When OpenAI pulled the plug on its AI video app Sora in March, a landmark deal with Disney evaporated with it. OpenAI pulled the plug on its AI video app Sora in March OpenAI pulled the plug on its AI video app Sora in March Under the three-year agreement, Sora would have generated short fan-created videos drawing on more than 200 characters from Disney, Marvel, Pixar, and Star Wars, with a curated selection streaming on Disney+. Disney had also committed to a $1 billion equity investment in OpenAI and was set to deploy ChatGPT enterprise-wide for its employees. Under the three-year agreement Under the three-year agreement The agreement was supposed to be Bob Iger’s final signature moment, proof that Hollywood’s most powerful IP holder could license its characters to AI on its own conditions rather than have them scraped without permission. Instead, OpenAI shut down Sora with barely an hour’s notice to Disney, no money had changed hands, and new CEO Josh D’Amaro inherited the fallout six days into the job. So, what will Disney’s next move be under the D’Amaro regime? In a statement after the shutdown, Disney said it “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.” How that will happen remains unclear, but one potential avenue is hiding in plain sight: Disney’s relationship with Epic Games. said said Disney Could Double Down on Epic Games and Fortnite Disney already holds a $1.5 billion equity stake in Epic Games and is building a persistent entertainment universe inside Fortnite, a platform where fans can play, watch, shop, and create experiences using Disney, Pixar, Marvel, and Star Wars IP. Unreal Engine already powers more than 15 Disney Parks attractions, multiple Star Wars films, and major Disney game titles. The infrastructure relationship is deep, tested, and built on terms Disney helped set. Disney already holds a $1.5 billion equity stake in Epic Games Disney already holds a $1.5 billion equity stake in Epic Games Reportedly, D’Amaro “was 500% behind” the Epic Games relationship while not being enthusiastic about the Sora deal; and senior Disney executives are actively discussing a potential acquisition of Epic Games outright, describing Disney as “the most natural home for it” given the park integration potential and IP compatibility. Tim Sweeney, Epic’s founder, retains full voting control of the company, so any acquisition is entirely his call. was 500% behind was 500% behind The Sora deal was about fan-generated AI video on a third-party platform Disney did not own or control. The Epic deal is about Disney investing in the destination: a persistent, interactive world where fans create and experience Disney IP in an environment Disney helps build and govern. D’Amaro may not need a new AI video deal at all. He may already have the platform he needs. Other Options Range from Runway to Pulling Back Google Veo Google is the AI video player with the greatest scale and distribution reach, but it has not inked any deals with IP holders. Disney sent Google a 32-page cease-and-desist letter in December 2025 alleging copyright infringement “on a massive scale,” demanding Google halt infringement and stop training models on Disney IP. However, Google has since blocked Disney-related prompts across Gemini and its other AI tools, which suggests Google is willing to negotiate rather than litigate. Awkward, but possible. Google is the AI video player with the greatest scale and distribution reach Google is the AI video player with the greatest scale and distribution reach 32-page cease-and-desist letter 32-page cease-and-desist letter blocked Disney-related prompts across Gemini and its other AI tools blocked Disney-related prompts across Gemini and its other AI tools Runway Runway has no existing legal conflict with Disney and leads quality benchmarks. It does not have Google’s scale or infrastructure, meaning Disney would be licensing IP to a smaller platform rather than embedding itself in a dominant ecosystem. For a company built around reach and brand ubiquity, that is a real tradeoff. Luma AI Luma AI’s Dream Machine platform is built on its Ray3 model, which Luma calls the world’s first reasoning video model capable of generating physically accurate video and animation. Luma’s models are already used by leading entertainment studios and technology partners including Adobe and AWS, and it is backed by Andreessen Horowitz, NVIDIA, Amazon, and AMD Ventures. Unlike Google, Luma has no legal conflict with Disney. Unlike Runway, it has been actively cultivating Hollywood relationships since opening Dream Lab LA in mid-2025, a Los Angeles initiative specifically designed to embed its technology in studio workflows. If Disney wants a partner with serious technology, entertainment credibility, and none of the political baggage, Luma is the cleaner option that has been hiding in plain sight. Explore ByteDance’s Seedance 2.0 A ByteDance option is low probability but not zero. Disney and ByteDance partnered in 2023 on a TikTok experience. Disney’s current chairman James Gorman is a senior advisor at General Atlantic, a ByteDance investor, and Disney board member Sir Jeremy Darroch is an executive advisor at KKR, another ByteDance investor. The political environment around ByteDance makes this publicly toxic, but the behind-the-scenes connections are not inconsiderable. Disney and ByteDance partnered in 2023 on a TikTok experience Disney and ByteDance partnered in 2023 on a TikTok experience Disney’s current chairman James Gorman is a senior advisor at General Atlantic Disney’s current chairman James Gorman is a senior advisor at General Atlantic The Less Likely Paths There are two other scenarios, however unlikely: building an internal capability and simply pulling back. Building an internal AI video capability is blocked by cost, infrastructure, and the labor confrontation it would trigger with SAG-AFTRA, the Directors Guild, and the WGA. The Epic relationship already delivers much of what an internal build was supposed to provide. A full retreat from AI video is equally unlikely given Disney’s public statement, and D’Amaro’s enthusiasm for Epic makes clear he is not opposed to fans interacting with Disney IP at scale. He is opposed to ceding control of it. What Disney’s Story Tells Us About Hollywood and AI Video Every major studio has been running the same contradictory playbook: sue the AI platforms that use your IP without permission, then quietly explore whether you can do a deal with one of them on better terms. Warner Bros., NBCUniversal, and Paramount have all issued legal threats or filed suits against AI video companies in the past year. Disney simply moved furthest down the path of resolution and got burned when the platform it chose pulled the exit. have all issued legal threats have all issued legal threats The deeper problem is that none of the foundational legal questions have been settled. Courts have not ruled definitively on whether training AI models on copyrighted content constitutes infringement. They have not ruled on whether AI-generated output featuring copyrighted characters is an unlawful derivative work. Every deal a studio signs with any AI video platform sits on top of that unresolved legal bedrock. The Sora deal did not solve those questions. It sidestepped them. And when the agreement collapsed, the questions remained. Google’s Veo, Runway, and ByteDance’s Seedance 2.0 are all advancing rapidly, with or without Hollywood’s cooperation. The studios can litigate, negotiate, or ignore what is happening. What they cannot do is stop it. Whatever path D’Amaro chooses, his public statements are telling. At Disney’s 2026 shareholders meeting he said, “At Disney, creativity is always led by people — that will always be the case. Our goal with AI is to empower human creativity and not replace it. We want to give artists and filmmakers and designers better tools so that they can focus on what they do best.” That is not the language of a company planning to generate movies with AI. It is the language of a company planning to use AI to extend the commercial reach of IP it has already built, putting its characters in more hands, more platforms, and more experiences without replacing the human creativity that made those characters worth anything in the first place. Either way, the end credits are not rolling on AI video. The only open question is who gets final cut, on whose terms, and whether Hollywood figures that out before the technology does it for them.

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Disney’s OpenAI-Sora Collapse Could Push It Deeper Into Epic Games

Disney’s OpenAI-Sora Collapse Could Push It Deeper Into Epic Games

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