The Disney/OpenAI Deal is Dead. What Comes Next?

So, if you haven’t heard by now the Disney OpenAI deal is dead and the online fandom is celebrating. 

Concerns with the deal ranged from the AI slopification of Disney+ to creatives being sidelined in favor of generative tools, and the possibility of AI being used in Disney’s films and animation. The rise of generative AI is not a Disney-specific issue. Every company in America is trying to figure out how to use it or risk falling behind, and Disney is no different.

What makes Disney different is that its IP is its greatest asset, and that is what is being threatened by the proliferation of unfiltered third-party AI platforms. The company is being pulled in multiple directions. Shareholders expect efficiency, fans expect authenticity, and Disney wants to maintain control over how its IP is used and created in a rapidly developing landscape.

So as Disney moves into AI, where do they draw the line, and what do they mean when they say it will not replace human creativity?

Sora was the app at the center of Disney’s deal with OpenAI, where users could generate and share short AI videos using licensed characters. The basics of the deal were that Disney would license 200+ characters for use on Sora in short clips, without actor likenesses or voices, invest $1.5 billion into OpenAI, and in return have a level of oversight over how that material was created.

Basically, the product that was pitched to fans was the ability to create and share 30 second clips using Disney IP. What made this deal unique was that Disney would have oversight and the ability to set guardrails and boundaries for the generated content and a curated selection of user generated videos would appear on Disney+.

Generative AI in arts and entertainment is a touchy subject. Some believe AI is going to fundamentally change or replace parts of Hollywood and animation. Others believe it is an area that should stay strictly human and that a flood of material that isn’t generated by human artists blurs the line between the work of real artists and machines. If enough low effort output gets tied to the brand the damage might be irreversible.

There is also the concern that AI becomes a cost-cutting tool, leading to layoffs and fewer opportunities for creatives. And the biggest concern of all is that Disney’s foray into AI is a slippery slope to AI generated featured films and animation.

Disney’s new CEO Josh D’Amaro has said the goal with AI is to “empower human creativity and not replace it.” That sounds good, but what does it really mean? Is it giving creatives full latitude to use AI, or a mandate to use just enough of it behind the scenes to reduce costs?

Are there internal rules for how AI can be used in films and animation, or is that left up to the individual teams? Are AI voices acceptable but not AI-generated characters or performances? Without clear definitions, no one knows what’s off limits and it allows fans anxieties to fill in the blanks.

OpenAI’s abrupt decision to shut down Sora effectively ended the deal, and Disney appears to have been caught off guard. Without Sora, there is no platform for the partnership to exist on. However, this does not change Disney’s core AI strategy. Disney is still going to engage with AI, but this gives them a chance to step back and better define how they plan to approach it, a question that hasn’t clearly been answered yet.

Disney is going to be part of this whether people like it or not. With this deal off the table, there will be plenty of other companies looking to work with them. When the next partnership comes fan scrutiny will be higher. That puts the pressure on Disney to get it right and thread the needle between investors, fans, and employees’ expectations, all while protecting their valuable IP.

Ultimately Disney’s AI strategy remains the same, but the OpenAI deal falling through may have bought them more time to define it.