AI disrupts entertainment? Major internet platforms benefit first, with the value of "experiential" and "sports" assets standing out

AI disrupts entertainment? Major internet platforms benefit first, with the value of "experiential" and "sports" assets standing out

```

The penetration of generative AI into the entertainment and media industry is accelerating. This is not a distant future, but a reality that is happening right now.

According to information from Windchaser Trading Desk, cited from the latest research report by Morgan Stanley, large technology and media companies such as Netflix, Spotify, Meta, and Google are showing clear mid-term growth prospects through AI-driven personalized recommendations, content cost optimization, and enhanced advertising monetization efficiency. The application of AI in content creation is also deepening. From the OpenAI-backed AI animated film “Critterz” to Netflix utilizing AI technology to reduce VFX costs, these all signal a revolution in production efficiency.

Therefore, the unique and irreplaceable value of shared experiences will only increase. The report believes that companies possessing “experiential” assets such as theme parks and live entertainment (e.g., Disney DIS, Live Nation LYV), as well as “sports” assets with top event IP (e.g., F1 owner FWONK, UFC parent company TKO), will become more attractive.

However, opportunities and risks coexist. Traditional film and music companies face a dual task: first, they must defend the value of their intellectual property (IP) and respond to infringement risks brought by AI; second, they can utilize AI to improve content creation efficiency and global distribution capability.

Content Creation Revolution: Costs Plunge, Efficiency Soars

Generative AI is fundamentally changing the cost structure and production model of content creation. The report points out that the application of AI in content mainly manifests in two aspects: innovation and efficiency improvement.

In terms of cost efficiency, AI is becoming a powerful tool for studios to reduce spending. The report estimates that major media companies are expected to lower their overall program production costs by about 10%, with the production costs for original scripted content (often accounting for half of total spending) achieving 10-30% efficiency improvements. Specific examples include:

AMC Networks has partnered with AI company Runway, using their tools to achieve “incremental production savings.”Netflix has used AI technology to produce VFX for the Argentinian series “El Eternaut,” applying what would have been expensive effects to a lower-budget show.

In terms of content innovation, both newcomers and established players are actively exploring. The standout example is the first-ever AI-produced animated feature “Critterz”, supported by OpenAI. This project has a target budget of under $30 million, with a production cycle of only nine months—far less than the hundreds of millions of dollars and several years typical of traditional animated films. In addition, Amazon’s Alexa Fund has invested in the Showrunner platform, described as “the Netflix of AI,” where users can generate animated series via text prompts.

The music industry is seeing a similar trend with production costs continuously dropping. AI tools like ElevenLabs’ Eleven Music can generate complete songs with vocals and instruments directly from text. This has led to a dramatic surge in content: there are now well over 100 million tracks on Spotify. However, this also introduces new issues: music platform Deezer reports that nearly 30% of new daily submissions are fully AI-generated, and 70% of plays are judged to be fraud seeking to collect royalties.

New Value Hotspots: Experiential and Sports Assets Stand Out

In an era where AI leads to a vast abundance of digital content, assets that cannot be easily replicated or generated become increasingly precious. Morgan Stanley believes that live “experiential” assets and global “sports” assets are growing in value as a result.

The report states that as AI enables ever more personalized digital experiences for every consumer, people’s demand for authentic, shared real-world experiences will increase. This trend benefits companies with unique experiential assets, such as Disney with its theme parks and resorts, and Live Nation, the world’s largest live music entertainment company.

Similarly, as AI-generated content floods major platforms, global top-tier sports event IP will see its value in the “attention economy” further enhanced due to its scarcity, live nature, and unpredictability. Technological advances are breaking down geographical restrictions on sports content, creating favorable conditions for global sports asset holders like Formula 1 group and TKO Group Holdings (UFC’s parent company).

Although AI technology brings vast potential, copyright disputes and labor tensions have become critical hurdles that must be cleared before its widespread use in the entertainment industry.

Protecting intellectual property (IP) is the top priority for traditional media companies. Recently, Warner Bros., Disney, and Universal have all sued AI company Midjourney for allegedly using classic IP characters to train AI models without authorization. These lawsuits highlight the so-called “original sin” problem of AI training data. Legal risks are not empty talk—AI firm Anthropic’s recent $150 million settlement with book publishers has sounded the industry alarm bell.

To avoid risk, industry leaders are acting cautiously. Netflix recently issued its first “AI Usage Guide” for production partners, requiring partners to declare when using AI in content production and conduct strict legal and ethical reviews on content involving portrait rights, scripts, or intended for use in final products.

At the same time, labor disputes are becoming increasingly acute. AI was a core issue in Hollywood’s 2023 strike, and with new labor contract negotiations approaching in 2026, the impact of AI on writers, actors, and other creative roles—and how their rights will be protected—is set to become a key point of contention for all parties.

 

~~~~~~~~~~~~~~~~~~~~~~~~

The above excellent content comes from Windchaser Trading Desk.

For more detailed interpretations, including real-time coverage and frontline research, please join [Windchaser Trading Desk · Annual Membership]

Risk Warning and DisclaimerThe market has risks, and investments should be cautious. This article does not constitute personal investment advice, nor does it take into account the investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investment decisions are made at your own risk. ```