Research Insight: How Generative AI is Reshaping the Entertainment Industry
Generative AI (GenAI) is transforming the entertainment world, offering media companies the ability to produce high-quality content more efficiently and at lower costs. While these advances promise significant advantages, they also carry potential risks that could reshape competition across TV, film, and music.
Key Highlights
- GenAI could reduce overall media industry costs by around 10%, with TV and film production seeing reductions up to 30%.
- Smaller and emerging players can leverage AI to create professional-quality content, challenging established industry leaders.
- Savings from AI adoption may be reinvested in talent acquisition, marketing, and live sports rights.
- In music, GenAI’s strengths lie in content curation and personalization, while live events and concerts may see increased demand.
A History of Technological Transformation
Technology has long driven innovation in entertainment, from colorizing black-and-white films to shifting music from gramophones to streaming platforms. Today, GenAI represents a new frontier: enabling faster content creation, reducing production costs, and enhancing audience engagement through personalized experiences.
Investors are monitoring these developments closely. By adopting GenAI, established companies can increase profit margins, explore new revenue streams, and optimize capital allocation. Simultaneously, AI empowers smaller players, potentially disrupting the dominance of major media companies.
Benjamin Swinburne of Morgan Stanley emphasizes, “While generative AI presents opportunities for today’s entertainment leaders, it also introduces risks. The technology is accessible to both incumbents and new entrants, so individuals could produce near-professional-quality content within the next five years”.
The Potential for Industry Consolidation
Tech giants, competing for consumer attention, may use AI to combine their marketing, IP, and global distribution capabilities with entertainment content. Swinburne predicts, “The media conglomerate of 2030 could be a hybrid of entertainment and technology assets under a single corporate umbrella”.
Reducing Costs in TV and Film Production
Content creation for TV, film, music, and books is typically resource-intensive. For instance, a major animated film recently took five years and $250 million to complete. Morgan Stanley estimates that GenAI could reduce overall programming expenses for large media companies by about 10%, with TV and film production potentially seeing cost reductions up to 30%.
AI can streamline processes such as scriptwriting, editing, sound mixing, and visual effects. Animation, in particular, benefits from AI in character design, lip-syncing, sound effects, and multilingual dubbing. Swinburne notes, “GenAI can replace physical production with digital or virtual workflows, reducing costs in pre-and post-production and minimizing re-shoots”.
Savings from AI adoption could be reinvested into marketing, talent acquisition, and securing live sports rights. “In this attention-driven economy, freed-up resources may increase budgets for top talent and sports, further driving consumer engagement,” Swinburne adds.
Transforming Music Production and Live Experiences
Music production has already become more accessible, and GenAI expands these possibilities. Artists can now create professional-grade recordings from home studios and distribute them via streaming platforms.
This shift allows labels to support more artists and release a larger volume of music, though audiences may become more fragmented. AI-driven curation and personalization help deliver the right tracks to the right listeners at the right time, boosting engagement, retention, and pricing power.
Moreover, AI may stimulate greater demand for live events. Cameron Mansson-Perrone of Morgan Stanley observes, “As AI changes digital interactions, consumers are likely to value ‘in-the-moment’ communal experiences more. Increased demand may also incentivize artists to tour, generating additional revenue streams”.
Conclusion
Generative AI is poised to redefine the economics, production, and consumption of entertainment. While it offers cost savings, personalization, and creative opportunities, it also introduces new competitive dynamics that both established companies and newcomers must navigate carefully.
