McKinsey has released a research paper exploring the potential impact of AI on the future of film and TV production.
With industry leaders asking how the technology could change what content is made and how it is produced, the analysts identified three possible outcomes beyond disruption of the supply chain.
Scaling of changes to current production workflows
McKinsey’s research indicated approximately $10 billion of forecast US original content spend could be addressable by some form of AI in 2030, with industry leaders extrapolating from their early experiences, Sean Bailey of B5 Studios commented, “I looked at every step of the workflow from ideation to distribution, and I really think every single piece of it will be significantly disrupted.”
Referring to a lag between technological development and industry-wide adoption, the report pointed to historical precedent such as the uptake of CGI. Asteria’s co-founder, Bryn Mooser, highlighted an ultimate increase in film budgets brought about through the effects seen in Jurassic Park, which “changed the entire industry”, despite the fact that Lucasfilm’s Industrial Light & Magic had been founded almost 20 years previously.
Interviewees did however express concerns around the use of AI in artistic endeavours, such as how it affects authorship and creativity.
The report suggested distributors are positioned to capture most value from AI-driven workflow efficiencies, resulting from structural market dynamics including a crowded producer market, consolidating buyer landscape and budget transparency. Producers investing in new technologies, adapting their operating models and developing strong IP are also well positioned, said McKinsey.
However, the vendor position is less clear. If broader video tools follow the pattern set by large language models, in which open-source models closely follow best-in-class examples and competition remains strong, value may bypass vendors as the technology is democratised. If professional-grade video models meaningfully diverge, vendors may benefit from price adjustment with developers and top IP owners also able to form partnerships and build a closed-loop ecosystem. Production service providers such as motion caption or SFX specialists may face pressures as automation takes over routine tasks.
Wide-scale democratisation of professional-grade content creation
Smaller studios may become able to compete directly with large organisations with AI unlocking the potential to increase total content supply, although the research indicates this outcome is less certain than anticipated impacts across existing production processes. This may depend on AI being used to deliver more high-end content, as early use of the technology has already led to so-called AI ‘slop’. It was also noted that incumbents still enjoy distribution advantages. Industry expert, Michael Porter, said, “In a world with even more content, IP owners will have a relatively higher chance of success. Their brands are more likely to cut through the noise in a world saturated with content.”
Widespread democratisation of professional-grade content may pressurise traditional producers and distributors, said the report. Larger studios would need to reimagine longstanding workflows while smaller operators may be able to adapt with greater agility. “There are an ever-increasing number of entry points for content,” said Matthew Wilson, chief legal officer, Fremantle. “AI only adds to our ability to play across new distribution channels.”
Changes in consumer behaviour and the increasing availability of content across more distribution points could significantly affect the landscape. This could potentially be analogous with the rise of broadcast TV, which led to a 38 per cent fall in the number of US cinemas between 1930 and 1957. Even small behavioural changes could have meaningful impacts. If existing open video platforms captured an incremental 5 per cent of viewing hours in the US, for example, there would be a $13.2 billion decline in US TV and film distribution revenues, only partially offset by a $7.5 billion increase in open-platform revenues, according to McKinsey.
The creation of new content formats and distribution channels
Applying historical patterns to forecast revenue indicates around $60 billion in revenues could be redistributed within five years of reaching mass adoption, should AI use surpass that of incumbent technology, said McKinsey. The shifts from stage plays to cinema, from linear to streaming, and from long-form to short-form each resulted in a 35 per cent contraction of incumbent revenue on average in the five years following the technology’s widespread adoption, according to the report.
A number of executives agreed such a shift is possible.“We will see a wave of new formats with AI, in the same way that nonlinear editing innovations gave rise to a wave of talent and reality shows,” said RTL’s Jan Lacher.
Suggesting even further transformative shifts as AI moves towards world models with an understanding of environments, characters and rules, Dani Van de Sande, founder and CEO of Artist and the Machine, said, “As world models mature, we’ll see entirely new creative operating models and mediums, stories that persist across formats, characters that evolve beyond a single script, and narrative experiences that can respond to audiences or unfold differently over time. It’s redefining what a story is and how it’s experienced.”
New models may emerge, such as platforms integrating creation and distribution in a single environment. “Creators will move upstream as AI puts cinematic quality production tools in the hands of people who never had access to traditional Hollywood pipelines,” said Infinite Studios’ Adrienne Lahens.
George Strompolos, co-founder and CEO of Promise, commented, “You could say that the creator economy was about the democratisation of distribution. This is about the democratisation of production and creation itself.”
The report cited DreamFlare as an example, a platform allowing creators to publish AI-enhanced stories direct to audiences who then vote on which concepts should be further developed.
AI may further reshape audience experience and behaviour. Platforms are already expanding the supply of content and range of individual control, which AI-adoption could accelerate. Michelle Kwon, head of operations at Runway, said, “One [shift] is that the user is driving the content that they want to see. And that means [in the future] that you’re no longer beholden to a single platform or season two of your favourite show not coming out for another year and a half. You’re able to generate a story with your own favourite characters or the ideas that you have in your head immediately today.”
Although the technology is reshaping numerous processes, leaders still stress the importance of human-led storytelling and creation, citing it as a defining marker of quality. “What is most exciting [about AI] is the potential to expand our human imagination and get to a point in storytelling where we don’t have to be thinking: Can I shoot that on a film set?” said Lori McCreary, producer and CEO of Revelations Entertainment and a board member of the Producers Guild of America.
Human-led storytelling could also influence the ways in which the technology develops. Kwon imagines an integration among solutions vendors into unified creative platforms. “There won’t be LLM companies and video generation companies,” she said. “The whole industry is moving toward world models.”
