Will AI Eat Hollywood?

Late last month California S.B. 1047, officially titled the “Safe and Secure Innovation for Frontier Artificial Intelligence Models Act,” made it to Gov. Gavin Newsom’s desk.

Those who wanted him to sign it into law included: Jane Fonda, Pedro Pascal, Shonda Rhimes, Mark Hamill, Alec Baldwin, Jessica Chastain, and Joseph Gordon-Levitt.

What’s more, SAG-AFTRA came out in favor of the bill, which is ostensibly all about protecting people—including actors, but not just them–from AI.

Guess who stayed silent about the proposed legislation?

The Motion Picture Association.

Newsom didn’t sign.

And those actors and many of their colleagues suffered a non-trivial defeat.

It was the second blow to their future prospects in a matter of days.

That’s because also in September Lionsgate Studios announced that it was partnering with AI developer Runway.

They will use Lionsgate’s “proprietary catalog”—a.k.a., films including both the John Wick and Twilight series and others including Django Unchained and The King’s Speech—for “the creation and training of a new AI model.”

As Lionsgate vice chair Michael Burns said of the arrangement, “Runway is a visionary, best-in-class partner who will help us utilize AI to develop cutting edge, capital efficient content creation opportunities.”

When you see words like “capital efficient” and “content creation” and you’re in the film industry, you’d better rethink leasing that BMW i4.

Burns went on to say, “Several of our filmmakers are already excited about its potential applications to their pre-production and post-production process.” If they’re using it pre and using it post, how long before they get to that big expensive part in the middle?

Burns added, “We view AI as a great tool for augmenting, enhancing and supplementing our current operations.” All of which sound like benign improvements. Until they’re not.

While correlation isn’t causation, it is interesting to note that a couple of weeks after the Runway-Lionsgate partnership—and note well that this is a partnership, not simply Lionsgate buying some AI software from a vendor—Lionsgate CEO Jon Feltheimer sent a memo to the studio’s staff that says, in part, “We are offering Lionsgate U.S.-based employees a voluntary severance and early retirement program that will allow us to adapt our workforce to the disrupted business environment.”

“Disrupted,” perhaps, as in AI being able to take over tasks that heretofore humans did.

What is clever about the memo is that the severance and retirement announcement follows the “all Lionsgate EVP’s and above will be required to return to the office five days a week effective January 2, 2025.”

In a survey conducted in mid-September by Blind, a professional social network, after Amazon CEO Andy Jassy’s announcement about the return-to-office requirement, 91 percent of those surveyed indicated they are “dissatisfied” with five-day-a-week plan, so one can suspect that there will be a non-trivial number that will find somewhere else to work—which Feltheimer may be banking on at Lionsgate. After all, building AI models takes a lot of capital, and when you’re pursuing capital efficiency, overhead is a good place to start.

AI is not inexpensive. The aforementioned S.B. 1047 would have regulated AI models that cost >$100-million to build—the sort of thing that you can imagine would be capable of building a convincing Marvel Cinematic Universe.

What’s interesting to note is that just a couple weeks before Newsom didn’t sign S.B. 1047 he did sign A.B. 1836 and A.B. 2602. The first protects the voice and likeness rights of dead performers; the latter requires consent by performers before studios can use their digital replicas.

About the signing, SAG-AFTRA president Fran Drescher, said, “AI poses a threat not just to performers in the entertainment industry, but to workers in all fields, in all industries everywhere.”

But most workers in other fields and industries don’t have to worry about their bosses using replicas in their place.

Presumably SAG-AFTRA isn’t as chuffed with Newsom after the failure of S.B. 1047.

The contract language negotiated last year is specific about digital replicas, so the actors are presently fairly well protected—they have to agree to digitization and they must agree about the digital use of their replicas. And the representatives of the deceased actors also must approve of the use.

But consider that Lionsgate is using its catalog to “train” the Runway AI. Feed in films, and before you know it, it “knows” not only how to do it, but what works. Think of it as artificial risk mitigation, which is something that many studios would be more than slightly interested in.

In a SAG-AFTRA FAQ about AI and the 2023 contract, there’s this:

“Why didn’t you ban the companies from training AI on our work?

“This is what many of us wanted. Given that the rules in this area will come from a variety of sources and not just collective bargaining agreements, an outright ban was not something that we could achieve in this round of negotiations. You may have noticed that none of the guilds got this language nor did they get express consent regarding training. The DGA’s agreement is silent on it. The WGA reserved the right to assert that training AI on covered material is prohibited by MBA or other law. We also have retained this right, although it will not be expressly referenced in the contract.”

Which is something of a mealy-mouthed response—the other guilds didn’t do it, so neither did we.

But come June 2026, when they negotiate the next contract, Lionsgate-Runway training will be likely complete, to say nothing of other studios finding the same capital efficiencies in this approach to content creation.

Between now and then, as studio execs look at the screens on their Bloomberg terminals and see their stock prices bumping along at a fraction of what it was back in 2021, you can be sure they’re going to do whatever it takes to juice the stock. And AI deployment is likely one of those things.

Cover image by Microsoft Bing AI Image Creator.