Disney’s Risky Acceptance of AI Videos
Disney will let fans run wild with AI-generated videos of its top characters. The move highlights the uneasy partnership between AI companies and Hollywood.
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It’s a childhood dream come true. Now you can control Mickey Mouse, Yoda, Cinderella and Iron Man. At least for 30-second increments.
In a new deal, Disney is licensing 200-plus characters to OpenAI’s Sora, a social media site for short AI videos. Users can create images and up to 30-second videos by providing simple text descriptions. (Note that you can’t use character voices.)
The move is a huge win for partner OpenAI but brings big risk for Disney. The fear that generative AI could disrupt Hollywood prompted Disney to strike a deal early. It’s also a shot against Google, which Disney sees as a bigger AI threat. After Disney recently sent a cease-and-desist letter, Google removed AI-generated videos with Disney characters from YouTube.
Disney’s announcement highlights its defensive stance at the top of its announcement, saying that “the agreement marks a significant step in setting meaningful standards for responsible AI in entertainment.”
It’s an effort to both protect intellectual property and embrace AI, but it’s not a given that Sora’s guardrails can always hold up. When Sora launched in October, I wrote about the looming flood of AI video apps and copyright challenges: “OpenAI is entering a minefield of trying to police certain content and figuring out where to draw the line, especially with teen users.”
Disney’s brand could be tarnished if users are able to generate offensive videos and OpenAI isn’t able to quickly take them down. Sora’s launch came with lots of copyrighted material appearing in users’ videos, drawing the ire of Hollywood.
Disney didn’t divulge the financial terms of the licensing deal, but did reveal it will invest $1 billion in OpenAI and become a customer of its tools. If OpenAI’s valuation continues to grow, Disney will own a small piece of that. Expect Sora to surge in popularity in early 2026 with the introduction of Disney characters. However, it’s expected that Disney will see minimal revenue from the three-year pact.
“This deal does not alleviate concerns in the media and entertainment industry about disruption from artificial intelligence,” writes Morningstar analyst Matthew Dolgin in a December 11 research note. But it does highlight the power of Disney’s IP and ability to adapt, writes Dolgin.
That adaptability could fast-track the growth of a serious competitive threat in Sora. The rise of major online platforms, such as Facebook, was bolstered, in part, by publishing and media companies providing free content to tap a new online audience. Consider that YouTube, with its combination of user-generated and professionally produced videos, netted nearly $40 billion in sales in 2024 and is currently the leader in TV screen time, with a 13% share.
Disney says it will show some of the user-generated Sora videos on its own Disney Plus app. But that’s not likely to be very popular. The company would prefer to build an in-house interactive AI video tool, and may even be working on one. But competing against the likes of Sora and other AI video apps, not to mention Facebook and Instagram, is a daunting and expensive challenge. Disney and other media companies also see a future where fans use AI to create personalized episodes or even feature-length films with iconic characters. The question is whether media companies can handle that internally or have to outsource it to OpenAI, Google or other AI firms.
As the most powerful media brand with a treasure trove of iconic characters, Disney’s deal sets the stage for other media companies sharing IP with AI companies and social media sites. Look for a series of similar agreements in early 2026.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
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