Why Netflix Bought Ben Affleck’s AI Company, and If Hollywood Should Worry

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0:44Matt Belloni:This episode of The Town is brought to you by The Madison, the new original series on Paramount+. Academy Award nominee Taylor Sheridan's most intimate story yet, unlike anything he's ever done before. The Madison follows a family raised in a world of digital distraction, forced by tragedy to truly see one another and come together. Authentic, multi-layered, and did I mention starring Michelle Pfeiffer and Kurt Russell? Don't miss The Madison. New series streaming March 14th, only on Paramount+. It is Monday, March 9th. Over the past few years, one of the smartest voices on the subject of AI in Hollywood has been Ben Affleck.

1:23Matt Belloni:He's argued for using AI as a tool for both efficiency and creativity. He's downplayed concerns that AI will take over the role of the creative person, particularly when it comes to filmmaking. He was good on Joe Rogan discussing that issue, and he's done a lot on his press tours. Turns out there's a reason why Ben Affleck knows so much about AI. We learned last week that he's quietly founded an AI startup. It's called Interpositive, and boom, he's now sold it to Netflix. People in town may have seen that headline and become concerned. But first, this is not a text prompt to video AI model. It's basically a filmmaking tool where a director can upload dailies and other pieces of his or her own movie.

2:04Matt Belloni:And the model can help fill in holes or streamline scenes, help with visual effects, sound mixing, all of it. But it's not a stretch to believe that Netflix is doing this in part because it wants AI to help deliver more content for less cost. And if you're afraid of people in the creative community getting spooked about AI, there's probably no better strategy than getting a filmmaker like Ben Affleck on your side. To that end, Netflix put out a little propaganda video with Affleck explaining this model and how it can take out stunt wires, fix sunset lighting, etc. It's going to make things better, not just cheaper, they argue.

2:38Matt Belloni:Do we believe that? And with all the AI technology startups out there, why did Netflix acquire the one co-founded by Ben Affleck? At the same time, Netflix closed a big deal with Affleck's artist equity for exclusive rights to movies. That's part of that deal. So we've got Lucas Shaw in here to discuss it all. We'll also get into the Live Nation antitrust settlement with the government. But mostly today, it's Ben Affleck, Netflix, and the next steps in AI. From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

3:13Matt Belloni:okay we are here with lucas cha from bloomberg welcome back lucas how was your weekend at the indian wells tennis tournament uh it was great it was the uh the event of the season you were missed where were you it felt like a music festival as a couple people told me i know did you spot any ellisons there larry ellison famously owns the tournament i did not spot david i did not spot lair i actually didn't the only famous person i saw was the basketball player jimmy butler who's a huge tennis fan and is on crutches because he's rehabbing but he was there to see carlos alcares no i'm sure they have some vip area that you can't see no tom cruise tom cruise was in town he was spotted on his motorcycle i'm sure they do but that's why i was so surprised to see jimmy just like walking down main street we are not talking about the ellisons or indian wells today we are talking about ai because this announcement last week that ben affleck's ai company that nobody knew was a thing uh is a thing and has been purchased by net it made a lot of his public comments on ai in which he looked quite intelligent or at least more thoughtful than the average filmmaker uh it made it made a lot more sense yeah exactly also it was kind of funny though because he was also shitting on netflix and how their movies need to tell you the plot five times and they need to have you know action in the first 10 minutes and lo and behold he does a big deal where artist equity is now producing movies exclusively for netflix not just the ones he's in.

4:36Matt Belloni:They got them to take the ones that he is not in. And this AI company, I think, was not just thrown in. It was part of the deal where they paid a certain undisclosed amount and got this company. So let's go through what this is and what this is not. Because I think on the surface, this is a pretty benign deal, but it may signal some things that are less benign. So give Give me your take on this deal. Do you get the sense that people are upset about this? No, not really, because it's Ben Affleck. Yeah, I guess if you were to structure a deal that you would want a Hollywood studio to do, especially one like Netflix that sort of comes from Silicon Valley and some people in Hollywood do not trust, this is what you would structure.

5:22You would say, okay, go and do a deal with a top-tier filmmaker who has developed tools that are trained primarily on what they're already making. and so you're not you're not violating copyrights it is totally kind of within the system and oh by the way it's sort of it is because it is made by an artist it is for your fellow artists um so i that's why i also you're we're gonna have different takes on this you're gonna say you're well don't tell me what i'm gonna say i'm gonna say what i'm gonna say i'm gonna say My only question about this is, does it really, like, does it matter, right? I assume that in the span of the last three to four years that Ben Affleck has not come up with God's gift to AI filmmaking tools.

