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Disney\u2019s expansive $1 billion licensing agreement<\/a> with OpenAI is a sign Hollywood is serious about adapting entertainment to the age of artificial intelligence<\/a> (AI), marking the start of what one Ark Invest analyst describes as a \u201cpre\u2011 and post\u2011AI\u201d era for entertainment content. The deal, which allows OpenAI\u2019s Sora video model to use Disney<\/a> characters and franchises, instantly turns a century of carefully guarded intellectual property (IP) into raw material for a new kind of crowd\u2011sourced, AI\u2011assisted creativity.\u200b<\/p>\n Nicholas Grous<\/a>, director of research for consumer internet and fintech at Ark Invest, told Fortune<\/em> tools like Sora effectively recreate the \u201cYouTube<\/a> moment\u201d for video production, handing professional\u2011grade creation capabilities to anyone with a prompt instead of a studio budget. In his view, that shift will flood the market with AI\u2011generated clips and series, making it far harder for any single new creator or franchise to break out than it was in the early social\u2011video era.\u200b His remarks echoed the analysis from Melissa Otto<\/a>, head of research at S&P Global Visible Alpha, who recently told Fortune<\/em><\/a> Netflix\u2019s big move for Warner Bros.\u2019 reveals the streaming giant is motivated by a need to deepen its war chest as it sees Google\u2019s AI-video capabilities exploding with the onset of TPU chips.<\/p>\n As low\u2011cost synthetic video proliferates, Grous said he believes audiences will begin to mentally divide entertainment into \u201cpre\u2011AI\u201d and \u201cpost\u2011AI\u201d categories, attaching a premium to work made largely by humans before generative tools became ubiquitous. \u201cI think you\u2019re going to have basically a split between pre-AI content and post-AI content,\u201d adding that viewers will consider pre-AI content closer to \u201ctrue art, that was made with just human ingenuity and creativity, not this AI slop, for lack of a better word.\u201d<\/p>\n Within that framework, Grous argued Disney\u2019s real advantage is not just Sora access, but the depth of its pre\u2011AI catalog across animation, live\u2011action films, and television. Iconic franchises like Star Wars<\/em>, classic princess films and legacy animated characters become building blocks for a global experiment in AI\u2011assisted storytelling, with fans effectively test\u2011marketing new scenarios at scale.\u200b<\/p>\n \u201cI actually think, and this might be counterintuitive, that the pre-AI content that existed, the Harry Potter<\/em>, the Star Wars<\/em>, all of the content that we\u2019ve grown up with \u2026 that actually becomes incrementally more valuable to the entertainment landscape,\u201d Grous said. On the one hand, he said, there are deals like Disney and OpenAI\u2019s where IP can become user-generated content, but on the other, IP represents a robust content pipeline for future shows, movies, and the like.<\/p>\n Grous sketched a feedback loop in which Disney can watch what AI\u2011generated character combinations or story setups resonate online, then selectively \u201cpull up\u201d the most promising concepts into professionally produced, higher\u2011budget projects for Disney+ or theatrical release. From Disney\u2019s perspective, he added, \u201cwe didn\u2019t know Cinderella walking down Broadway and interacting with these types of characters, whatever it may be, was something that our audience would be interested in.\u201d The OpenAI deal is exciting because Disney can bring that content onto its streaming arm Disney+ and make it more premium. \u201cWe\u2019re going to use our studio chops to build this into something that\u2019s a bit more luxury than what just an individual can create.\u201d<\/p>\n Grous agreed the emerging market for pre\u2011AI film and TV libraries is similar to what\u2019s happened in the music business, where legacy catalogs from artists like Bruce Springsteen<\/a> and Bob Dylan<\/a> have fetched huge sums from buyers betting on long\u2011term streaming and licensing value.<\/p>\n For streaming rivals, the Disney-OpenAI pact is a strategic warning shot. Grous argued the soaring price tags in the bidding war for Warner Bros. between Netflix and Paramount shows the importance of IP for the next phase of entertainment. \u201c\u200bI think the reason this bidding [for Warner Bros.] is approaching $100 billion-plus is the content library and the potential to do a Disney-OpenAI type of deal.\u201d In other words, whoever controls Batman and the like will control the inevitable AI-generated versions of those characters, although \u201cthey could take a franchise like Harry Potter <\/em>and then just create slop around it.\u201d<\/p>\n Netflix has a great track record on monetizing libraries, Grous said, listing the example of how the defunct USA dramedy Suits<\/em><\/a> surged in popularity once it landed on Netflix, proving extensive back catalogs can be revived and re\u2011monetized when matched with modern distribution.\u200b<\/p>\n Grous cited Nintendo<\/a> and Pok\u00e9mon as examples of under\u2011monetized franchises that could see similar upside if their owners strike Sora\u2011style deals to bring characters more deeply into mobile and social environments.\u200b \u201cThat\u2019s another company where you go, \u2018Oh my god, the franchises they have, if they\u2019re able to bring it into this new age that we\u2019re all experiencing, this is a home-run opportunity.’\u201d<\/p>\n In that environment, the Ark analyst suggests Disney\u2019s OpenAI deal is less of a one\u2011off licensing win than an early template for how legacy media owners might survive and thrive in an AI\u2011saturated market. The companies with rich pre\u2011AI catalogs and a willingness to experiment with new tools, he argued, will be best positioned to stand out amid the \u201cAI slop\u201d and turn nostalgia\u2011laden IP into enduring, flexible assets for the post\u2011AI age.\u200b<\/p>\n Underlying all of this is a broader battle for attention that spans far beyond traditional studios and shows how sectors between tech and entertainment are getting even blurrier than when the gatecrashers from Silicon Valley first piled into streaming. Grous notes Netflix itself has long framed its competition as everything from TikTok and Instagram<\/a> to Fortnite and \u201csleep,\u201d a mindset that fits naturally with the coming wave of AI\u2011generated video and interactive experiences.\u200b (In 2017, Netflix co-founder Reed Hastings famously said \u201csleep\u201d<\/a> was one of the company\u2019s biggest competitors, as it was busy pioneering the binge-watch.)<\/p>\nDisney\u2019s IP as AI fuel<\/h2>\n
The big Netflix-Warner deal<\/h2>\n