No Mercy / No Malice: The End of the Blockbuster

0:28Support for the show comes from Adobe Express. to create on-brand content, Adobe Express. Learn more at adobe.com slash express slash business. True story, I have used Adobe Express and I was shocked how easy it is to use and produce content.

0:48Support for the show comes from LinkedIn. It's a shame when the best B2B marketing gets wasted on the wrong audience. When you wanna reach the right professionals, you can use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals and 130 million decision makers, according to their data. That's why LinkedIn ads boast one of the highest B2B return on ad spend of all online ad networks. Spend$250 on your first campaign on LinkedIn ads and get a free$250 credit for the next one. Just go to linkedin.com slash prof. That's linkedin.com slash prof. Terms and conditions apply.

1:25Rinse takes your laundry and hand delivers it to your door. Expertly cleaned and folded. So you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. I'm Scott Galloway, and this is No Mercy, No Malice. Riding an AI wave, the Ellisons are poised to shake up Hollywood. Movie budgets of$200 million and 3 ,000 crew members may soon be coming to an end.

2:12The end of the blockbuster, as read by George Hahn.

2:21For David and Larry Ellison, the credits of the Fantastic Four first steps are the best part of the film. Specifically, they are the opportunity. The scrolling list of more than 3 ,000 cast and crew members is a sign of an industry ripe for disruption. The Marvel movie staff, from visual effects artists and animators to costume designers and location scouts, is bigger than the entire workforce of Lyft or Reddit. The Ellisons, who are now one of the most powerful media and entertainment families in history, are the kid in the sixth sense. They see dead people. They don't care if Hollywood is ready for AI.

3:06AI is ready for Hollywood. David Ellison, the Silicon Valley scion who bought Paramount Global with a sliver of his father's$349 billion fortune and is now pursuing a much bigger bid to acquire Warner Brothers, is keen to drive the AI transformation. Buying Warner would combine two of the most storied movie studios and two major streaming services, Paramount Plus and HBO Max. A deal announced by the White House gives Larry Ellison's tech company, Oracle, a stake in the new American TikTok, along with oversight of the app's algorithm for U.S. users. It also endows the family with more influence on our youth than anybody who doesn't live in the same home.

3:53And their bond with President Trump means they're unlikely to face any resistance. On day one as CEO of Paramount, David Ellison outlined his vision to shake up the company by investing in high-quality storytelling and cutting-edge technology. Adorable. He tried to assuage Hollywood's concerns and barely mentioned AI. Technology is not and never will be a replacement for human creativity, he said. Rather, it serves as a powerful multiplier. I wonder if lions sitting in the reeds, identifying their next meal, think of themselves as powerful multipliers. In the 50 days since he took over, Ellison has gone on a spending spree, providing some hope to a nervous Hollywood.

4:49Paramount won an auction for the big-screen reunion of Timothee Chalamet and James Mangold, the star and director of the Bob Dylan movie A Complete Unknown, and lured the Stranger Things creators from Netflix with the promise of delivering large-scale theatrical films. The company also plans to expand its annual movie output to 20 films from eight. Veteran producer Lorenzo Di Bonaventura told the New York Times that Ellison wants to do cool stuff. That sounds very basic, but underneath it all, making cool stuff is the Hollywood dream. Spoiler alert, don't count on a feel-good Hollywood ending for many or most of the crew members whose names appear in the credits of the Fantastic Four and other blockbusters.

5:36In his wider bid to take on Netflix and YouTube, Ellison is aiming for at least$2 billion in cost efficiencies and synergies, Latin for layoffs. The upshot will probably be as many as 3 ,000 job cuts. Every surviving studio owner will rely on AI, which is reinventing the way movies are made to generate content more quickly and cheaply. But David Ellison isn't just any studio boss. His father, the Oracle co-founder, who briefly surpassed Musk this month to become the world's richest man, is riding an AI tsunami with a staggering$455 billion pipeline of contracts to supply computing power. Paramount's new CEO, who envisions a next-generation studio that leverages cloud computing, AI, and other digital tools, likely won't waste any time in tackling Hollywood's bloat.

6:37As Jerry Cardinal, whose Redbird Capital helped finance the$8 billion Paramount deal, explained, this is not a nice-to-have. this is a need-to-have moment in Hollywood. You have a balkanized situation between technology and content, between Silicon Valley and Hollywood. Ellison isn't just motivated by the fact that the attendees are much hotter at Cannes Lions than Dreamforce. With access to a seemingly infinite pool of capital, he sees an opportunity to meld the best of the tech and entertainment worlds. The younger Ellison will rely on former Oracle CEO Safra Katz and scale AI chief financial officer Dennis Cinelli, both now Paramount board members, as well as former Meta and Google executive Dane Glasgow, who will lead product vision and strategy.

7:34We know the script. First comes consolidation, then comes efficiencies. It won't be long before the younger Ellison is spotted helming a tank division headed over the Sepulveda Pass with AI-guided projectiles. As they expand their empire, they'll brainstorm ways they can deploy AI to make three movies at$40 million apiece, or maybe ten movies at$10 million a pop, instead of going all-in and producing a blockbuster such as the Fantastic Four for more than$200 million. dollars. Taking more shots on goal is a better approach, given the risk complexion of a hit-driven culture. Yes, Beetlejuice, Beetlejuice made hundreds of millions of dollars, but the studio gave that windfall back with Joker Folie Adieu, which lost about 150 million dollars.

