For over a century, Hollywood has been the nerve center of global entertainment. In recent years, the industry has faced threats of disruption, not just from innovative streaming platforms such as Netflix Inc (NASDAQ: NFLX) or Walt Disney Co.'s (NYSE: DIS) Disney+ but from the technology itself - artificial intelligence.
A Friday ruling only underscores the significance of the looming showdown.
What Happened: Last week, U.S. District Judge Beryl Howell upheld that artworks created by AI do not qualify for copyright protection. The decision follows more than 100 tense days of the writers' strike, with one of the factors being the fear of studios using generative AI to replace human writers, The Hollywood Reporter said in a Friday report.
Stephen Thaler's "Creativity Machine," which autonomously created an artwork titled "A Recent Entrance to Paradise," was at the epicenter of the legal storm. Thaler's challenge, which pushed for AI's creations to be granted copyrights, was shot down on the premise that "human authorship is a bedrock requirement."
The court's rationale is deeply rooted in the origins of copyright law. Judge Howell explained that copyright laws are designed to reward and incentivize human creativity, and were never intended to apply to nonhuman actors.
It's a stance that echoes the human element, even as tools and mediums evolve.
While the legal battle underscores the traditional importance of human creation, the real drama unfolds in Hollywood. AI, in the middle of traditional labor disputes, is becoming the unexpected antagonist.
Actors, particularly the famous ones, are concerned about the loss of control over their likenesses - meanwhile, unknown actors and writers fear total displacement. AI's rapid integration into the entertainment industry - seen in movies like the recent "Indiana Jones," which used AI to make star Harrison Ford look younger - exacerbated the fears.
SAG-AFTRA's depiction of the studios' stance on AI underscored the depth of concern. Studios want to use AI's capabilities without needing perpetual consent from the performers. On the other hand, actors are aiming to safeguard their "human-created work," emphasizing protection for their voice, likeness and performance.
The Writers Guild of America is open to AI as a tool but is staunchly against any situation where AI-generated storylines could threaten their credits or reduce them to mere collaborators with machines.
Hollywood Economy: Hollywood's economics are taking center stage amidst the backdrop. Benzinga previously reported that renowned former studio chief Barry Diller proposed that top actors and executives consider a pay cut, especially if they are sincere about addressing industry pay disparities. With SAG-AFTRA and the Writers Guild of America on strike, the industry faces a potential standstill that could have a cascading effect on programming and revenues.
Studios including Warner Bros Discovery Inc (NASDAQ: WBD), Comcast Corporation (NASDAQ: CMCSA) by way of Universal Pictures, and Sony Group Corp (NYSE: SONY) by way of Columbia Pictures are in the crosshairs.
Industry analysts such as Alicia Reese from Wedbush believed that while Netflix might be cushioned in its upcoming earnings print, other studios were not in the same position. Even George Clooney acknowledged the industry's crossroads, calling it an "inflection point."