 employees at a time when we’ve heard basically nothing about the game studio’s $1.5 billion investment deal with Disney to build a metaverse.

The studio’s $1 billion plans to collaborate with OpenAI and Epic Games seem to be falling apart. There have always been signs that Sora was far from being ready for prime time, but the Disney deal helped normalize the idea of major companies getting into bed with gen AI firms. In addition to giving OpenAI a massive influx of capital, the deal with Disney would have put user-generated AI content directly onto Disney Plus, potentially flooding it with ‘AI slop’ that no one would find compelling.

Disney’s plan to pay OpenAI $1 billion so that Sora could churn out characters featuring its studio’s intellectual property now reads as particularly misguided. The situation looks even bleaker given the ongoing controversy surrounding OpenAI and its work for the Pentagon. Disney seems like it wants to cut its losses by distancing itself from OpenAI, but this move only highlights how ridiculous D’Amaro’s initial collaboration was.

While Epic layoffs haven’t been attributed directly to Disney, the sheer number of people who lost their jobs raises questions about how the company is prioritizing the Disney partnership. Epic’s struggles with Fortnite and its reduced spending could mean that a Disney-branded metaverse faces an uphill battle in the cut-throat games industry.