Behind the deal that took Disney from AI skeptic to OpenAI investor

Since OpenAI kicked off the AI revolution, Hollywood has eyed the AI industry with a tortured mix of excitement, wariness and hostility.
OpenAI and Disney disagreed over whether AI companies have the legal right to train models on copyrighted content, an enduring point of tension between Silicon Valley and creatives. Yet Gutierrez’s fireside chat with OpenAI’s intellectual property and content chief Tom Rubin was collegial, according to people familiar with the matter.
Behind the scenes, the companies had been in intense negotiations since the summer about how they could make OpenAI’s new text-to-video tool Sora 2 the centerpiece of a landmark deal to let Disney fans bring their favorite characters to life with AI.
The Burbank entertainment company on Thursday announced a blockbuster deal with OpenAI to invest $1 billion for an equity stake in the ChatGPT maker. As part of the deal, OpenAI will license more than 200 characters from Disney so that users can create AI-generated videos in Sora. Through the three-year licensing arrangement, fans will be able to generate videos of themselves surfing with Stitch off the shores of Hawaii or wielding a lightsaber in front of R2-D2.
The previous day, Disney sent a cease-and-desist letter to Google, one of OpenAI’s chief rivals in the AI space. Disney’s letter accused Google of “infringing Disney’s copyrights on a massive scale." Disney executives had grown frustrated that Google’s image generators had been going viral—but, from Disney’s point of view, without the output guardrails that OpenAI was offering copyright holders.
“We have a longstanding and mutually beneficial relationship with Disney, and will continue to engage with them," a Google spokesperson said in a statement. “More generally, we use public data from the open web to build our AI and have built additional innovative copyright controls."
The sharply contrasting approaches by the tech companies helped hasten a deal that OpenAI and Disney had been inching toward off and on from their first talks three years ago, according to people familiar with the matter.
Alphabet’s Google is the biggest tech company to draw Disney’s ire for allegedly using copyright material to train its AI systems and allowing its tools to output material that violates copyrights. The Disney letter, which was viewed by The Wall Street Journal, includes dozens of images and screenshots of videos created with Google’s Gemini, Nano Banana and Veo apps featuring Disney-owned characters like Homer Simpson and Spider-Man.
Disney’s dual actions this week illustrate the carrot-and-stick approach the company and other major copyright holders are taking to the growing wave of AI.
As recently as a few years ago, generative artificial intelligence was hardly a concern for Hollywood compared to falling box office receipts and cord-cutting. But with the 2023 Hollywood strikes and the introduction of the first version of Sora the following year, AI’s potential to replace human work took center stage. Text-to-image and video apps mined copyrighted film, television and comic book characters such as Darth Vader and Iron Man, leaving studios with a choice: take the tech companies to court or try to forge deals.
For Disney at least, the answer is both. Disney and Comcast’s Universal filed a lawsuit against AI company Midjourney in June, accusing it of enabling copyright violations by generating images of their characters. Before the lawsuit, Disney sent Midjourney cease-and-desist letters similar to the one it sent Google this week.
The OpenAI deal is the latest example of how Disney is positioning its trove of intellectual property for a future of entertainment beyond blockbuster movies, television shows and real-life theme parks. Last year Disney made a deal with Epic Games to invest $1.5 billion in the “Fortnite" maker while collaborating to come up with new ways for fans to interact with franchises including Pixar and Marvel.
It is a big bet by Disney CEO Bob Iger as he works to set up Disney for success after his contract expires at the end of 2026. Iger on Thursday said on CNBC that the plan is to curate Sora-created videos with its characters on Disney+ and, eventually, let people create Sora-powered videos within the streaming service.
Building an alliance
The relationship between the 100-year old entertainment company and the San Francisco-based tech upstart goes back to 2022, the year ChatGPT launched. Iger was introduced that year to OpenAI CEO Sam Altman by Thrive Capital founder Josh Kushner, according to people familiar with the matter. Thrive is a major OpenAI investor.
Iger joined Thrive as a venture partner that year, but left soon after when he returned to Disney, replacing his short-lived successor Bob Chapek.
The companies’ legal and policy teams have been talking since late 2023 about how copyright material should be treated in the AI era, according to some of the people familiar with the matter.
In February of 2024, OpenAI’s release of a preview of its Sora video generator shook Hollywood. Film and TV makers could see both how such a tool might make their jobs cheaper and easier, while also threatening some of their livelihoods.
Legal clarity
It also raised murky legal questions. Content companies argued that AI firms didn’t have the right to scrape their content and use it to train their models, while tech companies said it was fair use under copyright law.
The legal picture has gotten a bit clearer in the last year. The results of two cases suggested that training AI on copyright material might be fair use in some circumstances, in large part because it is considered transformational.
Recent lawsuits filed by content owners, such as Disney and Universal’s Midjourney complaint, have focused less on the training process and more on the allegedly infringing images the AI programs create.
“I think the legal landscape is clarifying," said Matthew Sag, a professor at Emory University School of Law. “It’s pretty clear that the fair use answer isn’t always or never, it’s sometimes."
OpenAI this summer first showed Disney its Sora 2—which lets users share videos—said people with knowledge of the matter.
When OpenAI launched the latest Sora app in September, it initially required copyright holders to opt out from allowing their material to be used in AI videos. It switched to an opt-in system several days later, after blowback from major entertainment companies and unions.
The Disney deal is designed to avoid one of the most contentious issues in Hollywood at the moment: The use of actors’ likenesses and voices in AI-generated content. The union representing screen actors fought for protections around AI in its 2023 strike.
Disney is in a strong position among Hollywood studios to work around those concerns because it has so many characters who are recognizable separate from their association with actors, according to industry executives. Many of the licensed characters are from its vast library of animated movies, but a lot of Marvel superheroes and Star Wars aliens and robots also fit the bill.
Nonetheless, Hollywood unions aren’t all satisfied with the arrangement. The Writers Guild of America, which also went on strike over issues including AI, praised Disney’s cease and desist letter to Google in an email to members. However, the union said Disney’s OpenAI deal “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."