The AI Tidal Wave That’s About to Upend Hollywood

A producer recently pitched me a $10 million "AI-powered thriller." I told him in 18 months, that same film will cost $1 million to make. By 2026? Maybe $100K.

Entertainment attorney Schuyler Moore—a veteran dealmaker who has structured billions in film financing—puts it bluntly:

Spoiler: The guilds can’t save you. And here’s why:

1. Public companies have a fiduciary duty: When AI cuts production costs by 90%, corporate boards must prioritize shareholders. They can’t pick feelings over finances.

2. Technology always wins: Just ask Blockbuster how fighting Netflix worked out, or the music industry’s failed war against MP3s.

3. Markets don’t care about tradition: If you can produce equivalent content at 1/10th the cost, the old way dies.

The New Economics of Film

Remember slate financing—funding 10-20 films in hopes a few hits cover the losers? Get ready to see that model put on steroids by AI-driven production.

Instead of betting $100M on 10 films, you’ll be able to produce 100 films for the same budget. As reports from Variety on AI in Hollywood suggest, this shift changes everything:

• More shots on goal: Test multiple storylines simultaneously.

• Lower risk per project: Reduce each film’s cost to nearly nothing.

• Real-time audience feedback: Launch test versions, tweak instantly.

• Rapid iteration: Evolve your project as data rolls in.

Netflix already uses data to inform content decisions. Soon they’ll generate 50 variations of a pilot for less than one pilot costs today, then refine based on immediate viewer analytics.

The Digital Likeness Gold Rush

Top actors? They’re about to get astronomically wealthy licensing their digital selves. Consider the precedent: James Earl Jones licensed his voice for future Darth Vader appearances.

Now imagine Tom Cruise licensing his likeness for 100 AI-generated films per year. Each one targets a unique micro-audience segment, and he collects passive income without lifting a finger. No scheduling conflicts, no aging, no geographic limitations.

All this while SAG-AFTRA and other guilds grapple with how to handle AI, and legal frameworks emerge for digital rights and performance licensing.

Business Creativity Trumps Artistic Creativity

As Moore notes: “Business creativity matters more than screenplay creativity.” With production costs nearing zero, the ability to structure deals, identify niches, and leverage distribution innovations far outweighs traditional creative constraints.

Key levers of success:

1. Rights structuring: Secure digital likenesses, script IP, and distribution rights on AI-friendly terms.

2. Audience targeting: Use micro-genre analytics to find and serve new niche markets.

3. Distribution innovation: Deliver custom cuts of the same film to different micro-audiences instantly.

4. Deal architecture: Structure revenue sharing, performance royalties, and licensing fees for AI-generated content.

The next great empires in film won’t rise from a single visionary script. They’ll be built by entrepreneurs who know how to package, license, and monetize content at scale.

The Micro-Audience Revolution

When production costs approach zero, you can profitably cater to audiences previously too small to matter:

• Left-handed surfers who love artisanal cheese? Make a rom-com just for them.

• Retired dentists who collect vintage motorcycles? Serve them a custom action thriller.

• Urban beekeepers who practice jiu-jitsu? Documentary gold.

Each micro-segment becomes viable at budgets well under $200K. When you’re not investing $20M in a single production, these niche bets pay off.

The New Infrastructure Play

While some focus on whether AI will replace VFX artists or editors, the real money is in building the picks and shovels of this gold rush:

1. Companies like LUMA Partners, a leading provider of digital rights management solutions, are building blockchain-based systems for tracking and monetizing digital likeness rights.

2. GumGum, a computer vision company, is using AI to identify and value previously invisible audience segments, such as consumer emotions and brand affinities.

3. Plex, a popular media player and server, is creating technology that automatically recuts and retargets content for different audience segments, optimizing it for various platforms and devices.

4. New firms specializing in AI-specific entertainment law, like Frankfurt Kurnit Klein & Selz, are emerging rapidly, advising clients on the legal and ethical implications of AI-powered content creation and distribution.

What Happens Next

In the next 18 months, expect:

• Major studios stocking up on AI patents.

• A wave of AI distribution startups getting acquired.

• Mid-budget producers scaling down or vanishing as cost structures implode.

• Traditional slate financing reinvented for a world of hyper-targeted content.

Meanwhile, WGA and other guilds weigh policies on AI-generated scripts, but the market moves faster than any negotiation table can.

The Real Question

AI isn’t coming—it’s here. The debate isn’t whether to adapt, but how quickly. While some argue AI might kill creativity, fortunes are being made by those who don’t wait.

Want to understand exactly how to position yourself as this shift accelerates?
Join us at the next Maltese Circle gathering this March, where investors and innovators who see both the risks and opportunities ahead will converge. Reply to this email with “Malta” in the subject line to express interest and we’ll get back to you within a day.

Space is limited. Secure your spot now.

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