Many people in Hollywood are anxious about their long-term relevancy, and that fear may have wide-reaching impacts.
While the world enthused over ChatGPT, screenwriters worried that generative AI would eliminate their jobs, which is one of the reasons they are now on strike. Then actors, angry over streaming residuals, followed suit.
As a result, Hollywood production has come to a screeching halt. Going forward, a significant cog in the machinery that drives traditional and advertising revenue may slow down, and if that happens, advertising revenues may decline.
Should Writers Fear Generative AI?
When the first popular generative AI platform entered the market last November many writers got spooked. ChatPGT, we were told, can create a wide array of writing, from complete articles and essays to poetry and screenplays. Writers wondered if they’d become obsolete.
But can generative AI write to such a quality that it can actually replace humans?
As a test, I asked ChatGPT to write a poem lamenting the loss of a garden due to climate change and its response made me laugh: “Amidst the sun’s relentless blaze it stood/ A once-vibrant haven, nature’s tapestry so good” and “Once tender blooms, now wither and decline/ As warming winds steal what once was thine.” Technically, it’s a poem, but objectively it sucks.
Now advocates of generative AI would argue I’m not being fair; generative AI works best when a human directs and corrects it with smart prompting. That’s my point, humans are essential to AI and without them it sucks. While there are plenty of AI programs for things like writing screenplays, they don’t write scripts from beginning to end, and if they did, those scripts would be as bad as the poem that ChatGPT wrote for me.
There are plenty of generative AI platforms available for scriptwriting, but they’re based on existing Large Language Models (LLMs) that have been trained on the language of the internet. These platforms come with a host of problems, as news organizations have learned, from hallucinations to potential intellectual property violations.
More problematic for anyone hoping to eliminate humans from the creative writing process is the limited creativity of generative AI. LLMs are word calculators; they’re good at predicting what the next word should be in text based on the data they have been trained on. Put another way, LLMs are good at predicting what someone might say based on what someone has said in the past. By definition, any text generated by an LLM will have some degree of originality, but only incrementally so. More importantly for Hollywood, AI can’t make the kind of colossal leaps in imagination required to write a groundbreaking screenplay like the one for Barbie. Only humans can do that.
Most generative AI providers don’t promise to do the work of a writer. Rather, they promise to help writers organize their work and drive efficiency in the writing process so that they can finish projects faster.
While those benefits are appealing, ultimately, any inspiration an AI tool can provide will be limited to what was inspiring in the past. Lean too much on generative AI, and Hollywood is likely to get scripts that are derivative, and capable of delivering just so-so revenues at the box office.
Major Studios and Streamers Embrace AI
Still, Disney and Netflix and other entertainment companies are embracing AI, and that’s scaring the writers and artists who work in entertainment. In early August, Reuters reported that Disney has created a task force to study artificial intelligence, and has 11 current job openings for people with expertise in AI and ML (none of the jobs involve screenplay development).
Earlier this year, Netflix alarmed artists when it used AI assisted background art in a short film, and the company is now hiring an AI product manager, a position that comes with an impressive $900,000 salary.
These stories are causing significant anxiety for writers and other creative artists, and the entertainment companies would be wise to lay out their plans for how they intend to use generative AI. It’s worth noting that freelance services like Freelancer.com and Fiverr counter that writers should not be concerned about losing their jobs. But those who can enhance their skills with GenerativeAI will have more success in the future.
Ultimately, studios are likely to learn what new outlets have learned: the technology can be assistive to humans, but not replace them altogether. Until then, fear will reign.
The Impact of Strikes on Digital Advertising
The issues facing writers will cause pain for the digital advertising sector. How much pain will depend entirely on how long the strike lasts.
Let’s start with everyone involved in the programmatic market. CTV has been good to the world’s open programmatic markets. According to Pixalate, CTV ad spend reached $3.2 billion in the first quarter of 2023, with plenty of room to grow further given that nearly all (98%) internet connected houses can be reached programmatically. Ad tech companies that provide the infrastructure and markets for CTV open programmatic may see a dip in revenue if the strikes go on for months.
Then there is the delay in new TV episodes to consider. In the first half of 2023, overall spending on TV ads totaled $26 billion, of which 9% was for advertising in talk shows, soap operas and sitcoms. That revenue has already declined as shows, such as late night comedy, went dark due to the writer’s strike. It can further decline if new TV shows and episodes are delayed by months on end.
Over the past few years, we’ve seen a pivot towards AVOD as consumers reduced the number of paid subscriptions to streaming services once lockdown orders were lifted. Without new content, will consumers have an incentive to tune in, or will they move on to other activities, resulting in less inventory for content companies and fewer opportunities for brands to reach new audiences?
“While video advertising and subscription revenues are expected to grow by double digits this year and next, the dual strikes could threaten that economy, especially if the standoffs run deep into the fall season,” Insider Intelligence principal analyst Paul Verna, told Marketing Dive.
But others are only mildly concerned about the impact of the writer’s strike on programmatic CTV. As Anthony Gonsalves, SVP of Publisher Development at Connatix explained, “As the Hollywood strikes rage on, scripted TV will undoubtedly suffer a setback in production and non-ad-supported subscription services will suffer. However, there are a couple of reasons why ad-supported CTV will not be impacted in the same way. The first is reality TV and unscripted shows are managed under a different SAG-AFTRA agreement and don’t fall under the same union as those on strike.”
Gonsalves points to other factors in AVOD’s favor. For instance, Max has benefited from the 90-day franchise and MTV is bringing back fan favorites like Jersey Shore Family vacation.
Traditional broadcasters were already struggling with revenue before the strike. In May, Yahoo Finance noted that declining advertising revenue continues to be a significant challenge for broadcasters. In its earnings announcement, Paramount reported a 7% decline in revenue (its TV media unit is 11% lower). Warner Bros. Discovery network ad revenue is down 15%. While the strikes aren’t causing a lot of pain right now, “In terms of financial impact, it really ultimately depends on the duration of strike,” Paramount CEO Bob Bakish told investors in an earnings call.
And then there’s all the money that Hollywood spends advertising its shows, movies and franchises each year. Two years ago, eMarketer projected that the entertainment industry would spend $26 billion in digital advertising by 2023. Without new movies and TV shows to advertise, many digital publishers will see a decline in ad revenue.
There’s a lot at stake for a great many people and companies relying on Hollywood. The cost of writers and other creative contributors fearing their long-term viability are high. Hollywood content producers need to appreciate that the writers are their partners and vital to their success. One way they can do that is to help everyone in the industry understand that tools like generative AI are just that — tools — not a replacement for humans. If the needs of creative people are not understood and respected, then the entire content dependent ecosystem, including digital marketing, may be put at risk.