Anyone who understands technological trends saw this one coming. We discussed it regularly. I mentioned a number of time that the demise of Hollywood is one of the most fascinating disruption stories we will ever see.

The fact it is unfolding before our eyes, in a manner that is so observable is what makes it so impressive. Add in the pace of the unraveling and it is breathtaking.

Of course, this will not be the last time we see this. Other industries are going to face something similar. For the moment, we will concentrate on what is taking place here.

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Collapse Of Hollywood

There is a major collapse happening in Hollywood and there is nothing the people in the industry can do about it. We are dealing with something that is not going to be protected by a contract. Size of entities are not going to matter. Neither is the geographic location.

The demise of Hollywood is upon us. Many of those who work in the industry are cooked.

Jeff Katzenberg is one of the legends in Hollywood. He started Dreamworks, one of the major production companies over the last 30 years.

AI Will Cut cost of Animated Films by 90%, Jeff Katzenberg Says

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.”

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This was something he stated back in November of last year. It was a very insightful observation.

We now have this announcement:

Sony Pictures to Use AI to Produce Movies and Shows In “More Efficient Ways”

Sony Pictures is embracing generative artificial intelligence to cut costs.

Chief executive Tony Vinciquerra, at an investor conference in Japan, said on Thursday that the company is “very focused on AI” and mobilizing to adopt the technology into the moviemaking process to streamline production.

“We’ll be looking at ways to use AI to produce films for theaters and television in more efficient ways, using AI primarily,” Vinciquerra said.

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This is taking place at a time when the crew union is trying to negotiate a new contract. They are going to find the hard way, like the writers, that even if they win, they lose.

Hollywood crews are unemployed, fear LA's production decline

2023's dual strikes by writers and actors created a dry spell for everyone in Hollywood. Crew members are still feeling the aftershocks.

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These studios are experiencing bust-after-bust. Even if they pull in decent amounts, the cost is so high that a sub $200 million box office is going to lose a lot of money.

Global Industry Driven By AI

The problem for these people is they operate locally. Depending upon their job, their career might already be over. We are going to rapidly see this becoming a global market.

Here is an example.

These are a couple tweets of AI generated videos that were put together by a company that is specializing in this content. It is rather short right now, only a couple minutes in length. One video has 24K views while the other 35K. Taking the lower one, that amounts to almost 800 hours of viewing.

https://x.com/Ethereal_Gwirl/status/1773040484069326995

https://x.com/Ethereal_Gwirl/status/1778432954634522931

For now these are rather crude (in addition to being short). The storylines is wanting. That isn't the point. Right now we are in the early stage. What will these look like in 2 years? We can expect both the quality and length to increase.

Then there is this:

Generative artificial intelligence is coming for streaming, with the release of a platform dedicated to AI content that allows users to create episodes with a prompt of just a couple of words.

Fable Studio, an Emmy-winning San Francisco startup, on Thursday announced Showrunner, a platform the company says can write, voice and animate episodes of shows it carries. Under the initial release, users will be able to watch AI-generated series and create their own content — complete with the ability to control dialogue, characters and shot types, among other controls.

It goes on to say:

“The vision is to be the Netflix of AI,” says chief executive Edward Saatchi. “Maybe you finish all of the episodes of a show you’re watching and you click the button to make another episode. You can say what it should be about or you can let the AI make it itself.”

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This is not quite personalized content but it is getting closer.

Here we are dealing with a company out of San Francisco. Sony could easily move it movie production to a Japanese division, avoiding any dealings with Hollywood. AI generating software is available to most anyone, a fact that will disrupt since some will figure out how to create some outstanding content.

The point to all this, in the attention economy, it is vital to get eyeballs. When Hollywood has a monopoly on both content creation as well as distribution, it was flying high. These days, the game is much different.

We are suddenly seeing the early stages of how content will change. Katzenberg talked about animated films being cut by 90%. Many might presume that could mean to the studios. While that will be the case, it also applies to anyone else.

Under this scenario, many will be operating at a high level. This means that studios have to compete with companies from all over the world.

As we see, people are not going to the theaters at the same pace as before. We also have many streaming services losing money (flops). The number one streaming service, with regards to viewing hours, is YouTube. These even outpaces Netflix which is the dominant of the major streaming platforms.

History Repeating Itself

In the early 2000s, many newspapers went out of business. The Internet destroyed that business. Today, there are still some around although most operate basically as blogs. They are online publications for the most part.

What destroyed the papers?

While there were successful websites that gained a following over time, such as Huffington post and Breitbart, it was the smaller pages that killed them. The fact that anyone who could set up a Wordpress site was suddenly a "journalist" caused the major problem.

This is the situation with video.

One filmmaker or site will not do Hollywood in. Instead, it will be the sheer volume of films generated, posted in many different places. Some might only get an hour worth of viewing, others thousands. The individual performance doesn't matter. It is the totality.

First print, then audio (music) and now video.

It is a pattern that keeps repeating itself.

What is the lesson from the Internet? It does two things:

• create abundance
• destroys whatever is in the industry it enters.

Hollywood is already starting to feel it. I forecast things are only going to get a lot worse for all the companies involved.

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