Disney CEO Bob Iger explains why he just did a blockbuster OpenAI deal

• Bob Iger said Disney's new deal with OpenAI will let the company harness AI tech to engage younger audiences.
• Disney and OpenAI struck a licensing pact that lets Sora users access Disney characters.
• Iger said he sees Disney+ users being able to ultimately use Sora on the streaming platform itself.

Disney CEO Bob Iger says his company's major licensing deal with OpenAI is all about establishing a foothold in a new realm of entertainment and engaging younger audiences.

The licensing agreement gives ChatGPT and OpenAI's Sora video platform access to Disney characters like Mickey Mouse and Darth Vader. Disney is also investing $1 billion in the AI company and becoming a "major customer."

Speaking on CNBC about the deal with OpenAI's Sam Altman on Thursday, Iger said it gives Disney a chance to get in on a fast-growing area of tech.

"It gives us an opportunity, really, to play a part in what is really a breathtaking, breathtaking growth in essentially AI and new forms of media and entertainment," Iger said.

Iger said the deal also fulfills a longtime desire by Disney to put user-generated content on its Disney+ streaming platform. Disney initially plans to put select videos created on Sora onto Disney+ to increase engagement with users, especially younger ones. Ultimately, Iger wants to let Disney+ users create such videos within the platform itself.

"That's a big step for us," he said.

Disney has long been highly protective of its famous characters and storylines, and Iger is widely seen in Hollywood as a champion of the creative set. But like other entertainment players, Disney has an engagement problem. The time people spend on streaming has stayed essentially flat over the past few years, despite increased spending on content. Social media and user-generated content, in contrast, continue to rise. The bet with OpenAI is that the deal can get people to spend more time on Disney platforms by giving them new ways to play around with its famous franchises.

Iger has long positioned the company as pro-technology, and he said, in reference to the OpenAI deal, that he'd rather participate in technological innovation than be disrupted by it.

"We think this is actually a way for us to be part of these developments, as opposed to being harmed by them," he said.

Iger said the deal is also a way for Disney to participate in the big rise in user-generated short-form video on social-media platforms.

Altman said Thursday that the demand for Disney characters, in particular, is "off the charts" on OpenAI's products. He said he sees the deal enabling people to do things like putting themselves in a lightsaber scene from "Star Wars" or creating a custom birthday video for their kid using the Buzz Lightyear character.

AI firms have been "frenemies" to media companies, as many in Hollywood are concerned about how they use copyrighted material and the threat that they could pose to the creative process. Iger said the OpenAI deal is good for creators rather than a threat.

"This does not in any way represent a threat to the creators at all. In fact, the opposite," Iger said. "I think it honors them and respects them, in part because there's a license to be associated with it."

Disney said the agreement does not include any talent likeness or voices and that OpenAI would have guardrails in place to make sure Disney's IP was used in a safe way.

In June, Disney, along with Comcast's NBCUniversal studio business, sued AI company Midjourney, claiming its tech created unauthorized copies of works ranging from Star Wars to The Simpsons. Midjourney denied the claims in its legal response. That suit is ongoing.