Disney to invest $1bn in OpenAI

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The Walt Disney Company has agreed to invest $1 billion in OpenAI as part of a deal that will allow the AI ​​startup to use Disney characters in its flagship products.

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

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

Disney will also take a $1 billion stake in the $500 billion startup, and in exchange for licensing its characters, it will be given warrants to purchase additional shares in OpenAI at a nominal price over the term of the contract.

The deal is the largest to date between an artificial intelligence company and a media group and represents an improvement in relations between the two industries after a period of mutual caution.

Media groups have grappled with OpenAI’s rapid expansion and its implications for their intellectual property, with The New York Times suing the startup 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, alleging that the search giant is “broadly violating Disney’s copyrights” by using them to train its AI tools.

A source close to Disney said that while the company was excited about the opportunities presented by artificial intelligence, it was also “rightfully concerned about the damage it can cause when creators’ rights are not respected.”

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

The release of the Sora 2 update earlier this year sparked a backlash, with CAA, which represents stars including George Clooney and Scarlett Johansson, warning that the app posed “significant risks” to customers 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.

“Rapid advances in AI represent an important moment for our industry, and through this collaboration with OpenAI, we will thoughtfully and responsibly expand our storytelling through generative AI,” said Bob Iger, Disney CEO.

Sam Altman, president of OpenAI, said the deal “will expand the way people create and experience great content.”

In recent months, OpenAI has closed $1.4 trillion in deals with chipmakers and other infrastructure partners to access more computing power, relying on an internal team to devise complex, custom deal structures.

Altman considers these partnerships essential for his company to overcome competitors such as Meta and Anthropic in the artificial intelligence race.

Disney shares rose 1.5 percent in morning trading Thursday, leaving the stock roughly flat for the year and with a market value of about $200 billion.