philip lelyveld The world of entertainment technology

The Rise of AI and the End of Hollywood as We Know It

... Despite these high-profile stumbles, social media video has continued its rise. Shapiro calculatesthat "social video represents about one-quarter of all time spent with video in the U.S." and that the "total creator media economy revenue was a little shy of $250 billion last year." By comparison, in 2024, the combined revenues of Disney, NBCUniversal, Warner Bros. Discovery, Netflix, Paramount, Sony Pictures and Lionsgate totaled less than $150 billion. ...

"Any value that exists is a function of the moats in the value chain," Shapiro explains, referring to competitive barriers that protect profitable businesses. ...

Shapiro identifies two historical critical moats in media: "There was a big moat around distribution because it was very capital-intensive, and there was a moat about content creation because it was expensive but risky [as it is] very hits-driven." ...

"The internet caused the cost to move bits to go to zero," he says, "and GenAI could cause the cost to make the bits to go to zero." ...

The democratization of animation tools has already begun reshaping the industry even without AI. At this year's Academy Awards, the Best Animated Feature Oscar went to Flow, a Latvian film made for just $3.6 million using Blender, a free open-source animation software. ...

"When you slump down on the couch after a long day and scroll through [Instagram] Reels for 20 minutes rather than pick up the remote that's an arm's length away," Shapiro writes, "you're revealing that Reels is higher quality than anything on Netflix (or Disney+, Hulu, Max, Amazon Prime, etc.)." What consumers increasingly value, he argues, isn't technical quality but engagement "quality," which is defined by authenticity, relatability and personal relevance. ...

"That parasocial aspect replaces the [need that arises from the] relatively dispersed populations that we now are," Shapiro says, and with recent trends like remote work, "we are losing direct physical-social, so parasocial will be an important part of our lives going forward."

When GenAI tools make high production values accessible to everyone, these elements of connection and authenticity may become even more important differentiators than traditional production values. ...

Importantly, the gap between GenAI's technical capabilities and genuine understanding of human experience may well preserve space for human creators, even in an AI-transformed landscape. The most successful content might combine AI's production capabilities with the authentic human connection that drives today's creator economy. ...

He believes GenAI will move the entertainment industry toward further fragmentation.

"I think that the middle [in] popularity—I would bet against that. I would bet that what you'll see is this increasing atomization into microcultures," he says. I think what you'll see is more and more time will be spent in personalization and in these very small cultures." ...

 "I think a good general question to ask is when one input becomes more abundant, what becomes more scarce? And clearly distribution is becoming more scarce," Shapiro observes. "Owning the end user, owning the platform, being the curator is probably more valuable than ever." ...

The vision Shapiro sketches in our conversation isn't complete disruption or replacement of traditional media but rather a fundamental transformation in creative and economic power. And he argues that GenAI won't eliminate human creativity, but it will democratize who can express that creativity at scale. ...

The Dunbar number—that is the number of other people researchers say our human brains are designed to interact with—is only 150, not the nearly 4 million people who bought tickets to Sinners last weekend. But, as Yuval Harari has noted in his classic text Sapiens, our species will still need the common narratives that unite us, so there will always be a vestigial desire for massive communal experiences at the same instance in time—like trekking to megaplexes for the opening weekend of Avatar 3: Fire & Ash—as well as for common experiences that are asynchronous and more parasocial.

See the full story here: https://www.newsweek.com/nw-ai/rise-ai-end-hollywood-we-know-it-2068807