Disney to invest $1bn in OpenAI

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The Walt Disney Company has agreed to invest $1bn in OpenAI as part of a deal that will allow the artificial intelligence start-up to use Disney characters in its flagship products.

As part of the three-year deal, announced on Thursday, Disney will make more than 200 Marvel, Pixar and Star Wars characters available within ChatGPT and Sora, OpenAI’s video-generation tool.

The move will allow users to create images and short videos featuring characters such as Mickey Mouse, Elsa and Darth Vader.

Disney will also take a $1bn stake in the $500bn start-up and, in return for licensing its characters, will be granted warrants to purchase additional equity in OpenAI at a nominal price over the course of the contract.

The deal is the biggest to date between an AI company and a media group and marks a softening of relations between the two industries after a period of mutual wariness.

Media groups have grappled with OpenAI’s rapid expansion and its implications for their intellectual property, with the New York Times pursuing a lawsuit against the start-up while other publishers such as News Corp have struck licensing deals with the San Francisco-based group.

Disney separately sent a cease and desist letter to Google on Wednesday evening, claiming the search giant was “infringing Disney’s copyrights on a massive scale” by using them to train its own AI tools.

A source close to Disney said that while the company was excited about the opportunities presented by AI, it was also “rightly concerned about the harms it can cause when the rights of creators are not respected”.

OpenAI’s Sora has stoked fears in Hollywood that the video-generation tool could pose a threat to human creativity.

The release of its Sora 2 update earlier this year prompted a backlash, with the agency CAA, which represents stars including George Clooney and Scarlett Johansson, warning the app posed “significant risks” to clients and their intellectual property.

Thursday’s deal gives OpenAI exclusive rights to use Disney characters in generative AI for the first year, but does not allow the company to use the media giant’s intellectual property to train its model.

“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,” said Disney chief executive Bob Iger.

OpenAI chief Sam Altman said the deal would “expand the way people create and experience great content”.

In recent months, OpenAI has struck deals worth $1.4tn with chipmakers and other infrastructure partners to access more computing power, relying on an in-house team to devise complex, bespoke deal structures.

Altman regards these partnerships as essential for his company to beat rivals such as Meta and Anthropic in the AI race.

Disney shares were up 1.5 per cent in Thursday morning trading, leaving the stock about flat for the year and with a market capitalisation of almost $200bn.