Disney Wants to Hire Most of the Employees From Bankrupt Character.AI
Disney Wants to Hire Most of the Employees From Bankrupt Character.AI
Ece Yildirim Mon, October 19, 2026 at 5:13 PM UTC
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©Pavlo Gonchar/SOPA Images/LightRocket via Getty ImagesThe lawsuit-riddled controversial AI chatbot company Character. AI officially filed for bankruptcy earlier this week.
The lawsuit-riddled controversial AI chatbot company Character.AI officially filed for bankruptcy earlier this week. Now, reports say Disney is looking to buy up most of the AI startup’s workforce.
Disney and Character.AI have had a rocky past. Roughly a year ago, the entertainment giant sent Character.AI a cease-and-desist letter, accusing the AI company of allowing its users to create unauthorized chatbots based on beloved Disney characters. The dispute ended without a lawsuit when Character.AI removed the characters from its platform.
Flash forward to last month, when Disney announced it had hired Character.AI’s CEO Karandeep Anand to serve as the company’s first-ever chief technology officer. Other employees from the AI company’s technical team were also expected to join Anand over at Disney, the now-bankrupt Character.AI said in a press release at the time, all to “help connect fans worldwide with [Disney’s] beloved stories and characters in new and innovative ways.” Now, legal filings show that Disney is looking to hire 66 Character.AI employees, a whopping majority of the company’s workforce, and is willing to pay $60 million per year over three years for them, or a total of $180 million.
Disney’s interest in Character.AI is a pretty major indication that viewers could expect a push into AI storytelling in the near future. Disney has also bid $20 million to acquire an undisclosed portion of Character.AI’s assets.
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Character.AI is known for its platform where users can converse with AI chatbots modeled after their favorite fictional characters, giving fans the feeling of becoming part of the fictional worlds of their favorite shows, movies, or books. Using AI to create interactive fan experiences is Character.AI’s business model, so one could reason that similar initiatives will soon come to Disney’s rich intellectual property, which spans everything from cartoon classics like Cinderella to the Star Wars franchise and Marvel.
As of this summer, Character.AI had also begun a push into original microdramas, a form of entertainment that has experienced a boom on social media platforms like TikTok. Microdramas are filmed vertically and often have low budgets and easy production timelines, but can reach a huge audience on social media with their drama-filled and cliché-laden stories. Dedicated microdrama streaming apps like ReelShort have been downloaded tens of millions of times in the past year on App Stores, and their seeming quick success has drawn the attention of Hollywood.
Disney could gain technical AI expertise from Character.AI’s workforce and assets, and under current bankruptcy laws, the entertainment titan is free from liability for Character.AI’s still ongoing legal troubles. However, the problems that plague the startup’s business model could also easily become a headwind for Disney.
Character chatbots blur the line between reality and fiction, and can become almost addictive for vulnerable users, such as those dealing with preexisting mental health problems or children. Without adequate guardrails in place, this reliance could become dangerous and even fatal. Character.AI’s reputation was battered in 2024 in one such case, where a grieving mother stated in a lawsuit that her 14-year-old son had been chatting extensively with a chatbot based on a Game of Thrones character before he committed suicide. The chatbot, pretending to be the character Daenerys Targaryen, had told him to “come home” to her.
After that lawsuit, and a couple of other controversies that even included a Jeffrey Epstein chatbot called “Bestie Epstein,” Character.AI banned under-18s from its platform.
Source: “AOL Money”
