What happens to movies when AI drives costs to zero?
Supply will increase; consumers will benefit; Hollywood will struggle
What happens to movies when the cost to produce them declines to near zero? Jeffrey Katzenberg argues that the cost to create animated films is going to decline by 90% within three years due to AI:
Artificial intelligence will lower the cost of creating blockbuster animated movies drastically, according to longtime industry executive Jeffrey Katzenberg.
“I don’t know of an industry that will be more impacted than any aspect of media, entertainment, and creation,” Katzenberg said in a panel discussion at the Bloomberg New Economy Forum on Thursday. “In the good old days, you might need 500 artists and years to make a world-class animated movie. I don’t think it will take 10% of that three years from now.”
The adoption of AI will accelerate the digital transformation of the entertainment industry by a factor of 10, said 72-year-old Katzenberg, who rose to prominence as a production executive at Walt Disney Co.’s movie studio before joining hands with filmmaker Steven Spielberg and Hollywood executive David Geffen to co-found DreamWorks.
Katzenberg, of course, helmed the ill-fated Quibi so a cynic might argue that his views on technology are not worth listening to. But in this case I am certain he is correct. However, AI won’t just lower costs for animated movies. It will lower costs for all movies and television production. It will also likely lower the production costs for triple-A video games, the production of which increasingly looks like that of a blockbuster summer movie. When costs decline to near zero, a couple of interesting things happen.
First, the technology is democratized, meaning millions of people have access to what was formerly the preserve of a select few. Think of what the advent of the iPhone and YouTube has meant for amateur vloggers. Now map that to the production of TV shows, movies, video games, and more. It is by now commonly accepted that any random person can whip out their iPhone, film their buddy skateboarding or cooking or skydiving or swimming or playing chess or any of a million other interesting activities, edit the video in Final Cut Pro, and upload it to YouTube. What happens when RunwayML is sufficiently powerful such that a person in Peoria or Pretoria can sit in front of her laptop, run a few prompts, and have the software spit out a fully formed movie?
Second, when costs collapse, supply increases, assuming stable demand. Stated another way, if demand for entertainment remains constant over time, but the costs to create that entertainment decline, then the supply of available entertainment increases significantly. Again, all we have to do is go to YouTube and see millions upon millions of videos to watch. A surfeit of choice for the consumer. (And a very competitive, albeit potentially lucrative, market for the creators.)
Here’s where this all leads: RunwayML and similar tech will collapse the production costs of movies, TV shows, and all other kinds of entertainment to near zero. Supply will increase, dramatically. Demand will either remain steady or increase. Because production costs will decline, and supply will increase, Hollywood will lose control over its traditional distribution channels. The smart players in Hollywood will of course adopt AI technology as it improves, and re-orient their businesses around algorithmically-generated content. But, so too will the public writ large. As this technology is democratized, anyone with a laptop and an internet connection can unleash their inner Spielberg. Yes, a lot of the stuff that the public makes with this technology will be crap, but, then, a lot of the movies that Hollywood makes today are crap. Few things are as shot through with power laws as Hollywood movie studios.
The ultimate beneficiary of all of this will be the consumer. Today, YouTube provides an extraordinarily optimized and seductive platform for the bored person looking for some quick entertainment. YouTube is able to do this because the costs inherent in filming video, editing it, and uploading it have collapsed to near zero. Imagine what will happen with movies, TV shows, and triple-A video games as their costs similarly decline.