Disney Picks a Side in the AI Wars

On last Wednesday evening, rumors spread that the unthinkable had happened.

Within 12 hours, Disney confirmed the rumor and thereby triggered a new wave of hysteria.

To the surprise of many, including some of its own employees, Disney has picked a side in the AI Wars.

Here’s what happened, why Disney did it, and what you should expect as a result.

About the AI Wars

Here’s a headline from The Atlantic on December 9^th: OpenAI Is in Trouble.

That wasn’t the opinion of a single journalist but rather the industry’s pervasive belief.

After getting a sizable headstart on the competition with ChatGPT, OpenAI has struggled mightily.

The company has failed to innovate at the same rate of progression as its peers, most notably Google.

On December 2^nd, OpenAI’s founder and CEO, Sam Altman, declared a “code red.”

The industry-wide perception was that OpenAI could see Google in its rearview mirror.

As is usually the case in such situations, the object was closer than it appeared.

Google closed that sizable gap almost overnight with the release of its latest AI model, Gemini 3.

The Wall Street Journal described this product as a “rare win” for Google, and consumers agreed.

You may wonder why everyone is so invested in AI, as you’ve likely heard it’s a bubble waiting to burst.

From a revenue perspective, that thought may yet prove true, although we all hope it doesn’t.

Such a sudden pop of the AI bubble would negatively impact the entire global economy.

How is that possible? Well, as I’m saying for the second time this week, eyeballs are the coin of the realm.

Wall Street investors throw money at anything that attracts significant eyeballs.

AI does that on a level you may not even comprehend, especially if you’re over the age of 30.

The AI Wars by the Numbers

According to The Information, OpenAI’s signature product, ChatGPT, is approaching 900 million active users…each week.

Folks, that’s about ten percent of the population using ChatGPT every week…and you’re probably one of them.

Now consider that Gemini 3’s immediate popularity has caused a surge in Google’s AI usage.

MarketWatch indicates that this product registers either 346 million or 650 million monthly users, depending on who you believe.

I should add that ChatGPT’s numbers are up for debate as well, with some suggesting 810 million monthly users.

The problem with all these calculations is that they’re challenging to quantify at such high levels.

Even if we use the worst-case numbers here, we’re still talking about 1.156 billion monthly AI users.

Importantly, those are just the totals for these two products, Gemini and ChatGPT. So, based on the coin of the realm, the makers of these two products are rich.

They have captivated society with their technology, which makes them powerful.

And that brings us to Disney, which has been the proverbial deer in the headlights as the AI era unfolds.

Disney’s AI Vulnerability

As you’ve probably heard, these AI tech companies aren’t exactly ethical with their training.

They feed all the data they can to their insatiable machines so that they’ll learn, well, everything.

Thus, when consumers use ChatGPT and Gemini, they have access to, well, everything.

Much of that data includes copyrighted and trademarked works, which include legal protections.

AI companies are running through these legal hurdles as if they don’t exist.

We’re witnessing the widest-scale adoption of, “Ask for forgiveness later rather than permission now” in the history of industry.

This behavior leaves the owners of these copyrighted and trademarked works in a vulnerable position.

Their best option is to sue the competition, something Disney did earlier this year.

Disney sued Midjourney, a company whose AI image generation system was using Disney’s characters.

Obviously, Midjourney didn’t have permission for that. Until this week, no AI business did.

The problem is that the legal system often takes years for cases to resolve.

So, even when the lawsuit goes in Disney’s favor, which is what usually happens in these things, the damage is done.

Still, Disney takes these actions because it can’t do anything else of note.

As proof, the company filed a cease-and-desist order against Google this week. While Disney has every reason to do this, it also has an ulterior motive we just learned.

Disney Picks a Side in the AI Wars

While the AI Wars aren’t as simple as just two parties, it’s a lot like streaming.

Right now, Netflix towers above the rest with Disney comfortably slotted in second position.

In the AI Wars, ChatGPT = Netflix (for now), and Google with Gemini is Disney.

However, unlike in the streaming wars, the business in second is quickly approaching first place.

That’s why OpenAI’s leader announced the code red. He perceives Gemini as an existential threat.

As part of the code red, OpenAI is now considering options it wouldn’t have previously. Enter Disney.

CEO Bob Iger has made what analysts are describing as an excellent deal with OpenAI.

Disney is investing $1 billion for a modest stake in OpenAI, one that should pay huge dividends.

As long as OpenAI wins the AI Wars, that $1 billion stake should pay off with revenue multiples.

That’s not why Disney is doing the deal, though. No, what Disney really wants is a layer of control.

When Disney sends Google a cease-and-desist, the hope is that Gemini will remove Disney characters.

That’s not guaranteed, though. Google could just as easily say, “We’ll see you in court.”

By taking a stake in OpenAI, Disney gains the ability to say, “I’d prefer you not do that.”

As a third party, such a request would have probably been ignored by OpenAI.

Business partners receive vastly different treatment, though, meaning Disney can better protect its brands.

To their credit, investors quickly identified the cleverness of Disney’s move, with the stock increasing after the announcement.

Of course, that’s not the only benefit for Disney, though.

The Other Reason This Deal Makes Sense

I often reference the lost generation of Disney non-fans from the 2010s.

During the cord-cutting era, Disney missed its opportunity to train a new generation of kids to love the products.

Do you know who is using AI a lot? Kids. The AI slop you complain about online is their cup of tea.

They’re using ChatGPT’s v often, child safety concerns be damned, and they looove that slop.

Now, Disney recognizes a pair of linked opportunities here, and you can see where I’m going.

According to Bob Iger, OpenAI’s Sora image generator will add approximately 200 Disney characters to its image catalog in 2026.

So, this AI slop generation of kids can interact with Mickey Mouse in a way you and I never could.

Should any of these images go viral – and let’s be honest that countless ones will – they’ll boost brand awareness.

Iger is no longer running away from this prospect. In fact, he’s leaning into it.

Disney+ Slop

As part of the deal, Disney+ will curate the best user-generated AI content from Sora.

Yes, one section of Disney+ will become a child-friendly slop shop…and I’ll make a bold prediction here.

This option will prove wildly popular with kids, and you and I will eventually use some of it, too.

Sure, we’ll gripe now, but that’s how it works with ubiquitous products like this.

Once they achieve critical mass, most people just accept it as a part of our everyday lives.

Disney knew this, which forced its hand in making SOME deal with an AI company.

Iger chose the one where he could make the best deal, largely because OpenAI is a bit desperate right now.

So, that’s why Disney chose a side. Will the strategy work? Stay tuned…

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Feature Photo: sciencenews.org