6:10I could be wrong.

6:11Matt Belloni:No, but what I think happened is they looked at this tool, Netflix, and they said, okay, this is a few years ahead of what we are doing here. We will eventually get there. but Ben's been doing this for three or four years now and we can buy this and just get a three or four year head start and we're already in business with this guy and this is the key thing here it's Ben Affleck they want AI to be incorporated into all of their filmmaking and this is you know kind of a Trojan horse where if they're in business with Ben Affleck on AI no one is going to question what Netflix is doing in the AI world.

6:52Matt Belloni:And that's the real value here. It's a big press release. They put out this propaganda video with Ben Affleck and Bella Bajaria and their chief product officer talking about how great this tool is. And every filmmaker is looking to say, okay, I can get on board with this. So this tool itself is pretty innocuous. They can get rid of wires. They can, you know, if they miss coverage of a certain reaction shot, they can use the dailies to recreate that reaction shot. all stuff that filmmakers, I think, would agree is just an extension of visual effects and using AI to superpower this stuff. A great tool.

7:27Matt Belloni:But it's what it's signaling about what's coming that I think is more interesting. Okay, what do you think it's signaling? Well, it's signaling that Netflix is going all in on AI, I think. But how do you make the leap from they're doing a deal for a relatively small company with a specific use case to that means that they're going all in on AI? It is the first sign of what Netflix is, the aspirations in AI, I think. This is all my speculation. They are not saying this. If you look at the financials, they have to bring down the cost of content. If they want to compete with YouTube for engagement, they got to make more and more and more, and they want to bring down the cost.

8:09Matt Belloni:So AI is certainly going to be a part of it. It's not just Netflix also. It's all of these studios. They want to figure out how to bring down the cost of content through AI. And if you can get a huge talent like Ben Affleck in your corner, you have a little bit of runway there to experiment, I think. I want to talk about that YouTube point for a second. Yes, they are all trying to compete with YouTube, but I don't think that any of these Hollywood companies is trying to compete with YouTube on volume because they just can't do that. That's not a winning game. No, but they want to get more. Why do you think Netflix is doing podcasts?

8:41Right. But again, that's not a competing on volume. That's a different category that can boost engagement.

8:48Matt Belloni:That produces a lot of volume of hours for not a lot of money. Yeah. And very few of those podcasts will generate significant viewership. They're doing, you know. Oh, how dare you? Craig's podcast is number one. They'd like to find the one or two that can be hits and sort of touchstones for them. Sure. But okay, but back to AI. So you don't think that this is a volume play ultimately with AI? I think that they would like to find ways to bring down costs and they would like to find ways to make the product better. But I don't think that what they're going to be trying to do, and I could obviously be wrong, is suddenly be like, now we're going to be pumping out a new series every day.

9:29Matt Belloni:No, no, but it's more efficiency. Sure. They're always looking for efficiencies and the cost of content keeps going up. Yes, because their advantage on YouTube right now is actually profitability. They're more profitable than YouTube based on—we don't have the YouTube numbers, but based on outside estimates, they're more profitable. Yeah, look, you said it. Every studio—Amazon has been very public over the last couple of months about what they're trying to do in AI. Disney obviously has a deal with open AI, although that has been less around sort of the production of their film and television properties.

10:01Lionsgate has that deal with Runway. Every Hollywood studio is trying to figure out a strategy, and they want to do so without terrifying and antagonizing the creative people with which they work, which is why aligning with a major filmmaker like Ben Affleck is probably more appealing to Netflix, which, again, of all the companies other than Amazon, is probably going to be met with the most fear and skepticism on this topic. And we know Amazon has a whole division run by Albert Chang, whose job is to figure out how to incorporate AI into the production process. Yeah. Mandate from CEO Andy Jassy on down.

10:40You know, there was already coverage of how it was used in the show House of David, which is kind of one of the biblical epics that they have. And then I know that they're working on it with animation and kind of a bunch of other areas.

10:57Matt Belloni:um yeah everybody is i guess this is not news but i just think that that the value of a ben affleck ai company to netflix goes beyond this particular tool that he is totally to them yes it it um it gives them some license to to fuck around over the next couple of months yeah it's like remember how everyone remember how everyone freaked out when lionsgate did that deal with runway to essentially hand over their library to this AI company to create tools for them that they can use in the process. I've heard that deal has not been bearing much fruit or not as much fruit as they wanted to. But imagine if Runway was started by James Cameron or someone like that.

