The transformation of AMC Theaters when showing an AI-generated animated short that won a film festival award was another surprise in a new year full of such films. The series was scheduled to feature the short film Thanksgiving Day As part of the pre-screening ad block, says Frame Forward AI Animated Film Fest. But AMC executives claimed they were not consulted by the company doing the bookings, and now that they know, they have shut it down.
AI isn’t a big bogeyman for theater owners; In fact, the coming glut could help them. But the Adam Aron-led company has realized the basic truth of doing business in Hollywood, circa 2026: wade into the waters of AI at your own risk.
The number of AI studios covering Hollywood, along with the venture capital money to power them, is growing at an astonishing rate. Hollywood-focused video generation platform Runway AI has unveiled a new cash raise of $315 million; Saudi Arabia led a $900 million funding round for Amit Jain’s startup Luma; Multipurpose AI giant Anthropic has raised $30 billion. The battle to launch new models is escalating in the same way that the United States and the Soviet Union once adopted new nuclear weapons.
Google, Runway and former TikTok majority owner ByteDance are releasing new models in 2026, seeking to launch a market of creators who use AI tools to spit out huge amounts of entertainment over the limited and tedious work of traditional photography and studios.
But Big Tech’s quest for vomiting may not be as simple as simply flooding the sector with money. All the technical and dollar power of AI video is on display, with many of the professionals in charge of the content landscape — from writers to directors to traditional ad executives — voicing concern about the loss of jobs and creativity, a major barrier to transformation.
This push is happening even as AI’s largest customer base expresses deep skepticism about what the movement is trying to spark. A post-Super Bowl survey of 500 Gen Z and Gen Alpha consumers by youth-focused data firm Cafeteria found that “AI wasted a lot of time,” according to the company, with a greater number of respondents reacting negatively to ads with AI messages than to traditional products and less-than-simple content. “Any of the AI ads, like Meta and ChatGPT. I don’t like what they were promoting,” said a 19-year-old from Orlando. “Oh my God, all the AI ads,” said a 17-year-old from Mount Airy, Maryland.
“Generation Z/Alpha expressed strong negative feelings toward AI and AI-generated advertising,” the research firm concluded.
Neutralizing these uncertainties will be key for AI companies. For now, the main audience for these moves appears to be Wall Street, where the so-called AI boom that has fueled the economy and stock market shows no sign of slowing. But whether end users — as the group said the boom ultimately assumes and depends on them — will embrace the fruits of the AI era has yet to be proven. Whether this imbalance can be redressed remains the central narrative for Hollywood in 2026.
The big flash point came with the launch of Seedance 2.0, a video tool that raised the bar on what Sora 2.0 did, as Brad Pitt and Tom Cruise’s fight over a fictional Jeffrey Epstein conspiracy spread faster through the social network than the Epstein Island conspiracy theory. The model’s parents agreed to put up some guardrails after she was threatened by everyone from SAG-AFTRA to Netflix.
“Seedance acts as a high-speed hacking engine… [and] “Netflix will not stand by and watch ByteDance treat our intellectual property rights as free public domain clip art,” its lawyers wrote to ByteDance executives. This was followed by a cease-and-desist letter from the Motion Picture Association, which represents all major studios, calling the infringement a “feature, not a bug” in the product, and major talent agency CAA saying Seadance had a “brazen disregard for creators’ rights.”
But the prevailing feeling is that something has radically changed. Across town, writers and directors continued their work with a sort of sullen acceptance, like a farmer dragging himself to his plow even as the hurricane clouds overhead grew darker.
“I was shocked,” he wrote. dead pool Screenwriter Rhett Reese in a viral post
All of this is happening as Hollywood’s biggest AI deal yet — a Disney+/OpenAI partnership that will encourage the platform to be flooded with user-generated Sora 2.0 content — is hovering at the top.
As the battle raged, politicians intervened. Democratic Senator and emerging anti-AI powerhouse Bernie Sanders just came to California to meet with tech executives and Silicon Valley Rep. Ro Khanna, telling reporters shortly before the trip that he hopes these AI moguls can address his concerns.
“We would be very wrong if we did not have deep concerns about the transformative impact these technologies will have and understand that we are in no way prepared to deal with them,” Sanders noted. He said he intends to communicate this to the executives.
Sanders said he recently met with Geoffrey Hinton, the godfather-turned-alarmist, who said a new kind of intelligence that threatens business and humanity was developing faster than he could handle, and who helped shape Sanders’ thinking.
Activity at the industrial base level continued apace. After helping launch the industry-wide Alliance of Innovators on AI for Risk, Everything everywhere at once Director Daniel Cowan continued the drumbeat, telling an audience at a Sundance panel: “There is a feeling that this technology is inevitable.” He said it was not so. “Filmmakers, you’re experts. You’re experts at telling stories,” and “We can’t let the technology industry set the terms for our industry.”
Meanwhile, another creator with a history of decline, 2023 Strikes Guild advisor Justine Bateman, was planning her own attack. The founder of Credo23, a seal of approval for creative work denoting the use of no artificial intelligence, is about to launch her second “No AI” film festival in Hollywood in March, and has recruited top names to attend and speak, including 2025 Oscar winner Sean Baker as well as Gus Van Sant and Matthew Weiner.
Bateman says she feels encouraged not only by the response from Hollywood but also from the public through polls like the Super Bowl poll. “If generative AI is integrated into entertainment, and the people who are supposed to watch it don’t want to, who is really your customer?” she asks.
She remains upset that major Hollywood companies like Disney are making deals with AI companies that have trained their models on unauthorized data.
“It’s like, ‘Hey, you’re stealing from us, so I’ll invest in your heist venture so you stop stealing,’” she says. “It’s a weird thing to do.” Given how intense the AI wars are in Hollywood, it might be weird.
This story appeared in the February 23 issue of The Hollywood Reporter magazine. Click here to subscribe.
