No More Hollywood

Let’s start with three data points:

1. Ne Zha 2 has been a massive global box office success since it was launched this past January, blowing past all expectations. 2019’s Ne Zha had done very well; the sequel had unexpected resonance.
2. KPop Demon Hunters is Netflix’s most-watched movie of all time. It has had more than 236 million views. By the time you read this that number will probably be bigger.
3. A Minecraft Movie is currently the highest-grossing film in the U.S. so far this year, with some $424-million in tickets sold.

What do all three have in common?

They are animated.

Which leads us back to 1984 and the Ridley Scott-directed commercial for the original Apple Macintosh. In it, we were told:

On January 24th, Apple Computer will introduce Macintosh. And you’ll see why 1984 won’t be like ‘1984.’

The point was it would allow the democratization of computing. It would no longer be the domain of IT departments in their air-conditioned rooms with elevated floors to accommodate the wiring.

The Mac brought computing to the desk tops not only in offices, but in homes. And because it was a move from centralized to distributed computing, because it came with MacWrite and MacPaint, because it had drag-and-drop functionality, and because Apple also sold the professional-grade LaserWriter printer, people found they could create newsletters with a professionalism and ease that mimeograph machines just didn’t allow. Some of these publications were the stuff of bake sales and lost pets, but some had greater value to both the creators and the recipients.

By the early 1990s desktop publishing transitioned from the physical to the digital, with platforms like GeoCities, MySpace, and FrontPage, and then with Blogger and WordPress. Things moved online. And there was a proliferation of people creating pages — whether text, photos, mood boards or whatever — online.

Certainly much of the material still remains on the level of bake sales and lost pets, but there are other sites that not only rose to the level that had previously been the domain of professionals, but they also won advertising and/or subscriptions meaning that these home publishers were now the professionals.

At the beginning of the year, for example, Substack boasted around 50,000 “publishers” and more than 35 million subscribers, of which some five million are paying subscribers. This direct sale from writer to reader means a media landscape where legacy outlets for print, broadcast and the digital renditions of both are struggling for readers and relevance.

As with the original Mac, it is no longer just about things being created by the professionals.

If we look at what’s happened in the video space, the numbers for YouTube alone are nothing short of astonishing.

According to Google (parent Alphabet owns both), from 2014 to 2024 the number of monthly active users grew from 1 billion to 2.5 billion.

While COVID decimated the business at movie theaters, it accelerated fortunes of YouTube: the number of videos uploaded grew 40% between 2014 and 2022.

Presently there are approximately 500 hours of video content uploaded every minute. That’s 720,000 hours per day.

This is not just something people are doing as a lark.

According to an Oxford Economics YouTube survey from 2023, there may be up to 400,000 people in the U.S. who create and post YouTube videos as a full-time job.And now we are at the point where an array of artificial intelligence tools — including Synthesia, Runway, OpenAI Sora, Google Veo, Kling AI, Deepbrain AI, Adobe Firefly, Luma Dream Machine — allow individuals to create videos that amplify the trend toward quality and reach achievable by the YouTube creators. Plus, for those who have been doing top-notch video creation, it accelerates their capabilities.

This is doing for screen production what the Apple Mac did for print production, but bigger, quicker, stronger. We are already seeing how it is revolutionizing the consumer interface.

People can go to Showrunner — which was developed by a company named “Fable” founded by Pixar and Oculus veterans and backed by Amazon — and create shows (on the Discord platform) that can then not only be viewed, but can be subsequently supplemented by the viewers (who can turn themselves into animated characters and join the narrative, for example) and thereby provide income to the original creators.

Yes, passive engagement is possible, but this takes engagement with a program to a new level, far beyond the social sing-alongs that are now becoming increasingly common.

People can put themselves in the plot.

Showrunner positions itself as the “Netflix of AI.” While free to use now, plans call for it to charge at some point — undoubtedly the point where there is a sufficient network effect. This is fanfiction turned into fanfiction TV.

Unsurprisingly, given the centrality of IP to this project, studios including Disney have expressed interest in Fable.

On September 1 a company named Wondershare released a new AI platform for the development of “cinematic videos in just a few clicks.”

As the company describes it:

Traditional video production is often complex, costly, and time-consuming, requiring specialized equipment and skills. ToMoviee AI transforms this process by allowing users to create through natural text prompts or intuitive drag-and-drop actions. Automated workflows and machine learning enable faster production, cost reduction, and the generation of diverse creative concepts — from scripts to visual styles.

In other words, like the early days of the Mac, when “regular” people found themselves empowered by the technology to create all manner of professional-grade documents that they could distribute, ToMoviee takes the same sort of approach for creating videos that are similarly professional-grade, even though they, too, are made by “regular people.”

Note well, however, that bit about “faster production, cost reduction,” which are issues for professionals, not the home amateurs who have an interest in creating something more professional than they otherwise could pre-AI. This is a tool that can be deployed by businesses to create programs.

While most of the AI tools provide the means to make videos that are measured in minutes rather than hours, it is, of course, merely a matter of time before the length is even Marvel-proportioned.

To make a motion picture, the salaries of the cast and crew can account for about 30% of the budget and the production anywhere from 25 to 60%. The script is typically on the order of 5%; post-production 15 to 25%; and marketing 20 to 35%.

AI can greatly diminish these production costs. And, in animated movies, salaries can be vastly reduced too — remember: the SAG-AFTRA contract calls for payment to actors if their likeness is used in an AI-based project. Animations might mean using voice actors. But, while there is still generally widespread use of “name” actors for the voice work, usually for marketing purposes , were that scrapped, the whole salary part of the overall budget would be greatly minimized.

AI post-production costs are also likely to be smaller than previous forms of movies. While marketing spend is certainly discretionary, given the savings elsewhere in the development, it can still be a comparatively large percentage yet still be comparatively small in real dollars spent.

Which brings us back to Ne Zha 2, KPop Demon Hunters, and A Minecraft Movie.

All are animated, so there is clearly box-office appeal.

In fact, the top-five global-grossing movies so far this year are:

1. Ne Zha 2
2. Lilo & Stitch (an animated-live hybrid)
3. A Minecraft Movie
4. Jurassic World Rebirth (what would it be without computer-generated dinos?)
5. How to Train Your Dragon (the animated remake)

While the democratization of textual content generation certainly didn’t turn the vast majority of users of the technology into award-winning and/or renowned authors, journalists or analysts, the technology has had an ongoing effect on the fortunes of traditional media companies.

(Another example: think of what streaming has done for the sales of physical or even digital music.)

It is almost inconceivable to think that AI video generation won’t have a concomitant consequence for film studios. Just as there are still labels — Universal Music, Sony Music, Warner Music, etc. — their business is profoundly less predicated on the highly lucrative selling of things like CDs than it once was, now licensing music to streaming services which get their cut of the action.

For the creators — the musicians — they generally make more money from touring than they do from streaming, which explains why bands, even with members in their 80s, are out there flogging the stages globally.

Things are significantly changed.

Perhaps the studios will get ahead of it and embrace the technology, which is a solid possibility, given the aforementioned interest by Disney in Fable and the fact that David Ellison’s father, Larry, is the co-founder and single largest shareholder in tech company Oracle. But then the question arises: what happens to the entire supply chain — from leading actors to key grips to foley artists — when the work is done on a cloud-based server?

It won’t be pretty for many.