Hollywood cannot decide whether AI is a production tool or a threat to the craft, so it is treating it as both at once. Big studios are putting AI-generated shots on screen. Awards bodies and festivals are drawing lines against it. If you run a small production company, a video agency or a post house, you are caught in the middle, and your clients are going to ask where you stand.
What happened
Amazon has been among the most open about it. TechCrunch reported in February that Amazon MGM Studios' AI unit was opening a closed beta of its production tools to industry partners, with a focus on keeping characters consistent across shots and on pre- and post-production work. The unit's head said the goal is to "support creative teams, not to replace them." Amazon's series "House of David" used 350 AI-generated shots in its second season, and Netflix's co-CEO has said "The Eternaut" used generative AI for a building collapse scene.
The tool makers are pushing a bigger idea. At a Semafor event in April, Runway CEO Cristóbal Valenzuela suggested studios could make about 50 films for the cost of one $100 million feature. TechCrunch noted that critics dispute the idea that more output automatically means better art.
The pushback is real. Variety reported that this summer the Academy of Motion Picture Arts and Sciences disqualified synthetic performers and AI-written scripts from awards consideration, the Cannes Film Festival banned AI-generated productions, and the Writers Guild of America ended its sponsorship of the Urbanworld festival after it said it would accept AI-generated work. Variety's framing is that Hollywood is embracing the tools despite the fears, with the open question being whether audiences connect with the work.
Why it matters for your business
For a small production company, the studio debate is less important than what it signals. Your clients, whether brands, nonprofits or local businesses, are reading the same headlines. Some will ask why a 30-second spot costs what it does when "AI can make video." Others will want written assurance that no AI touched their project.
Both questions are reasonable, and you need an answer for each. The economics are shifting in pre-production and post work first: storyboards, animatics, cleanup, rotoscoping, transcription, rough cuts, and alternate versions for different platforms. That is where hours are being saved today. Fully generated footage is improving fast but still carries risks around likeness, rights and consistency that most small clients are not equipped to judge.
The other side of the argument is serious. Writers, actors and crew see AI as a way to cut them out, and festival and awards rules show how much weight that view carries. A small studio that leans on synthetic performers or AI-written scripts risks losing talent relationships and festival eligibility. That is a business cost, not just an ethical one.
What we'd do
- Write an AI use policy and share it with clients. List where you use AI (for example: transcription, cleanup, previsualization) and where you do not (for example: performers' faces and voices, final scripts). Clarity wins trust.
- Put AI terms in your contracts. Say whether AI tools may be used, who owns the outputs, and that no client footage will be used to train third-party models.
- Get consent for any likeness work. Never generate or alter a real person's face or voice without written permission.
- Use AI where it buys time for the craft. Previs, rough cuts, versioning and captioning free up hours for directing, shooting and editing.
- Check festival and union rules before you start any project meant for awards or guild-covered talent.
- Price on value, not hours. If AI cuts post time, do not quietly absorb it. Offer more versions or faster turnaround.
Our position: small studios should adopt AI quietly in the back half of the pipeline and stay cautious at the front, where performances and scripts live. The studios fighting about this are setting rules everyone will eventually work under. Be the shop that can explain exactly what it does with AI, and you will win the clients on both sides of the argument.
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