The attitude of AMC Theaters, which screened the festival’s award-winning AI-produced animated short, was once again impressive in a busy new year for film festivals. The chain was scheduled to show a short film. thanksgiving Startup Frame Forward AI Animated Film Fest says it’s part of its pre-show ad blocking. But AMC executives claimed they had not been consulted by the company responsible for booking them, and now that they know, they are shutting down the company.
AI is not a big bogeyman for theater owners. In fact, the upcoming oversupply may even help them. But around 2026, the company led by Adam Aron grasped a fundamental truth about doing business in Hollywood. It means stepping into the realm of AI at your own risk.
The number of AI studios filling Hollywood, and the VC money to power them, is growing at an alarming rate. Hollywood-focused video generation platform Runway AI has revealed $315 million in new funding. Saudi Arabia led a $900 million funding round for Amit Jain’s startup Luma. All-purpose AI giant Anthropic has raised $30 billion. And just as the United States and the Soviet Union once accumulated new nuclear weapons, the battle over the release of new models is intensifying.
Google, Runway, and former TikTok majority owner ByteDance are all releasing new models in 2026 to stimulate a market for creators who use AI tools to produce high-volume entertainment instead of the more limited and arduous work of traditional shoots and studios.
But the way big tech companies are trying to make this happen may not be as simple as simply dumping money into the space. All the tech and dollar energy for AI video is emerging as many professionals in charge of the content landscape, from writers to directors to traditional advertising executives, express concern that jobs and creativity are being lost, posing a major impediment to change.
This push comes even as AI’s largest customer base has expressed deep skepticism about what the movement is trying to spark. A post-Super Bowl survey of 500 Gen Z and Alpha consumers conducted by youth data company Cafeteria found that “AI was a huge missed opportunity,” with many respondents having a negative reaction to ads with AI messages compared to traditional products and quality content, according to the company. “All the AI ads like Meta and ChatGPT. I don’t like what they’re advertising,” said a 19-year-old from Orlando. “AI advertising is amazing,” said the 17-year-old from Mount Airy, Maryland.
“Gen Z/Gen Alpha expressed strong negative feelings towards AI and AI-generated advertising,” the research firm concluded.
For AI companies, counteracting that skepticism will be key. For now, the main target of this movement appears to be Wall Street, as the so-called AI boom that has driven the economy and stock markets shows no signs of slowing down. But whether end-users (which the group says it envisions and ultimately depends on) will embrace the fruits of the AI era remains to be demonstrated. And whether that disparity can be addressed remains the central story of Hollywood in 2026.
The big flashpoint came with the release of Seadance 2.0, a video tool that leveled up what Sora 2.0 did. Because Brad Pitt and Tom Cruise’s battle over the fictitious Jeffrey Epstein conspiracy spread on the social web faster than the Epstein Island conspiracy theory. The model’s parents agreed to put up guardrails after receiving threats from everyone from SAG-AFTRA to Netflix.
“Seedance acts as a high-speed piracy engine… [and] “We will not stand by as Netflix treats ByteDance’s valuable intellectual property as free public domain clip art,” lawyers wrote to ByteDance executives. The Motion Picture Association of America, which represents all major studios, issued an injunction saying the copyright infringement was a “feature, not a bug” in the product, and talent agency CAA said SeaDance “brazenly ignores the rights of creators.”
But the feeling that something has fundamentally changed persists. Across town, screenwriters and directors went about their work with a kind of grim acceptance, like farmers limping with their plows through thickening tornado clouds above.
“I’m upset,” he wrote. dead pool Screenwriter Rhett Reese said in a Viral X post. And while writers whose currency lies in the non-AI realms of imagination and humor may be in a relatively better position than set designers and other physical production professionals, the mood remained as bleak as ever.
All of this is happening as the biggest Hollywood AI deal to date hangs in the air: the Disney+/OpenAI partnership that will help flood the platform with user-generated Sora 2.0 content.
As the fighting intensified, politicians also intervened. Democratic Sen. Bernie Sanders, a rising anti-AI force, recently traveled to California to meet with tech executives and Silicon Valley congressman Ro Khanna, and told reporters shortly before his trip that he hoped the AI bigwigs would address his concerns.
“It would be a huge mistake not to understand that we are deeply concerned about the transformative impact that these technologies will have, and that we are completely unprepared to deal with them,” Sanders said. He said he plans to communicate this to executives.
Sanders said he recently met Jeffrey Hinton, the godfather of AI who sounded the alarm, and argued that new intelligences that threaten jobs and humanity are emerging faster than he can handle them, and that this helped shape his thinking.
Grassroots activity in the industry remains active. After helping launch an industry-wide Creators Coalition on AI to address risks. Everything at once, wherever you are Director Daniel Kwan continued to beat the drum, telling the audience at a Sundance panel, “There’s a sense that this technology is inevitable.” Not so, he said. “Filmmakers, you are the experts. You are the storytelling experts.” “We cannot allow the technology industry to dictate the terms of our industry.”
Meanwhile, 2023 Strike Guild Advisor Justin Bateman, another creator with a history of fighting back, was planning his own offensive. The founders of Credo23, a seal of approval for creative works that demonstrate a lack of use of AI, are debuting their second “no AI” film festival in Hollywood in March, and have recruited major celebrity attendees and speakers, including 2025 Oscar heavyweights Sean Baker, Gus Van Sant, and Matthew Weiner.
Bateman says he is hurt not only by the backlash from Hollywood, but also by audience backlash from polls like the Super Bowl. “If generative AI is being integrated into entertainment and the people who are supposed to watch it don’t want it, who is your real customer?” she asks.
She remains outraged that Hollywood’s biggest companies, like Disney, are doing business with AI companies that trained their models on unauthorized data.
“It’s like, ‘Hey, you’re stealing from us, so I’m going to invest in your theft business so you can stop stealing,'” she says.
This article was published in the February 23 issue of The Hollywood Reporter magazine. Click here to subscribe.