8:31In Hollywood, AI is often cast as the villain, whether that's on screen, in movies ranging from 1984's The Terminator to the latest Mission Impossible installments, or in real life. In 2023, writers and actors went on strike and shut down the business for several months, demanding protection from AI. In exchange for losing five months of their careers, WGA members got dick. And when I say dick, I mean almost nothing. Almost nothing includes increases in compensation that lag inflation and illusory protections from AI. Their fears are well-founded as the studios begin to apply gen AI to visual effects, sound mixing, editing, production, and script writing in search of efficiencies.

9:24A recent study surveying 300 leaders across the entertainment industry estimated that AI will affect more than 200 ,000 jobs over three years, especially roles in visual effects and post-production, which focus on editing and finalizing content. In the lead-up to the Oscars earlier this year, The Brutalist and Emilia Perez ignited controversy over their use of AI to enhance actors' voices, even with their blessing. But it's not that simple. Where some see an existential threat, Others see innovation, an opportunity to lower the barriers to entry and democratize a field once reserved for the Hollywood elite and their offspring.

10:13Consider the multiple ways AI is already shaking up the industry. The Tom Hanks and Robin Wright movie Here used metaphysics, aging and de-aging technology to follow their characters over different stages of their lives. Studios otherwise would have hired multiple actors, relied on makeup artists, or used a small army of VFX artists at a cost of tens of millions of dollars. An increasing reliance on tools such as TrueSync, which can manipulate the movement of performers' lips to accommodate dubbing in different languages, is expected to lower demand for multilingual voice actors. Actor and filmmaker Tyler Perry put an$800 million studio expansion on hold after seeing OpenAI's Sora and realizing he might not have to travel to locations or build sets.

11:08Even if Sora, which generates short video clips based on written prompts, isn't yet good enough for Hollywood studios, it's just a matter of time. With Luma AI's latest tool, according to the LA Times A hoodie becomes a superhero cape A sunny street turns snowy A person transforms into a walking banana or a medieval knight No green screen, no VFX team, no code The directors of Marvel's Avengers Endgame plan to build a high-tech studio and craft AI tools to make films with smaller budgets If they're successful, AI will be used to empower artists rather than displace them. Jeffrey Katzenberg, who founded DreamWorks with Steven Spielberg and David Geffen more than three decades ago, captured the industry's attention in 2023 when he predicted that AI could cut the cost of animated films by 90%.

12:12Katzenberg is familiar with technological shocks. He was a pioneer in the animation revolution in the 1990s, sparked by the advent of computer graphics and the success of Pixar's Toy Story. Today, he sees promise amid the tumult, with AI accelerating a new wave of storytelling innovation. He told Bloomberg, I don't believe it's the end of Hollywood. Will it function the way it has in the past? Absolutely not. Now Pixar is the one feeling the heat Open AI and Vertigo Films plan to wrap an AI-driven animated feature called Critters After nine months of production, in time for the Cannes Film Festival in May Only a couple dozen people are working on it And the budget is less than$30 million 80 % cheaper than a typical animated movie

13:10History is clear. Technological breakthroughs create short-term disruption and painful job losses, but also unleash lower production costs, creative ideas, bold new businesses, and, over the long term, a net increase in employment. In the car industry, automation destroyed jobs on the factory floor, But we didn't envision the new jobs that building heated seats and car stereos would create down the road. In 1999, the average cost of developing and launching an e-commerce site was$1 million. Today, you can set up a decent website for around$5 ,000. Your investment is 99.5 % less. And you're entering a market that's more than 40 times bigger.

14:07Hollywood will follow a similar path as AI opens the door to independent filmmakers. You won't need tens of millions of dollars in Hollywood connections to produce a movie of theatrical quality. Ben Affleck is right. AI will make it easier for outsiders with compelling scripts to produce the next goodwill hunting. AI has become the Ozempic of the corporate world. While GLP-1 medicines switch off the signal in your brain that you need to eat more, AI suppresses the appetite to hire more, reducing companies' cravings for the protein of human capital. Hollywood is no different. AI will create new roles and elevate the careers of those who learn to leverage it successfully, but jobs will vanish.

14:58The collision between Hollywood and Silicon Valley signals the end of the blockbuster and the industry as we know it. Disney's Bob Iger and Warner's David Zasloff will be out within 12 to 24 months, as their affinity for and relationship with the creative community is quaint and outdated. They grew up in an era when talent held the power. Their job was to not piss off people. The Ellisons, like the Honey Badger, don't give a shit. The younger Ellison wants to bring the best of Southern and Northern California together. In this case, the togetherness is Northern California invading the City of Angels.

15:42Like most wars, the battle is over before it starts, based on which side has more brute force. Picture Iger, Zaslob, SAG-AFTRA and 50 plus percent of the creative community hunkering down behind Chateau Marmont armed with squirt guns Life is so rich

16:19Support for this show comes from Nike. What was your biggest win? Was it in front of a sold-out stadium? Or the first time you beat your teammate in practice? Nike knows winning isn't always done in front of cheering crowds. Sometimes winning happens in your driveway, on a quiet street at the end of your longest run, or on the blacktop of a pickup game. Nike is here for all of the wins, big or small. They provide the gear. You bring the mindset. Visit Nike.com for more information. And be sure to follow Nike on Instagram, TikTok, and other social platforms for more great basketball moments.

17:00Blockchain is reshaping every aspect of society, starting with finance. It's happening across industries, across sectors, and across the world. And it's happening with Ripple. With more than a decade of blockchain experience, over 60 licenses, and strong institutional trust, Ripple provides financial institutions with blockchain and crypto-powered solutions across payment and digital custody applications. This means secure, 24-7 transactions, moving value across the world faster. Find out more at Ripple.com.

18:03We'll see you next time. You can turn your team into a content machine with Adobe Express, the quick and easy app to create on brand content. Learn more at adobe.com slash express slash business.