Inside Hollywood’s cautious approach to adopting AI

AI in Hollywood: A slow and cautious adoption: The entertainment industry’s anticipated embrace of AI tools for film and television production has been slower than expected, with major studios hesitating to form partnerships with AI companies.

Promised revolution meets industry skepticism: Early in 2024, AI companies like OpenAI approached Hollywood studios with ambitious promises of revolutionizing the production process, but the response has been cautious and measured.

• OpenAI and other AI firms sought access to footage and intellectual property to train their models, offering tools to make movie and TV production faster, easier, and more cost-effective.
• Despite the initial excitement, few concrete deals have materialized, with the most notable being a partnership between AI startup Runway and Lionsgate announced last month.
• Major studios are not expected to announce significant AI partnerships until 2025, indicating a more prolonged adoption timeline than initially anticipated.

Barriers to adoption: Several factors are contributing to the slow integration of AI in Hollywood, reflecting the industry’s complex landscape and concerns.

• Evolving regulations and legal uncertainties surrounding AI use in creative industries are causing hesitation among studios.
• There’s skepticism about audience acceptance of AI-generated or AI-enhanced content, raising questions about the market viability of such productions.
• Studios are grappling with how to value their extensive libraries for AI training purposes, as the worth of content for machine learning may differ significantly from traditional metrics.
• Protecting intellectual property remains a primary concern, with studios wary of potential misuse or dilution of their valuable franchises and characters.
• The entertainment industry has shown a general mistrust and controversy surrounding AI, partly fueled by recent labor disputes.
• Fear of job losses due to AI automation has created resistance among various industry professionals.

Labor concerns and contractual safeguards: The threat of AI was a central issue in recent Hollywood labor disputes, leading to new protections in industry contracts.

• Actor and writer strikes prominently featured concerns about AI’s potential impact on creative jobs and compensation.
• New contracts now require explicit permission and compensation for the creation and use of digital replicas of actors, setting a precedent for AI use in the industry.

Economic drivers and industry challenges: Despite the hesitation, economic pressures may eventually push studios towards AI adoption as they seek to address ongoing industry challenges.

• Studios are interested in AI’s potential to cut costs, especially in light of challenges such as cord-cutting and struggling box office returns.
• The promise of increased efficiency and reduced production costs is particularly appealing as the industry faces financial pressures.

Valuation and legal complexities: The integration of AI in Hollywood is complicated by unique challenges in content valuation and legal considerations.

• There’s no established standard for valuing film and TV libraries for AI training purposes, with obscure content potentially being more valuable than popular franchises.
• Legal questions persist regarding AI training methodologies and fair compensation for talent whose work may be used to train AI systems.
• Several lawsuits have been filed by creators against AI companies, highlighting the ongoing legal battles in this space.
• OpenAI’s broad interpretation of “fair use” for AI training has raised concerns among content creators and rights holders in Hollywood.

Regulatory landscape: The slow adoption of AI in Hollywood is also influenced by ongoing efforts to regulate AI use in creative industries.

• State and federal politicians are working to pass legislation addressing AI concerns, adding another layer of complexity to potential partnerships.
• The evolving regulatory environment creates uncertainty for both studios and AI companies, affecting the pace of adoption.

The Lionsgate-Runway deal as a potential model: The recent partnership between Lionsgate and AI startup Runway provides insights into how future agreements might be structured.

• The deal involves training an AI model on a limited selection of titles from Lionsgate’s library.
• The focus is on improving production and marketing efficiency rather than replicating actors or creating standalone content.
• Importantly, the agreement stipulates that the data cannot be used to train other AI models, addressing concerns about data control.
• No money changed hands in this deal, suggesting a cautious, experimental approach to AI partnerships.

AI companies’ strategies: In response to the slow adoption, AI firms are adjusting their approach to gain traction in Hollywood.

• Some AI companies are offering financial incentives to creators to use their tools, aiming to build a user base and demonstrate the technology’s potential.
• These efforts are part of a broader strategy to get AI tools into the hands of more creators, potentially bypassing studio hesitation.

Future outlook: Economics vs. concerns: While concerns about AI use in Hollywood remain significant, economic factors may ultimately drive decision-making.

• The potential for cost savings and increased efficiency could eventually outweigh current hesitations, especially as the technology matures and legal frameworks solidify.
• However, the industry’s cautious approach suggests that any widespread adoption of AI tools will likely be gradual and carefully managed.