AI Film Studios Challenge Hollywood’s Production Model

A growing group of film companies is using generative AI to produce backgrounds, visual effects, animation and, in some cases, synthetic performers. The shift is making traditional studio infrastructure less essential and giving smaller teams a chance to produce films with far less money.

At Promise, a new AI-focused studio near Sony Pictures in Culver City, filmmakers recently used AI to create an entire meadow around actor Tori Thomas during production of the horror film Touch Grass. A Chinese AI model generated the background in real time, allowing the crew to swap locations without rebuilding a physical set, according to The Guardian.

Promise co-founder and CEO George Strompolos estimates hybrid productions combining human actors with AI could cost 20% to 50% less than conventional films, potentially reducing filmmakers’ dependence on major studios.

The technology is also finding a place at established production companies. Imagine Entertainment, run by Ron Howard and Brian Grazer, has launched AI studio Obsidian and is working on The Code, an AI-enabled animated film directed by Howard, according to The Guardian. Obsidian executive producer D Ryan Reeb estimates that the technology can cut production costs by 30% to 40%.

Hollywood’s job debate

The push comes as Los Angeles struggles with a shrinking production industry. More than 40,000 production jobs have left the area since 2022, according to federal data cited by NBC Los Angeles.

Asteria, an AI-focused production company based at historic Mack Sennett Studios, argues the technology could help reverse that decline by allowing smaller teams to complete projects faster and cheaper.

Asteria co-founder Bryn Mooser told NBC Los Angeles that AI can handle tasks including animation in-betweening, crowd generation, shot extensions and cleanup while leaving creative decisions to people.

But the industry’s concerns are not disappearing. Actors and writers fear AI could replicate their likenesses, voices and work, while critics worry that cheaper production could ultimately mean fewer human jobs. Christopher Nolan has observed that public suspicion of AI is unusually intense, while actor Emily Blunt has called the rise of AI performers “really, really scary,” according to The Guardian.

The new studio model

The bigger question may be whether AI creates a more independent Hollywood or simply moves more power into the hands of technology companies.

Joanna Popper, a producer and AI adviser, told The Guardian that AI could empower talented storytellers to make projects without traditional gatekeepers. But she also warned about the possibility that “five tech companies suck all of the financial gain out of the industry.”

That tension could define the next phase of Hollywood. Lower production costs could help independent filmmakers and revive projects that once struggled to secure financing. At the same time, dependence on a handful of AI providers could create a new gatekeeping system, one based not on studio lots and executives, but on models, computing power and access to proprietary technology.

AI may make movies cheaper and more flexible, but Hollywood still has to decide who controls the tools and who gets paid when they are used.

Read more: The same debate over cost, creative control, and human jobs followed ByteDance’s AI-generated films to Cannes, where Seedance-powered productions offered another glimpse of Hollywood’s possible future.