On the surface of it, Disney’s strategy to commit $1 billion to OpenAI while providing its characters to Sora appears somewhat like Goliath yielding to David. Why would Disney expose its cherished intellectual property to the public for unrestricted use? The very same IP that its legal teams historically would have prosecuted you over if you even contemplated crafting a cake resembling Simba for your child’s “Lion King”-themed birthday celebration?
And why would it license that IP to OpenAI on the same day it dispatched a cease-and-desist notification to Google, alleging the search giant was violating Disney copyrights on a “vast scale?” This is the same Disney that just six months prior joined forces with Universal to take legal action against Midjourney, another generative artificial intelligence firm, for essentially accomplishing what users of Sora will now be permitted to do with Disney’s permission.
The rationale is that Disney needed an insurance policy on the future of AI.
After all, the prospects for the technology are uncertain at best, and investors are increasingly questioning the prudence of the industry’s – and especially OpenAI’s – enormous expenditure commitments.
But the worldwide entertainment giant cannot appear to be missing the opportunity if the technology ultimately alters how people produce and interact with the world. And Disney, being Disney, discovered a method to secure a position without initiating another legal conflict.
Much like Goldilocks – an IP that Disney does not possess, we might add – OpenAI is perfectly suitable for the Mouse House.
“I imagine that Midjourney is too modest… and Google is likely too large,” Matthew Sag, a law professor specializing in AI and machine learning at Emory University, remarked in an email. “Disney and Google clash on numerous matters (just consider YouTube), so resolving all the business disputes would take an eternity. Furthermore, it is difficult to envision Disney obtaining an equity stake in Google.”
To be explicit: Disney is not surrendering control of its IP to OpenAI permanently. In a talk with CNBC’s “Squawk on the Street” on Thursday, Disney CEO Bob Iger confirmed that the three-year licensing arrangement includes merely about one year of exclusivity for OpenAI. Following that, Disney is free to offer its IP to other AI firms.
“We have consistently perceived technological progress as an opportunity, not a peril,” Iger stated to CNBC. “No human era has ever obstructed technological progress, and we do not plan to try.”
So, to summarize: Disney secures the ability to place certain constraints on how its figures manifest on Sora, earns licensing revenues from OpenAI, and—as a bonus—receives $1 billion worth of ownership in one of the preeminent startups globally.
OpenAI? It gains the ability to enhance its AI video creation tool with around 200 Disney characters that users will have the ability to modify in virtually any manner they choose. It also secures some necessary funds, although $1 billion is not substantial compared to the $1.4 trillion it owes to various corporations in the coming years.
Perhaps most critically for OpenAI, it avoids being sued by Disney, at least for a period.
Iger’s approach is not without hazards. Permitting one’s most valuable IP to enter the realm of AI output—even sophisticated output like Sora’s—runs the risk of diminishing the brand and alienating the human artists responsible for the cherished figures. But Iger seems to be betting that the IP might be vulnerable regardless if generative AI evolves into as potent and widespread as its advocates like Altman suggest. And for the reasonable cost of $1 billion, he manages to gain a foothold.
The agreement grants Disney assurance from OpenAI that it will prevent users from generating illicit, damaging, or age-inappropriate content, the companies communicated. Iger also stressed on CNBC that inclusion on Sora does not imply that people will be able to produce their own full-length “Ratatouille” fan fiction videos, or anything comparable.
“We must bear in mind that these are 30-second videos. We are not discussing the creation of shorts or motion pictures,” Iger remarked. “This is a method for us as a corporation to truly offer experiences, particularly to younger demographics, engaging with our characters in novel ways.”
(Interpretation: Sora is hardly Pixar, folks—it’s a plaything for children. At least, for now.)
The essential takeaway: Disney and Iger perceive in OpenAI a favored brand with considerable capacity, yet one they can manage with relative ease. OpenAI, which has never achieved profitability and urgently requires patrons willing to pay for its offerings, needs Disney considerably more than Disney requires OpenAI.
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