OpenAI said Thursday it reached a licensing deal with the Walt Disney Co. to use more than 200 popular Disney characters including Mickey Mouse, characters from “Frozen” and Yoda from “Star Wars” in OpenAI’s text to video tool Sora. Disney has also agreed to invest $1 billion in the San Francisco AI startup.

The deal marks a significant step in Hollywood, as a major studio is partnering with one of the most valuable AI companies in a three-year licensing deal that will bring iconic characters to an AI-powered platform. Under the deal, users early next year can generate prompts on Sora to create short videos that feature the Disney characters and use ChatGPT Images to create images of the characters in seconds. Some of the Sora-generated videos will be shown on Disney+. The companies said the agreement does not include talent likenesses or voices.

“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 Chief Executive Officer Bob Iger said in a statement.

Artificial intelligence has been a controversial topic in Hollywood, as creative talent have raised concerns about AI companies taking their work or likenesses without their permission and not compensating them enough. In 2023, actors and writers went on strike to gain more AI protections in their contracts with major studios. There have also been questions raised about what would be the appropriate compensation for intellectual property that could be used to train AI tools.

Disney has had a more contentious relationship with other AI companies. Earlier this year, the company sent a cease-and-desist letter to tech start-up Character.AI, alleging that chatbots on the platform were impersonating well-known Disney characters and generated replies that simulated those known characters and incorporated their back stories. Disney and Universal Pictures have also sued AI company Midjourney alleging that its image generator infringed on its copyrighted characters from franchises such as “Star Wars” and “Despicable Me.” Warner Bros. Pictures later joined the lawsuit.

This week, Disney sent a cease-and-desist letter to Google, alleging copyright infringement of the company’s characters from the tech behemoth’s AI tools.

Some entertainment companies, including Lionsgate and AMC Networks, have partnered with AI companies, to help create more efficiency in areas such as marketing, preproduction and visual effects work. Some creatives have also praised AI tools, saying it has helped them test bold ideas when they are dealing with smaller budgets.

But many in Hollywood have been skeptical over the way AI companies have approached the use of characters and dead celebrities in their tools. OpenAI launched its second version of its text-to-video tool Sora in September and received push back from talent agencies, the Motion Picture Assn. and estates of dead influential figures who raised concerns that likenesses of characters and people were used without their permission.

In response, OpenAI said it would give more granular controls to rights holders and is working on a way to compensate them for video generation. OpenAI said it has guardrails to block the generation of well-known characters and a team of reviewers who are taking down material that doesn’t follow its updated policy. Rights holders can also request removal of content.

Having the backing of a company like Disney will likely help boost OpenAI’s reputation in the industry. The licensing deal includes classic Disney princesses like Cinderella and Ariel, as well as characters from the worlds from such films as “Monsters Inc.,” “Toy Story” as well as Marvel and Lucasfilm franchises like Black Panther and Stormtroopers.

Disney will also become a customer of OpenAI using its tools to build products, and experiences in areas such as Disney+. Disney employees will also have access to ChatGPT, according to a post on OpenAI’s website.

In addition to making a $1 billion equity investment in OpenAI, Disney will also have warrants to purchase additional equity.

“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’s CEO Sam Altman in a statement. “This agreement shows how AI companies and creative leaders can work together responsibly to promote innovation that benefits society, respect the importance of creativity, and help works reach vast new audiences.”

OpenAI in its post on its website said the transaction is subject to corporate and board approvals and negotiation of definitive agreements.

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