Walt Disney is joining the craze around Artificial Intelligence (AI), announcing that it is investing $1 billion in OpenAI. The investment gives the startup company the rights to use characters from Marvel, Pixar, and Star Wars franchises in its popular Sora AI video generator. Here are the details on this partnership and what it means for the Hollywood landscape.

Disney Announces Landmark Partnership with OpenAI

The entertainment industry has been increasingly embracing the use of generative AI in recent months. A new three-year partnership announced on Thursday between Disney and OpenAI is reinforcing that the technology is going to play a major role in how content is produced in the future. While proponents of the deal say that it is a natural extension of where AI technology is headed, critics worry that the deal will negatively impact creative jobs as well as intellectual property rights.

Diving into the specifics of the licensing deal, Sora and ChatGPT Images will now be able to produce videos using classic licensed Disney characters such as Mickey Mouse and Snow White as early as next year. The collaboration does not include the use of voices or talent likenesses.

Disney CEO Bob Iger said that the agreement with OpenAI will give the entertainment giant the ability to "extend the reach" of its patented storytelling using generative AI while also "respecting and protecting creators and their works." It is being reported that negotiations between Iger and OpenAI's Sam Altman began years ago.

According to Reuters, a source close to the situation said that OpenAI offered Disney the opportunity to preview its image-generation tool Sora prior to its launch. Iger dropped hints about the agreement during a call with investors in November, noting that AI would allow Disney the opportunity to give Disney+ subscribers tools to create their own user-generated content in short form.

The agreement also gives Disney+ the right to air a selection of videos by users on its streaming platform. This part of the deal allows Disney to lean into the growing market for short-form video content. In addition, Disney will receive warrants to buy additional equity in OpenAI.

Disney said that it plans to deploy ChatGPT for its employees. The two companies will also use the existing OpenAI models to generate new products and experiences for Disney+ subscribers.

The announcement detailed that guardrails will be put in place to protect against the use of Disney characters in inappropriate settings and situations. It is also being reported that Disney wants to use the OpenAI tools to support movie production in an effort to become more efficient.

Negative Reaction to the Agreement in Hollywood

Meanwhile, Hollywood's unions are holding back on the celebrating. The unions have long been worried about the use of generative AI in this industry space.

Danny Lin, president of the Animation Guild, responded to the news by noting that compensation for artists was a chief concern. Lin said that although animators do not own the rights to the characters that they create, they are the reason that the franchises have earning potential.

The Writers Guild of America (WGA) detailed that it would meet with Disney to determine how much of its labor would be used in new user-generated videos. A note sent to WGA members from leadership said that the announcement "appears to sanction its theft of our work."

The widely used SAG-AFTRA union representing actors and other entertainment workers confirmed that Disney and OpenAI contacted them to offer assurances that the deal would employ the ethical and responsible use of the emerging technology. Industry experts caution that the unions will be limited in how much they will be able to rein in the power of media produced by AI.

The news of the partnership between Disney and OpenAI came on the same day that President Donald Trump signed an executive order blocking states from enacting AI restrictions. The president defended the order by saying that the race to the top for AI technology is between the U.S. and China. According to the White House, the goal of the order is to prevent states from slowing down the progress made in this technological space.

Political experts warn that the executive order will likely face significant legal challenges from many blue states. Critics have expressed concern that the deregulation could allow AI companies to avoid accountability in the event that the technology brings harm to its users.

Altman is in support of the Trump initiative, saying that innovation could slow down should OpenAI have to jump through a patchwork of state rules. Altman asserts that these roadblocks would keep the U.S. from being as competitive in the international AI race.

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