Disney partners with OpenAI as AI continues to gain traction

Disney has announced a $1 billion equity investment in OpenAI, paired with a significant three-year content licensing agreement. This landmark deal positions Disney as the first major content partner for OpenAI’s generative AI video platform, Sora

The licensing agreement grants Sora the right to generate short, user-prompted social videos featuring over 200 characters from Disney, Marvel, Pixar, and Star Wars. Crucially, the agreement explicitly excludes the use of talent likenesses or voices to protect actors and creators.

Disney Partners With OpenAI

Fans will be able to create and share short, original videos using Disney’s beloved characters via Sora, which is expected to roll out in early 2026. A curated selection of these fan-inspired, Sora-generated videos will be made available to stream on the Disney+ platform, creating new forms of fan engagement and content.

“Disney is the global gold standard for storytelling, and we’re excited to partner to allow Sora and ChatGPT Images to expand the way people create and experience great content,” said OpenAI CEO Sam Altman in a statement.

Disney will become a major customer of OpenAI, using its Application Programming Interfaces (APIs) to build new products, tools, and experiences across its business divisions, including new features for Disney+.

The company plans to roll out ChatGPT for its employees, signaling a broader adoption of AI within Disney’s internal operations.”

“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,” Disney CEO Bob Iger said in the statement.

He added, “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, giving them richer and more personal ways to connect with the Disney characters and stories they love.”

Disney Has Been Protective of Its IP

This deal marks a significant shift for Disney, which has historically been highly protective of its intellectual property and has been involved in legal disputes against other AI companies (like sending a cease-and-desist letter to Google regarding unauthorized IP use and litigation against others).

Responding to an analyst’s question on possible partnership with AI companies, Iger said during the fiscal Q4 2025 earnings call, “It’s obviously imperative for us to protect our IP using this new technology. And we’ve been pretty engaged on that subject with a number of entities, and I’m hopeful that ultimately, we’ll be able to reach some agreement, either the industry or the company has on its own with some of these entities that would, in fact, reflect our need to protect the IP.”

He added that the company would use AI for data mining as well as creating efficiencies within the company. He added, “There’s phenomenal opportunities to deploy AI across our direct-to-consumer platforms, both to provide tools that make the platforms more dynamic and more sticky with consumers, but also to give consumers the opportunity to create on our platforms.”

Iger has been working on a turnaround

Notably, Iger has been working on a turnaround strategy since he returned to Disney in 2022. Among others, he changed the company’s strategy, and Disney started targeting streaming profitability instead of chasing subscriber growth.

Disney’s streaming business had been posting losses, and quarterly operating losses peaked at around $1.5 billion before Iger took over. The strategy has paid off, and Disney’s streaming business has now turned profitable.

The full fiscal year 2025 saw the DTC business achieve an operating income of $1.3 billion, significantly ahead of its original guidance, highlighting the success of recent strategic pivots.

While the focus has shifted to profit, the services continued to add subscribers, though at a more moderate pace than the initial launch frenzy.

Subscriber growth was driven by a healthy addition of 3.8 million core Disney+ subscribers, with growth seen both domestically (US/Canada) and internationally.

Higher subscription revenue, largely due to price increases on the ad-free and ad-supported tiers of Disney+ and Hulu, was a major contributor to the improved financial margins.

The ongoing integration of Hulu content directly into the Disney+ app for bundled subscribers has been a major focus, creating a more comprehensive, higher-value content library designed to reduce churn.

The “Disney Bundle” (Disney+, Hulu, and ESPN+) remains central to the strategy, offering value while reducing cancellations. Disney is actively pursuing new third-party bundling opportunities.

The ad-supported tier continues to be a crucial revenue driver. More than half of new Disney+ subscribers domestically are choosing the ad tier, boosting advertising revenue for the segment.

Disney announced a new theme park in the UAE

Earlier this year, Disney announced a new theme park in the UAE in partnership with Abu Dhabi-based Miral Group. Iger said that a third of the world population resides within a four-hour flight from the UAE, and the region has an addressable market of 500 million tourists, which bodes well for the upcoming theme park.

It said that as part of the deal, “Disney will oversee design, license our IP and provide operational expertise, while Miral will provide the capital, construction resources and operational oversight.” Notably, the investment would be in addition to the $60 billion investment that Disney previously vowed for its Parks.