Disney makes a 'dramatic shift' on AI content with $1 billion OpenAI investment

By Lukas I. Alpert

The deal includes a landmark licensing agreement that will allow fans to create their own AI-generated short clips on OpenAi's Sora using Disney characters

Fans will be able to make short-form clips on OpenAI's Sora platform using Disney characters, like Darth Vader or Mickey Mouse. (Photo by Kent Nishimura/Getty Images)

An earlier version of this story misspelled the name of Theresa Payton.

Now everyone can say, "I am Groot."

The Walt Disney Co. has agreed Thursday to invest $1 billion in OpenAI, in a deal that includes a three-year licensing agreement that will allow fans to create their own artificial-intelligence-generated short clips on Sora using Disney's characters.

The pact makes Disney (DIS) the first major content partner with Sora, OpenAI's short-form clip-generating platform, and will give users the ability to create their own videos using characters ranging from Mickey Mouse and Moana to Darth Vader and the monosyllabic, tree-like alien Groot from "Guardians of the Galaxy."

It also appears to signal a change of heart for Disney, which has lodged complaints over how AI agents have used its copyrighted content, while also adding some risks.

"The rapid advancement of artificial intelligence marks an important moment for our industry, and through this collaboration with OpenAI we will thoughtfully and responsibly extend the reach of our storytelling through generative AI, while respecting and protecting creators and their works," said Walt Disney CEO Bob Iger. "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."

As part of the agreement, Disney will make a $1 billion equity investment in OpenAI, and receive warrants to purchase additional equity.

Disney shares rose about 1% in recent morning trading on news of the deal. The stock has rallied 5.5% so far in December, after sinking 15.8% amid a five-month losing streak through November.

Under the content deal, fans will be able to start making their own video in early 2026, and Disney will begin posting a curated selection on its streaming platform, Disney+.

As part of the deal, OpenAI said it is committed to promoting "the responsible use of AI that protects user safety and the rights of creators," but the content arrangement is not without its risks, experts say.

"The key question is what guardrails exist. Without strong controls, you invite deepfakes, misinformation, and inappropriate uses of characters that anchor billion-dollar franchises," said Theresea Payton, a cyber expert who served as the White House's chief information officer in George W. Bush's administration.

Others see the deal as a way to protect Disney's intellectual property from abuse.

"We believe this agreement codifies what specific IP can be used (animated characters) and what form the output can take (i.e. short-form video). This will both protect actor/actresses in Hollywood and prevent cannibalization of Disney's long-form Film and TV output," Citi Research media analyst Jason Bazinet wrote in a note to clients.

Disney now joins a growing list of media companies that have struck licensing arrangements with AI firms. Last year, News Corp (NWS), which owns MarketWatch publisher Dow Jones, reached a content-licensing deal with OpenAI. Several media outlets have engaged in litigation with AI firms over copyright questions related to the use of their content.

Most such deals have so far centered on the use of news articles and written stories to train AI programs and use their information to answer user questions. The Disney deal seems to take it one step further in allowing its intellectual property to be used by fans to create their own content.

Payton said that Disney's decision to loosen its hold on its intellectual property is a big step and marks a sign of change in media and Hollywood as AI takes hold.

"Disney is known for having one of the tightest grips on its intellectual property, so opening up this many characters to Sora users is a dramatic shift for a company famous for protecting every pixel of its brand," she said. "This move makes clear the GenAI era is here to stay, and when a company like Disney loosens its grip, it shows just how quickly AI is reshaping expectations-and how urgently governance and safety standards are needed."

As Disney cements its partnership with OpenAI, it is fighting the use of its content elsewhere. On Thursday, it was reported that Disney had sent a cease-and-desist letter to Alphabet Inc.'s Google, saying the tech platform was infringing on Disney's copyrights by using its content for its AI platforms.

Disney has previously fired off similar cease-and-desist letters to Meta Platforms Inc. (META) and Character.AI, and is part of litigation with NBCUniversal and Warner Bros. Discovery Inc. (WBD) against Midjourney and Minimax.

-Lukas I. Alpert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

12-11-25 1146ET