By Dawn Chmielewski and Deborah Mary Sophia Dec 11 (Reuters) – Walt Disney is investing $1 billion in OpenAI and will let the startup use characters from Star Wars, Pixar and Marvel franchises in its Sora AI video generator, a crucial deal that could reshape how Hollywood makes content. The three-year partnership announced on Thursday is a pivotal step in Hollywood's embrace of generative artificial intelligence, side-stepping the industry's concerns over the impact of AI on creative jobs and intellectual property rights. As part of the licensing deal, Sora and ChatGPT Images will start generating videos using licensed Disney characters such as Mickey Mouse, Cinderella and Mufasa, from early next year. The agreement excludes any talent likenesses or voices. "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. TALKS BEGAN LONG AGO Iger and OpenAI's Sam Altman began talking years ago, as they explored a way to do more to showcase the potential of generative AI, when combined with Disney's characters and stories, according to one person familiar with the talks. Prior to the launch, OpenAI offered the studio early looks at its image-generation tool Sora, the source who requested anonymity to discuss the negotiations said, adding that Disney found OpenAI willing to engage constructively in this dialogue. Iger previewed part of the strategy during an investor call in November, saying AI would allow the company to provide Disney+ users with tools to create and consume user-generated content, mainly in short form. As part of the agreement with OpenAI, a selection of the videos by users will be made available for streaming on Disney+, allowing the streaming platform to capitalize on the growing appeal for short-form video content. The media conglomerate will also receive warrants to purchase additional equity in the ChatGPT maker. The companies will use OpenAI's models to build new products and customer experiences, including for Disney+ subscribers, while Disney will deploy ChatGPT for its employees. The deal also includes guiderails to protect against the characters being depicted in inappropriate situations and Disney also plans to use OpenAIs tools for its internal purposes to support film production as it looks to gain efficiency, the source said. The partnership comes months after Creative Artists Agency, Hollywood's premier talent agency, criticized OpenAI for exposing artists to "significant risk" through Sora and questioned if creative professionals would be compensated for their work. "An entertainment giant partnering with an AI company will inevitably invite backlash from labor groups in the entertainment industry," Emarketer analyst Ross Benes said. "But unions' power is limited and they will unlikely be able to stem the momentum of AI-produced media." CNBC reported earlier in the day that Disney sent a cease and desist letter to Google alleging the company infringed its copyrights. Disney and Comcast's Universal had in June filed a copyright lawsuit against AI photo generation firm Midjourney for its use of the studios' best-known characters. (Reporting by Dawn Chmielewski in San Francisco and Deborah Sophia and Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur)
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