11:42Matt Belloni:Like there would have been a lot more goodwill towards Lionsgate's efforts there. Well, but what you just said is why, I guess I am short-term at least, skeptical of how to how big a deal some of this stuff will be because it just feels like we're we're still in the we're at least right now still in the phase that ai and i don't know that this is going to change but the the utility of it will ai will create a bunch of tools that are useful for filmmakers but we we don't yet have a lot of evidence that it's like massive job replacement which is obviously the fear and aflick has had some smart comments on that he thinks that that fear and that messaging is coming from the AI companies themselves in order to scare everyone and to justify the cost of their investments in this technology.

12:31Matt Belloni:He said that on Joe Rogan, I believe, or in one of his interviews. And if you're the already kind of a leader or a really powerful company like OpenEye or Anthropic, if you scare people enough that they feel like you have to create guardrails, but you've already gotten big enough to be powerful, you can sort of create the guardrails that enshrine your power yeah it's like elon trying to get rid of the uh ev tax credit because tesla's already big enough right and it would just prevent others from getting as big as him or in the hollywood example if like netflix and disney banded together to sort of set the rules to basically establish the kind of rules with guild rules with production all of that you just you know you set it up in a way so that it perpetuates their dominance what i like about Affleck is he's very blunt about what AI can do and not do in the writing capacity, because I agree with him.

13:24Matt Belloni:I don't think that AI is going to be able to write quality scripts because it always reduces to the mean. Have you written a newsletter in the style of Matt Melanie using Claude or ChatGPT? I tried it once in ChatGPT. It was god awful. Did you feed in all of your reporting i did not put in my reporting that would help but i asked it to create a newsletter on a topic that had widespread reporting yeah and more of like and it just spat out garbage it was just it was just generic and nonsense yeah so and i'm not i mean and i imagine that the similar results would come out for you as well have you done it i i've i don't think i've it's okay you're not going to get no no i'm trying to remember i i've obviously fooled around with them quite quite a bit but i don't i think i have tried to see if it could mimic my writing style um but i don't know that i had it write a newsletter i don't remember okay so we are in agreement that the ben affleck thing sort of a nothing burger not a nothing burger good for him a strategically useful deal for both of them where ben affleck looks like a very forward thinking filmmaker with this new technology netflix gets to align itself with a top-tier filmmaker and seems less threatening in terms of how it's applying AI.

14:42And look, it could be a useful tool for a bunch of people, right?

14:45Matt Belloni:Does this instill your trust at all in any of these major companies in Hollywood that they will be using AI ethically going forward? I think they will do whatever they need to do to comply with guild rules. I'm not worried. I think this is, I'm not really worried about the studios. I continue to believe that this is the wrong place to worry about artificial intelligence. You got to worry. You think it's going to come from outside the system. The concern is how do OpenAI and Anthropic and Google and Facebook use the technology, right? It's how do these big tech companies that have proven that they don't really give a shit about copyright or they do, but only up to a point and are gonna prioritize creating great tools and technology that users like, how are they going to kind of roll out products and how will they be adopted?

15:32And what will that mean for the assets that these companies own? This is a topic, it's why I've always been confused on the guild negotiations. I think that for the most part, the guilds and the studios are on the same side. There are obviously areas where they are going to disagree. And I understand why some of the guilds are worried about ways in which the studios could reduce some employment. But I think net-net, they're on the same side in that they are trying to protect copyright. They are trying to protect the work and jobs. And yes, the studios might try to save a little money. But for the most part, their incentives are more aligned than not when it comes to their relationship with these big tech companies.

16:09Matt Belloni:But you're more concerned about the whack-a-mole of Sora and Seed Dance and all these other tools. I mean, we've seen it already, right? I know. And how many times can they send cease and desist letters and get an apology after the fact? It's always going to be ask for forgiveness. They're going to create the product. And especially if we're talking about Chinese companies, they're not going to give a shit about American movie copyrights. I know. And then all of a sudden there's going to be Chinese videos of Brad Pitt and Tom Cruise starring in separate movies that the U.S. can't really do anything about and that people can pirate on the Internet.

16:41And it only they only brought it to heel with YouTube initially because they they just like they bothered YouTube enough that YouTube decided it was more in their interest to sort of build a tool to police the platform that was imperfect, but good enough. And guess what? It worked out pretty well for YouTube.

