Behind Closed Doors, Studios Want AI to Make Hits. There’s a Catch

We all know Hollywood’s existential fight to stop AI companies from copying its most valuable creations, from Star Wars characters to the magical settings in Harry Potter. But behind the industry’s fierce battle to protect its intellectual property lies a delicious irony.

Studios are eager to use AI to create more of their own.

But even if the next Avatar or The Simpsons could be created with AI, studios face a major obstacle to turning those creations into franchises: copyright. 

For an industry built on owning characters, stories and franchises that can generate revenue for decades, that’s a serious obstacle to Hollywood studios’ AI ambitions.

Under U.S. copyright rules, purely AI-generated material generally can’t be copyrighted. Most deals in the entertainment business involve investing in a copyrighted work in one way or another. Today, only original works created by humans are eligible for copyright protection.

“Copyright is like owning a stock,” one exec explains. “The stock increases in value the more demand [there is] for it. Same with copyright.”

Or, as another attorney who advises studios and production companies put it: “Copyright is key, and you can’t monetize anything without it.”

Until recently, Hollywood’s AI strategy has been largely defensive: sue companies like Midjourney, demand protection for copyrighted characters and challenge the unauthorized use of movies and television shows to train AI models.

But the conversations happening behind the scenes tell another story.

“They don’t want anyone else to be able to generate their IP,” entrepreneur Nelson Chu says of the several dozen studio executives he spent months talking to. But these same execs were quick to add, “But wait, I want to be able to generate my IP using AI.”

Today, Chu is betting that he can help them have it both ways. His six-person startup, Arcos Labs, has developed technology designed to document what humans create vs. what AI generates — potentially helping studios establish copyright protection for AI-assisted work (the legal system, however, may not give studios exclusive rights to all of those creations — more on that below).

But the technology can’t guarantee a copyright, and the legal questions surrounding AI-generated entertainment remain far from settled.

So what exactly are studios experimenting with behind closed doors? Can Hollywood find a way to own what AI makes? And could human creativity, ironically, be the key to unlocking the industry’s AI future? Today I speak to Chu, who is betting his company on the answer.