The other shoe has finally dropped.
Today, December 11, 2025, OpenAI and Disney announced a partnership that essentially signals a marriage between generative AI and legacy media. Although some kind of deal was inevitable, the range and scope of this one are striking. Disney is sinking $1 billion into OpenAI for an equity stake and warrants, while simultaneously inking a three-year licensing deal.
The immediate result? OpenAI’s Sora and ChatGPT will legally ingest over 200 marquee characters from the Disney, Marvel, Pixar, and Star Wars vaults. We’ll see AI-generated Disney content on Disney+, and Disney employees will get enterprise-grade access to OpenAI’s tools. Notably, actor likenesses are off the table—a nod to the sensitivities of the recent labor strikes—but the direction of travel is clear. For more reporting, see the Verge.
Why it matters
Addressing the “Snoopy Problem“
AI companies and copyright industries are beginning to understand, and become reconciled to, the fact that neither side is going to score an absolute victory when it comes to the fair use issue for AI training. AI training that results in a model that learns from, but does not reproduce, the training data looks very likely to be upheld as fair use. Two recent cases held as much on summary judgement and this aligns with a line of precedent “nonexpressive use” cases that predate generative AI.
However, it’s becoming increasingly clear that it’s hard to train generative AI models to be really useful without some degree of memorization of the training data along the way. This is particularly problematic when it comes to copyrightable characters, because copyright protects characters more abstractly than most things. This is the well-known Snoopy problem (a term I coined in 2023).
Faced with this increasingly clear reality, it makes sense for consumer facing AI companies and entertainment Giants like Disney to think about licensing arrangements.
This deal signals a retreat from the fair use absolutism of early AI development. OpenAI and Disney have effectively priced the risk of memorization. Instead of spending the next decade in discovery arguing over pixel similarities, they are moving to a licensing regime. Disney gets paid and retains control; OpenAI gets legal certainty and the ability to serve the entertainment industry without looking over its shoulder.
Capital Crunch?
With competitors like Anthropic eyeing public listings, OpenAI’s decision to take strategic capital from a corporate giant like Disney may be telling. It suggests we are hitting a saturation point for traditional venture capital at the scale these foundation models require. It also hints that OpenAI sees more value in “smart money,” than in the volatility of the public markets. Disney isn’t just a piggy bank; it’s a hedge. By entangling itself with the world’s premier IP holder, OpenAI makes itself indispensable to the very industry that threatened to sue it out of existence. Or, I’m sure that’s the theory, whether it pans out that way remains to be seen.
The End of the Scaling Era?
Finally, this move also adds to the “Data Scarcity” thesis. The era of simply scraping the open web to make models smarter (2017–2025) might be over. The low-hanging fruit of the public internet has been picked, processed, recycled into synthetic data, and processed again, every which way you can imagine. To get better, and to stay ahead of open source rivals, companies like OpenAI are going to need access to data that no one else has. Google has YouTube; OpenAI now has the Magic Kingdom.
The Bottom Line
This is the template for the future. We are moving away from total war between AI and Content, toward a negotiated partition of the world. The tech companies provide the engine; the media giants provide the fuel. And for now, at least, both sides seem to think that’s a better outcome than leaving it up to a judge.
I wrote this blog post the morning the deal was announced, because it fits surprisingly well with a Law Review article I am writing, “The Snoopy Solution: How Fair Use and Licensing for Generative AI Can Coexist” based on a talk I gave at Yale last month.