March 25, 2026
Following Disney’s retreat from its $1 billion deal with OpenAI, after the AI company decided to shut down its AI video tool Sora, some Hollywood insiders are chirping about this being a death knell for what seemed like the entrance of AI into the movie business. Not so fast.
Although it’s true that Disney now has no obvious entry point into the promise of lower budgets and faster production times that AI might bring to its animation unit, the exit of OpenAI isn’t the end of the story. In fact, this may be just the beginning. Despite OpenAI’s retreat, which some have speculated may have been hastened by ByteDance’s stunning Seedance 2.0 release, Disney still has plenty of other partnership options. Runway, Luma AI’s Dream Machine, and Google Veo, just to name a few, all remain top-tier potential AI video partners for Disney.
The notion that Disney would allocate $1 billion to OpenAI to explore AI video, and then completely lose interest simply because Sam Altman, OpenAI’s CEO, is shifting the company’s priorities is unlikely. If Disney had $1 billion worth of interest in AI video living in its Disney+ app, having 250 of its characters licensed for use by random AI video users (via the Sora app), as well as an arm into OpenAI’s AI video research for its own needs seven weeks ago, well, Disney probably still has some interest in the space.
So what changed? What else might explain the sudden erasure of the Disney-OpenAI relationship? The easiest connective tissue to examine leads to Bob Iger, who officially stepped down from his CEO perch just one week ago. Iger is a venture partner at Thrive Ventures, which owns Thrive Holdings, which in turn has an ownership stake in OpenAI as of just three months ago. With a seemingly OpenAI-friendly-by-association Iger exiting his seat of power at Disney, it’s possible that some within Disney decided to rethink a few things regarding the OpenAI deal.
New Disney CEO Josh D’Amaro, who isn’t as tapped into the movie business part of Disney as his lieutenant (and former rival for the CEO slot) Dana Walden, will have to forge his own path for Disney. He can’t afford to hew too closely to any of the close-knit associations established by Iger during his time running the ship. We don’t know if Iger’s departure and the change in leadership are part of the reason the deal fell apart, but it deserves some scrutiny.
Ok, but what else could be in play? Well, amid the aforementioned AI video partner options available to Disney, one unlikely partner, ByteDance and its Seedance 2.0, is actually not so unlikely. Why? Let’s run down the reasons. First, Disney and ByteDance have already worked on partnerships, namely back in 2023. Disney and then-ByteDance-owned TikTok partnered to produce a major in-app Disney experience on the short-form video app.
But there’s more. It turns out that at least two major Disney players have ties to ByteDance. Disney’s current chairman, James Gorman, is also a senior advisor at investment firm General Atlantic, which is an investor in ByteDance. Similarly, Disney board member Sir Jeremy Darroch is an executive advisor at investment firm KKR, another one of ByteDance’s investors. To be clear, there’s no direct indication that any of these associations would sway any internal decisions at Disney, but framing them as wholly irrelevant would be somewhat generous. And although some might frame ByteDance as a “China-based company” at odds with a Hollywood staple like Disney, there are more reasons for a partnership between the two than against.
Based on my multi-year research into the AI video space, it has become clear that animation is likely where AI video will make its first major feature film splash. The shift has already begun in Japan’s anime industry, with names like K&K Design (Battleship Yamato, Star Blazers 2202) aggressively employing AI to produce anime videos. AI video may or may not replace human actors anytime soon (audiences will decide that), but animation in the U.S. will almost certainly become awash in major AI-generated animated movies and TV shows in the near future.
Disney likely understands this and won’t stop researching the space simply because OpenAI is no longer in the picture. With an average production budget of around $150 million for theatrical animated releases in the last six years, the potential cost savings and production efficiencies will be difficult for Disney, a public company beholden to its shareholders, to ignore. Stay tuned. Disney isn’t done with AI video, it’s probably just getting started. ✍︎
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Cover: Modified screengrab of Sora promotional video from OpenAI on YouTube
