Walt Disney and OpenAI announced a three-year licensing deal Thursday that will allow users to create short videos featuring beloved Disney characters through artificial intelligence.

The deal marks the first time a major entertainment company has embraced generative AI at this scale, licensing its fiercely protected characters — from Mickey Mouse to Marvel superheroes and Star Wars’s Darth Vader — for AI content creation.

The partnership represents a dramatic shift for an industry that has largely been battling AI companies in court.

Disney and other creative industry giants have been suing AI firms like OpenAI, Perplexity and Anthropic, accusing them of illegally using their content to train their technology.

The entertainment giant continued that legal campaign on Wednesday, separately sending a cease-and-desist letter to Google over the illegal use of its intellectual property to train the search engine giant’s AI models.

For OpenAI, the deal comes as it faces increasing questions about the sustainability of its business model, with costs skyrocketing far faster than revenue — despite nearing one billion users worldwide.

Under the agreement, fans will be able to produce and share AI-generated content featuring more than 200 characters from Disney, Marvel, Pixar and Star Wars franchises on OpenAI’s Sora video generation platform and ChatGPT.

Launched at the end of September, Sora aims to be a TikTok-like social network where only AI-generated videos can be posted.

From the outset, many videos have included characters directly inspired by real cartoons and video games, from South Park to Pokémon.

Facing license-holder anger, CEO Sam Altman promised OpenAI would offer rights holders more control to put a stop to these AI copies.

The partnership includes a $1 billion equity investment by Disney in OpenAI, along with warrants to purchase additional shares in the ChatGPT maker.

Disney shares rose more than 2 percent Thursday after the announcement.

Disney CEO Robert Iger said the collaboration would “thoughtfully and responsibly extend the reach of our storytelling.”

Characters available for fan creations will include Mickey Mouse, Minnie Mouse, Elsa from Frozen, and Marvel heroes like Iron Man and Captain America, as well as Star Wars icons including Darth Vader and Yoda.

The agreement excludes talent likenesses and voices from actors amid deep concern in Hollywood about the impact of AI.

“This does not in any way represent a threat to the creators at all — in fact the opposite. I think it honors them and respects them, in part because there’s a license fee associated with it,” Iger told CNBC.

Hollywood’s leading actors union, SAG-AFTRA, said it would “closely monitor” the deal’s implementation, while the Writers Guild of America said it will meet with Disney to probe the terms and underlined that OpenAI had stolen “vast libraries” of studio content to train its technology.

Iger, in a joint interview with Altman on CNBC, insisted the deal only includes videos no longer than 30 seconds and the technology wouldn’t be used for longer-form productions.

Beyond licensing, Disney will deploy OpenAI’s technology to build new products and experiences for Disney+, the streaming platform.

“Disney is the global gold standard for storytelling,” Altman said. “This agreement shows how AI companies and creative leaders can work together responsibly.”

Both companies emphasized their commitment to responsible AI use, with OpenAI pledging age-appropriate policies and controls to prevent illegal or harmful content generation.

In Disney’s complaint against Google, OpenAI’s biggest rival in the AI space, the entertainment giant accuses Google of infringing Disney’s copyrights on a massive scale by copying a large corpus of content without authorization to train and develop AI models and services.

“We’ve been aggressive at protecting our IP, and we’ve gone after other companies that have not valued it, and this is another example of us doing just that,” Iger told CNBC.