The Impact of AI on Hollywood

When this piece was first published, back in 2023, the question was whether artificial intelligence would replace Hollywood. Three years later the answer arrived — and it was not the one either side expected. No announced apocalypse, no promised revolution. What 2026 delivered was something more useful: a precise map of the line between what the machine solves and what it does not.

This post was rewritten from scratch in July 2026, based on what is documented — the union agreement, a US Supreme Court decision, and the end of one of the sector's most talked-about products.

The Agreement That Set the Line

After the 2023 strike, which established the first rules on consent and compensation in the face of AI, SAG-AFTRA — the actors' union — signed a four-year contract with the studios in 2026. It was ratified with 91.4% of the vote.

Two points matter more than everything else:

Synthetic performers only when they add "significant additional value" to the project. Being cheaper than hiring people does not count as justification.
Advance notice is mandatory before an actor's performance is licensed to train artificial intelligence.

The criticism from inside the union is worth recording: some members consider "significant additional value" vague enough for studio lawyers to define however they like, and note that it came with no compensation floor attached. That reservation is legitimate.

But the most revealing signal is economic, not legal: the studios did not push for more exemptions. Those with the money, the access to the technology and every incentive to cut costs kept betting on real people.

Sora Was Shut Down — and the Reason Matters

On 26 April 2026, OpenAI discontinued Sora, its video generator. The tool that led half the world to declare the end of audiovisual production simply went offline.

Three reasons were reported: unsustainable cost — the product was reportedly losing around one million dollars per day — engagement that did not hold after the initial buzz, and the legal complexity surrounding copyright and ownership of what was generated.

Generating video consumes far more computing power than generating text or images. What looked like a technical detail became the deciding factor. And there is a lesson here for any company evaluating artificial intelligence, in any field: what decides is not the impressive demo, it is the unit cost when the thing runs at scale, every day.

The Decision That Changes the Math for Anyone Producing Video

On 2 March 2026, the US Supreme Court declined to hear Thaler v. Perlmutter. That refusal left the human authorship rule standing: a work generated entirely by artificial intelligence, with no meaningful human involvement, cannot be registered for copyright in the United States.

The nuance is what matters in practice, and almost everyone gets it wrong: using AI is not what is barred. A work made with the help of artificial intelligence remains registrable — provided there is human creative contribution and it is documented. What gets no protection is the result of pressing a button.

For a company this stops being a lawyer's topic and becomes a business one. The corporate video, the campaign, the piece that carries the brand: if the material is entirely generated, it is born without protection — and a competitor can publish something practically identical with nothing you can claim against it.

What AI Does Well Today — and What It Still Does Not

It does well, and comfortably so: storyboards, previsualisation, background plates, fast idea variations, repetitive post-production tasks. It dramatically shortens the path between an idea and the first version you can actually show. That is a real gain and should not be dismissed.

It still does not do well: continuity between shots, believable physics, and long-form storytelling with nuance. Those are exactly the three things that separate a clip from a film — and a good-looking corporate video from a corporate video that works.

There is also the audience factor, which few people saw coming. A significant share of viewers began rejecting effortlessly generated content, tired of the volume flooding social platforms, and platforms started limiting that kind of material. "Made with AI" stopped being a sellable novelty and, in certain contexts, became a reputational liability.

What This Means for Those Who Are Not Hollywood

We are an agency that produces video, so let us be direct even against our own interest: for plenty of purposes, generating with AI is the right call. Concept tests, ad variations, internal material, disposable campaign pieces. Insisting on full production in those cases burns the client's money.

What 2026 made clear is where that logic breaks. When a video has to carry the brand for years, hold visual continuity, direction and legal standing, the bottleneck was never generating images. It is authorship, coherence, rights and judgement. It is no coincidence that this is exactly what the union protected, what the Supreme Court required, and what kept the category's most famous product from balancing its books.

The tool got cheap. Deciding what to shoot, why, and in what order is still expensive — because it is still human work.

Frequently Asked Questions

Does AI already replace a video production company?

For short, disposable or test pieces, often yes. For the video that represents the company, no: continuity, direction and legal certainty still depend on people.

Does an AI-made video have copyright?

In the United States, a work generated entirely by AI cannot be registered — the human authorship rule was confirmed in March 2026. With AI assistance and documented human creative contribution, yes.

Does Sora still exist?

OpenAI discontinued Sora on 26 April 2026, over cost and legal issues. Other tools remain on the market, but the episode shows the category is not yet stable.

So is it not worth using AI in video?

It is, very much so — at the right stages: ideation, storyboard, previsualisation and post-production support. The mistake is confusing the stage with the final product.