Disney hired 66 employees from bankrupt chatbot startup Character.AI for about $60 million a year, plus a $30 million retention pool. The move came weeks after Disney’s own layoffs.
Disney is spending big to bring in workers from an AI company that just went bankrupt.
The company plans to pay about $60 million a year to 66 employees from Character.AI, according to a Chapter 11 court filing reported by Business Insider. Disney is also setting aside $30 million for an “aggregate retention pool“ to encourage them to stay.
Over the next three years, Disney expects to spend about $180 million on “total compensation and retention“ for the group, the filing said.
Why is Disney hiring Character.AI employees?
It’s part of Disney’s push into AI under CEO Josh D’Amaro. In September, Disney hired Character.AI’s CEO, Karandeep Anand, as its first company-wide chief technology officer.
Disney hasn’t said how much it’s paying Anand. It also didn’t respond to Business Insider’s requests for comment.
In a memo to employees, Anand said Disney is “uniquely positioned to win“ in a media business he described as being “at an inflection point.”
How many Character.AI employees are joining Disney?
Sixty-six accepted offers. Of those, 56 have already resigned from Character.AI, and the other 10 are waiting on U.S. work visa updates, Business Insider reported.
That’s most of the startup. Character.AI had about 86 full-time employees at the end of September, according to PPC Land, which reviewed the court filings.
Is $60 million a year a lot for 66 workers?
It works out to roughly $900,000 per person on average, though Disney didn’t say how the money is split.
Entertainment lawyer Corey Martin of Granderson Des Rochers told Business Insider the numbers didn’t surprise him, since Character.AI’s employees are its biggest asset. “It’s not that unusual in this space,” said Martin, who didn’t work on the deal.
Didn’t Disney just lay off workers?
Yes. Disney laid off several hundred workers in late September, including some tech employees, Business Insider reported.
It was Disney’s third major round of layoffs since D’Amaro became CEO in mid-March. The Character.AI hires came about two weeks later.
Disney’s stock is up less than 2 percent over the last 12 months and down more than 36 percent over five years, according to Business Insider.
What is Disney buying from Character.AI?
Some of its technology. Disney made a $20 million bid for a license to certain Character.AI intellectual property and tech, a deal that sets the starting price for a bankruptcy auction.
Other companies have until Nov. 20 to make higher bids, according to PPC Land. An auction is set for Nov. 23, with a sale hearing on Nov. 24. A bankruptcy judge is overseeing the process.
Why did Character.AI go bankrupt?
Mostly legal trouble. Character.AI filed for Chapter 11 on Oct. 12, citing “significant legal, regulatory, and operational headwinds.”
The company faced lawsuits from families who say its chatbots harmed their teens. Character.AI and Google, one of its backers, settled several of those lawsuits earlier this year, Business Insider reported.
What happened between Disney and Character.AI before?
They clashed. Disney sent Character.AI a cease-and-desist letter last fall, telling it to stop making chatbots based on its copyrighted characters without permission.
Character.AI complied and removed chatbots featuring characters from Disney franchises like Star Wars and Marvel.
What happens to the Character.AI app?
For now, it stays online during the bankruptcy. Character.AI’s filings say the company is likely to wind down after the sale, PPC Land reported.
That means the people who built the app will soon be working at Disney, while the app itself may not survive. Disney hasn’t shared what its new AI team will work on first.
Article compiled with the help of the Pirates & Princesses newsroom.
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Hat Tips:
Business Insider, James Faris (Oct. 2026), the compensation and retention figures, staff resignations and visas, Disney layoffs, stock performance, Corey Martin’s quote, Anand’s memo and the cease-and-desist
PPC Land, Luis Rijo (Oct. 13-14, 2026), the 86-employee headcount, bid deadline, auction and sale hearing dates and wind-down plans
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