OpenAI and Disney just called off their partnership, giving new Mouse House CEO Josh D’Amaro a big test less than a week into his reign.
Loading audio narration…
The Disney deal gave Sora, OpenAI’s AI video platform — which the company plans to shut down — permission to use iconic characters like Mickey Mouse and Cinderella. The Mouse House took a billion-dollar stake in OpenAI and got say over how its IP was used.
Notably, Disney also planned to feature a curated collection of AI-generated short-form videos from Sora on Disney+. That dream is over now.
Disney+ is still moving forward with Verts, a new short-form feed on its app similar to the short-form interface on its ESPN app. Other major streamers — including Netflix, Peacock, and Paramount+ — are also exploring short-form clips. All these services are looking for ways to juice engagement, particularly on mobile.
Still, losing Sora is a blow to Disney’s strategy. D’Amaro told employees in his introductory memo last week that he wanted to prioritize “immersive, interactive, and personal ways for people to experience Disney.” Analysts have highlighted interactive elements, like AI, as a way for Disney to boost streaming engagement.
A Disney spokesperson told Business Insider that they “respect OpenAI’s decision to exit the video generation business and to shift its priorities elsewhere.”
“We appreciate the constructive collaboration between our teams and what we learned from it, and we will continue to engage with AI platforms to find new ways to meet fans where they are while responsibly embracing new technologies that respect IP and the rights of creators,” the Disney spokesperson continued.
Getting engagement after the OpenAI marriage unravels
Without OpenAI’s help, D’Amaro will need other ways to make Disney’s flagship streaming service more engaging, especially for younger audiences.
Disney’s streamers, led by Disney+ and Hulu, accounted for a 4.9% viewership share on US TVs in January, according to Nielsen. That’s only marginally higher than the 4.4% combined share that those two streamers had in May 2021 — nearly five years ago. And it’s well below Disney+ and Hulu’s peak viewership share in July 2023.
Disney isn’t alone, as its paid streaming peers have struggled to keep pace with the explosive growth of free streamers like YouTube, whose US viewership share has more than doubled from 6% to 12.5% from May 2021 to January 2026.
Consumers have flocked toward free services as paid streamers, including Disney+ and Hulu, consistently raise prices.
YouTube may also be winning viewers for other reasons, such as its interactive comment sections and the emotional connections fans have with their favorite creators.
Will Disney find another AI partner to dance with? That’s a call D’Amaro must now make.
