We know where the Walt Disney Co. stands in the AI wars.
In a Thursday morning double whammy, Disney unveiled a $1 billion investment in OpenAI, which includes bringing its vast trove of characters and intellectual property to its generative video platform Sora. That same morning, Disney also sent a cease-and-desist letter to Google, accusing its generative AI efforts of copyright infringement on a “massive scale.”
The stark contrast underscores how entrenched corporate rivalries are forging the alliances around AI. Disney, which is fresh off of resolving a carriage dispute with Google’s YouTube TV that resulted in a temporary blackout, is partnering with OpenAI, which is seeing its own dominance in AI challenged by the search giant.
For Disney, whose own AI efforts have stalled, the alliance gets into the technology in a big way. But in doing so, the media giant is willingly wading into a minefield that includes the possible exploitation of its characters and backlash from actors and writers.
“This really is a pretty strong signal that Disney is taking AI seriously,” an individual familiar with the company’s AI efforts told TheWrap.
Disney is in effect legitimizing OpenAI despite lingering questions about it and other AI companies using copyright-protected content to train their models. But given the risks, don’t assume other media companies will follow suit immediately.
For OpenAI, Disney’s investment gives it a shot in the arm as it attempts to keep pace with Google in the broader AI arms race. While ChatGPT shot out of the gate at the end of 2022, it has seen its leadership erode as Google has continually improved its models, forcing the startup to declare “code red” last week in an effort to improve the quality of its AI model. Sora itself could use a boost, having fallen off the Apple App Store chart after topping it for the first few weeks it was available.
When it comes to AI, things are always a little extra complicated. Here’s a breakdown of what both sides get out of this deal, and the potential downsides.
Representatives for Disney and OpenAI didn’t respond to a request for additional information on the nature of the partnership.
What this means for Disney
Disney CEO Bob Iger telegraphed this partnership last month during the company’s investor conference call, teasing “interesting conversations with some of the AI companies” and the concept of user-generated content coming to Disney+.
On Thursday, we got the payoff: “Bringing together Disney’s iconic stories and characters with OpenAI’s groundbreaking technology puts imagination and creativity directly into the hands of Disney fans in ways we’ve never seen before, giving them richer and more personal ways to connect with the Disney characters and stories they love,” Iger said in the company’s announcement of the partnership with OpenAI.
Beyond taking a stake in one of the hottest startups in the world, Disney will allow Sora users to utilize more than 200 Disney, Marvel, Pixar and Star Wars characters in its AI-generated videos. Previously, if you reference specific characters in your prompts for AI videos, Sora would block the attempt.
Disney said it would host a series of curated Sora-generated videos on Disney+. The company will also get access to OpenAI’s technology to power new experiences on the streaming service, with ChatGPT likely to be more deeply integrated into more regular corporate workflows similar to other businesses.
TheWrap Take: Disney’s partnership represents a bold move to loosen the reins of valuable IP in the relatively infinite sandbox that Sora provides. The upside is you’ll see a lot more content featuring its well-known characters, which could engender more of a connection down the line.
But there are considerable risks. The early days of Sora saw Nazi SpongeBobs and criminal Pikachus show up in video. Social media has always had an element of users willing to push buttons with their posts, and generative AI gives them near-total freedom to do as they wish.
Iger defended the deal on CNBC, arguing that the company is putting guardrails around how its IP will be used. “This will be a safe environment and a safe way for consumers to engage with our characters in a new way,” he said.
But experts warn it’s a matter of time before savvy users get around those guardrails.
“I would be extremely concerned about the boundaries that Sora places on the use of Disney’s IP and the potential negative impact on Disney’s brand,” said Avi Greengart, an analyst at research firm Techsponential.
While Iger noted these shorts were only 30 seconds long, and not a threat to actors or voice actors, both the Writers Guild of America and SAG-AFTRA responded to the deal with a more critical eye.
“Disney’s deal with OpenAI appears to sanction its theft of our work and cedes the value of what we create to a tech company that has built its business off our backs,” the statement from WGA reads.
What this means for OpenAI
OpenAI is locked in an AI arms race against Google, Meta and, on a global scale, China-backed AI companies. With Google taking the lead with Gemini 3, some are saying the startup is in trouble.
But declaring “code red” and actually improving the model requires huge resources to build out the data centers and other infrastructure required to train its algorithms. The company said it expects spending to rise to $115 billion through 2019.
That’s where Disney’s investment enters the picture.
OpenAI has struck a number of flashy deals lately, including one in which it would use AMD’s graphic processing units in exchange for the right to acquire shares of AMD, and another $300 billion cloud computing deal with Oracle. All of these deals have raised questions about its ability to bear the costs with expenses outpacing its revenue growth.
Having Disney as a partner also gives OpenAI a framework to pursue similar agreements with other media companies.
“This agreement shows how AI companies and creative leaders can work together responsibly to promote innovation that benefits society, respect the importance of creativity and help works reach vast new audiences,” OpenAI CEO Sam Altman said in a statement.
TheWrap Take: While Disney and OpenAI are now tied at the hip, don’t expect a cascade of other deals to come forth soon. Disney’s cease-and-desist against Google is evidence that there’s still a lot of tension between Hollywood and tech companies.
“We’ve been aggressive at protecting our IP and we’ve gone after other companies that have not honored our IP, not respected our IP, not valued it, and this is another example of us doing just that,” Iger said.
It’s also unclear whether getting access to Disney IP will be a shot in the arm for Sora. Will Disney+ users even want to watch these short clips?
“I’d call it an experiment, not a gimmick,” Greengart said. “I expect the experiment to fail: short form AI videos probably have a place within short form mobile video apps, but Disney+ is not where people go to find them.”
