Walt Disney Co. has announced a landmark three-year partnership with OpenAI, investing $1 billion in equity while licensing more than 200 characters from its Disney, Marvel, Pixar, and Star Wars franchises for use in OpenAI’s Sora generative video platform and ChatGPT’s image tools.

The deal marks Hollywood’s boldest embrace yet of artificial intelligence amid ongoing debates over creator rights and content disruption.

At a joint press event, Disney revealed that Sora users will be able to generate short, prompt-based social videos featuring iconic characters such as Mickey Mouse, Elsa, Spider-Man, and Grogu, alongside props, vehicles, and environments. Selected clips will stream on Disney+, while OpenAI’s APIs will power new subscriber experiences like personalized story content. Disney also plans to deploy ChatGPT internally for employee productivity tools.

CEO Bob Iger described the partnership as a “thoughtful and responsible” evolution: “The rapid advancement of artificial intelligence marks an important moment for our industry... extending the reach of our storytelling through generative AI, while respecting and protecting creators and their works.” OpenAI CEO Sam Altman echoed the sentiment, calling Disney “the global gold standard for storytelling” and framing the deal as proof that AI firms and creative leaders can collaborate responsibly.

The agreement includes safeguards: no real actors’ likenesses, age-appropriate filters, and granular controls for character generation. Disney also receives warrants for additional equity, positioning it as a major OpenAI customer.

The move follows Disney’s lawsuits against Midjourney and cease-and-desist actions against Character.AI over unauthorized use of its IP. Analysts see the pivot as a strategic thaw, with Disney shifting from litigation to licensing partnerships that protect rights while tapping AI’s potential.

Markets responded positively: Disney shares rose 3.2% in pre-market trading to $112.45, adding $6 billion to its market cap. Analysts forecast up to $500 million in annual revenue from AI tools by 2028, though unions like SAG-AFTRA warn of job losses.

Rollout begins in early 2026, with beta access for Disney+ subscribers. As Hollywood navigates AI’s double-edged sword—innovation versus disruption—this deal could set precedents for creator compensation and ethical guidelines in the entertainment industry.