16:57Matt Belloni:Do you think it's more likely that the first kind of mostly AI movie comes from a traditional studio? And I'm including people like Netflix and Amazon in that. Or is it going to be OpenAI Studios presents the first AI film? Well, OpenAI has a movie at Cannes. Yeah, well, no, it's not at Cannes yet. They say they are trying to get this animated movie into Cannes. I would be shocked if Cannes let an OpenAI movie into the actual festival. My guess is they will bring it there and show it outside of the official festival. and then everyone will write about it and it'll be a big controversy. Yeah, but yes, there's no way it comes from a major studio first.

17:32It's going to be either, I mean, there already are, it'll be an independent using existing tools or it will be bankrolled by one of these big companies to say, look at what our tech can do.

17:43Matt Belloni:Yeah, Pixar, this journal piece this weekend, Pixar said they haven't even incorporated any AI tools into their workflow and they're resisting it. And they are now doing more commercial movies in order to justify their costs because they don't want to do that stuff. So we'll see how long that lasts. This episode is brought to you by TaxAct. Like an expert coach, TaxAct offers step-by-step guidance and guaranteed accuracy when filing taxes. Get tips along the way, add expert assist to talk to tax experts and let our experts do your taxes for you with expert full service. TaxAct helps you find the deductions and credits you deserve so you can get them over with.

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18:43Matt Belloni:On to the Live Nation settlement, because I know you've written about this. I think it's a big deal. I think most people don't really understand what was at stake here. Live Nation has tentatively agreed to settle the federal case,$200 million, and some promises by Live Nation that they will end exclusive booking practices. And what else? Am I missing anything? There's some disagreement at the moment over whether they're going to sell certain venues or exactly some of the details about it. They haven't announced yet. Like we basically, we broke the news Sunday night. that politico followed up monday morning with some more details um i think they've announced it by now they have they have announced it um but i i don't know that they have announced all of the details so this is nothing for them this is a huge win for live nation 200 million dollars that's like michael rapino's like tip for the valet at when he goes to shows that is nothing right yeah 200 million dollars to a company that makes billions of dollars in revenue a year that's The money is not the issue.

19:48I mean, it sucks, but the money is not the issue.

19:50Matt Belloni:Yeah. The issue is they were facing a potential breakup. Well, there's no. Yes. The Department of Justice was trying to get Live Nation, which owns Ticketmaster, to divest Ticketmaster. And that is not going to happen. They will try. They will create. They will open up ticketing a little bit by which, you know, the way it works is venues tend to have an exclusive relationship with a particular ticket seller, which in a lot of cases for the big venues is Ticketmaster. And Ticketmaster's competitors would like, SeatGeek, Access would like to be able to either have it be completely open or the same venue, your local arena, you can buy tickets from two or three different places or at least have allotments where Ticketmaster gets some and they get some.

20:35And so I think there's going to be a little bit more of that. But, you know, the huge change for the way ticketing works that I think some people are hoping for is not going to happen.

20:47Matt Belloni:No, no change to the ticket prices, no change to what makes consumers. Well, they're not going to litigate pricing in a settlement like this. No, no, but I'm saying the whole point of this was to address the skyrocketing price of concert tickets, and that's not happening. Although the states seem to not be on board with this. At least New York has already put out a press release saying they are not on board with this. So could the case continue even if there's a federal settlement? It probably will, because look, the majority of the state attorneys general in the country joined the suit. And it's an easy, it's a bipartisan issue.

21:24Matt Belloni:Everybody hates Ticketmaster. Right. Everybody hates Ticketmaster, which is also sort of Ticketmaster's job. I know we've talked about this a little bit, but we have talked about this. It's not like Ticketmaster is operating in a vacuum. You have the artists who say, this is how much I want my tickets to cost. You have the venues who say, this is what I want. And they are taking all the flack for that. Bruce Springsteen is charging three grand for his No Kings tour. Yes. You know who's not saying you have to charge three grand? Michael Rapinoe, the CEO of Live Nation. He's not mad about it, but he's not going to be the one to say, hey, Bruce, you really got to charge only a thousand.

22:03Unless he's going to say it's not going to sell, you need to bring it down.

22:07Matt Belloni:Yeah, it's charging$3 ,000 because that's what the market is for those premium tickets for Bruce Springsteen. I know. So why did this happen? Is this because they played audio of Rapinoe threatening venues in the opening argument? Is this happening because Trump, for some reason, wants it to happen? This is why Gail Slater stepped down in the antitrust division. Like, give us the insight on why this is happening. Well, look, Live Nation has been trying to settle this for a while. They made a proposal last spring, I believe, and had been trying to settle with the DOJ for a bunch of last year. I think it was in their interest to not have it go to court and have embarrassing things like the audio of Michael Rapinoe threatening the Barclays Center played.