Will the Entertainment Business Stay Human?

0:00Welcome to Thoughts on the Market. I'm Ben Swinburne, Morgan Stanley's U.S. media and entertainment analyst. Today, Gen.ai is poised to shake up the entertainment business. It's Wednesday, July 23rd at 10 a.m. in New York. It's never been easier to create art for anyone with a little help from Gen.ai. You can transform photos of yourself or loved ones in the style of a popular Japanese movie studio, or any era of visual art to your liking. You can create a short movie by simply typing in a few prompts. Even I can speak to you in several different languages. I can ask about the weather.

0:48In the media and entertainment industry, Gen.ai is expected to bring about a seismic shift in how content is made and consumed. A recent production used AI to de-age actors and recreate the likeness of a deceased performer, cutting what used to take hundreds of VFX artists a year to just a few months with a small team. There are many other examples of how Gen.AI is revolutionizing how stories are told, from script writing and editing to visual effects and dubbing. In music, Gen.AI is helping music labels identify emerging talent and generate new compositions. Gen.AI can even create songs using the voices of long-gone artists, potentially extending revenue far beyond an artist's lifetime.

1:31Gen.ai-driven tools have the potential to reduce television and film production costs by 10 to 30%, with animation and post-production among the biggest savings opportunities. Gen.ai could also transform how content reaches audiences. Recommendation engines can become even more predictive, using behavioral data to serve up exactly what listeners want, sometimes before we know what we want. And there's more studios can achieve in post-production. Gen.ai can already dub content in multiple languages, even syncing mouth movements to match the new dialogue. This makes global distribution faster, cheaper, and more culturally relevant.

2:12With better engagement comes better monetization. Platforms will use Gen.ai to introduce new pricing tiers, targeted advertising, and personalized superfan content that taps into niche audiences willing to pay more. But all this innovation brings up profound ethical concerns. First, there's the issue of consent and copyright. Can Gen.ai tools legally use an actor's name, likeness, or voice? Then there's the question of authorship. If an AI writes a script or composes a song, who owns the rights? The creator or the Gen.ai model? Labor unions are understandably worried. In 2023, AI was a major sticking point in negotiations between Hollywood studios and writers and actors guilds.

2:58The fear? That AI could replace human jobs or devalue creative work. There are also legal battles. Multiple lawsuits are underway over whether AI models trained on copyrighted material without permission violate intellectual property laws. The outcomes of these cases could reshape the entire industry. But here's a big question no one can ignore. Will audiences care if content is AI-generated? Some consumers are fascinated by AI-created music or visuals, while others crave the emotional depth and authenticity that comes from human storytelling. Made by humans could become a premium label in itself.

3:40Now, despite Gen.ai's rapid rise, not every corner of entertainment is vulnerable. Live sports, concerts, and theater remain largely insulated from AI disruption. These experiences thrive on real-time emotion, unpredictability, and human connection, things AI can't replicate. In an AI-saturated world, the value of live events and sports rights will rise, favoring owners of sports rights and live platforms. So where do we go from here? By and large, we're entering an era where storytelling is no longer limited by budget, or geography. Gen.ai is lowering the barriers to entry, expanding the creative class, and reshaping the economics of media.

4:23The winners in this new landscape will likely be companies that can scale, platforms with massive user bases, deep data pools, and the engineering talent to integrate Gen.ai seamlessly. But there's also room for agile newcomers who can innovate faster than the incumbents and disrupt the disruptors. No doubt, as the tools get better, the questions get harder, and that's where the real story begins. Thanks for listening. If you enjoyed the show, please leave us a review wherever you listen and share thoughts on the market with a friend or colleague today.

4:59Benjamin Swinburne:The preceding content is informational only and based on information available when created. It is not an offer or solicitation, nor is it tax or legal advice. It does not consider your financial circumstances and objectives and may not be suitable for you.