Hollywood is a dumpster fire. As I write this, Snow White is looking like it might lose the most money of any movie in history. This is coming on the heels of two very difficult years for the industry.
It is about to get a lot worse.
As stated on numerous occasions, the ultimate demise of Hollywood is technological. People like to point to factors such as COVID, the strikes, wokeness, and quality of films. A strong case could be made that these were components. However, the overall trend is technology.
There were two major waves:
- the breakup on the monopoly of distribution presented by the Internet
- the emergence of improved tools for content generation
We discussed the first repeatedly. In this article, we will dive into the second situation.
AI Progress Surprising Hollywood: The Demise Is Coming
This is something that we broached last year. At that time, I predicted the revolution from AI was coming faster than many expected. For this reason, anyone who reads these articles will not be surprised at the news.
It does not appear, however, that Hollywood is in this camp.
OpenAI started targeting Hollywood the moment Sora was released. While this is not available for use by the general public, the company did have studio personnel working with the software. This provided feedback while also enhancing the system.
When OpenAI unveiled technology called Sora last year that lets people instantaneously generate hyper-realistic videos — like a movie trailer of an astronaut traversing a barren desert planet — in response to a text prompt of just a few words, it wasn’t the quality of the footage that caught Hollywood folk off guard as much as the rapid growth of the technology initially thought to be years away from being able to be plugged into the production pipeline.
There you have it. The industry thought the technology was years away yet, in early 2025, the progress is stunning the experts. What does this mean over the next 18 months? Where will the technology be by the end of 2026?
On March 19, the ChatGPT maker screened 11 short films made with Sora by independent filmmakers at Brain Dead Studios, a hip movie theater in West Hollywood on Fairfax Avenue, in a bid to showcase its technology. Those movies displayed the limitations of the tools while hinting at their potential.
Here is where we see a trap. Many will opt to focus upon the limitations. The challenge with this is, regarding AI, that is temporary. Whatever issues there are with the software today, the next update will resolve a portion of that. By the time we are entering 2026, a fair bit of what is at issue today will be eliminated.
At the same time, the capability is expanded.
Legal Issues
A major dispute is brewing in the legal arena. We are seeing court challenges over copyright protection and IP. This is going to be something that will keep escalating.
Since we have seen no sign of ruling, this is going to wage on for a while. What will not stop is the progress of the technology, something to keep in mind.
Another factor is IP applies to what is not owned. Companies can utilize the software on its own properties. Some already cut deals with the likes of OpenAI.
The current legal landscape mostly limits adoption to the previsualization process, like conception and storyboarding, that doesn’t directly involve the final product. Widespread utilization of AI tools in the moviemaking process will depend largely on how courts land on novel legal issues raised by the technology.
My view is the legal challenges do not matter.
To start, the courts are too slow. This is Napster and the file sharing story all over again. By the time it was resolved, the industry lost. Newer methods of music distribution were created. If we look at the appeal process, we are dealing with years before we see firm resolution.
The second issue is OpenAI is not the only game in town. Napster was targeted because it was a company. However, peer-to-peer file sharing exists to this day.
Deepseek made news with its open source LLM. What happens when this hits the video generation market? There will be some company, from somewhere, providing open source software the puts out a product which cannot be challenged. Sure, you can go to court over a company from China (or North Korea) but it doesn't matter.
Then we have the numbers game. As things spread outward, we could see millions of people using this technology to some degree. It becomes very difficult to keep pace.
The Demise of Hollywood
Everyone is being hit.
Right now, it seems the major studios have an advantage and the workers are the ones suffering. That is how things are framed, mostly due to the fact that many cannot think past this concept. Of course, it is why the strikes pitting union members against the studios were laughable. The workers were trying to make like they were the victims and the studios were greedy thieves.
While that might not be completely wrong, what was missed was the bullseye on the studios chest. This is becoming more evident. Most of these studios will not survive, at least on their own.
The technology is going to put the ability to generate video in the hands of everyone. What results is the potentiality for some amazing things.
It is like a keyboard on a computer; anyone can use it. However, most people create nonsense. That said, a portion create absolute masterpieces across the entire spectrum of fields.
Some will remain at that level. There will be experts who are able to use the technology for masterful works of art. Some will produce cinema quality films using AI (at some point). The masses might never get to this level.
Nevertheless, the sheer volume of content will mirror text. Few are writing great novels, keeping Gone with the Wind safe in its historical place. In spite of this, we see the hours people spend consuming content on X or Facebook.
It is a numbers game.
There will be independent studios and individual movie creators churning out works that rival Hollywood. The will come from all corners of the globe, further destroying the monopoly. My view is that movie studio generated content will simply be an adjunct to a platform. Amazon bought out MGM. At what point does Meta get a hold of a studio and simply release its stuff on Facebook?
After all, AGI is sending costs of output plummeting.
Of course, that might not even be necessary. What if Llama, Meta's AI model, gets to the point where Facebook or Instagram users can simply prompt a full length movie from the application. The capability is built into the platform.
There is a reason why the steaming wars saw an unexpected winner, one that keeps increasing its lead.
Source
Take a close look at the rankings; there is something that stands out.
Three of the top 4 (excluding other streaming) are technology companies. Google, Netflix, and Amazon already have larger market share than all of Hollywood, Disney being the exception. The latter, is a combination of Disney+ and Hulu.
Here we have insight into the future. The distribution channels are dominated by major silos in the Internet world.
Go back to the technology waves listed at the top. The first is in full swing with the second just getting started.