Open to AI: Hollywood uses AI tools despite doomsday fears

Manhattan Beach Studios in Southern California is the pinnacle of revolutionary technology, home to both the "volumetric" screen where Jon Favreau filmed the "Mandalorian" franchise and Lightstorm Entertainment, where James Cameron spent years bringing the Na'vi to life. At Stage 21 is Innovative Dreams, the AI arm of director Jon Erwin's Entertainment.

On Stage 21 is Innovative Dreams, an artificial intelligence offshoot of director Jon Erwin's entertainment company Wonder Project. Here, COO Brian Yee sips from a can of Diet Coke as he shows off the soundstage that houses Innovative Dreams' crown jewel: a series of LED screens where a team of AI artists renders generative AI into products. This is not the first time that this space has been shown to a journalist. But the fact that it's happened several times this year suggests that, three-quarters of the way to 2026, AI will no longer be Hollywood's ultimate bad word. Related Stories Salma Blair, charged with second-degree assault in plane crash, released on $20,000 bond to perform at LACMA Art + Film Gala

The term "AI" emerged as an appendage to the Hays Code, the 20th century guidelines that dictated what studios should and should not include in their films. This has spooked the corporate and art worlds alike, especially after months of headlines about the potentially global nature of AI models and warnings that progress must be accelerated. Americans also increasingly believe the technology does more harm than good, according to a recent Gallup poll. Popular in diversity

But just like the way studios and directors in the 1960s and 1970s embraced once-taboo nudity, AI has found a new wave of fans eager to go public this year. The technology has appeared at marquee film festivals, including Tribeca, which premiered the AI-powered documentary drama Violet Dreams. Oscar winner Reese Witherspoon declared that "the artificial intelligence revolution has begun" and Martin Scorsese said that filmmakers should be "open to how [the film] can evolve". In an interview in July, George Lucas was perhaps the most blunt: "There's nothing you can do about it."

Part of what's driving this growth is creative familiarity with technology. Some have added it to their projects: Veteran producer Ryan Kavanagh says his company, Acme Studios, cut the cost of Doug Liman's "Bitcoin" from $200 million to $70 million using artificial intelligence. Bitcoin's bottom-line costs dropped from $130 million to $35 million. Others have experimented with AI features or used AI tools to help with things like voice syncing. Kathleen Kennedy, who served as president of Lucasfilm from 2012 to 2026, helped organize a group of industry bigwigs to create a framework for how Hollywood talks about it.

When you have a set of tools that all of a sudden, 'I can dream it up, and I can create it, and I can show it to somebody,' you find that it enhances your creativity, it doesn't diminish it in any way,” Keharvin says.

But even with such attitudinal steps, Pew Research shows that public fears about the social impact of AI are high, and digital choruses lash out at any project that features the technology. It forced creators to walk the fine line between wanting to experiment with artificial intelligence and the disaster that exposing its use could cause.

"If the creative is great and engages the audience on a level other than, 'Hey, look at this AI thing,' then the audience will understand," says Kathleen Grace, Lionsgate's senior director of AI. But it's challenging when you're leading the way with AI as the only hook.

Oscar-winning director Steven Soderbergh sparked controversy earlier this year when he revealed how he used 10 minutes of artificial intelligence in his upcoming documentary John Lennon: The Lost Interview. He also revealed his plans to use artificial intelligence in his film about the Spanish-American War, starring Wagner Moura.

While Soderbergh acknowledges that artificial intelligence remains a "very emotional topic," he says the loudest voices raging against its use are the ones that haven't bothered at all. "I've seen the version of John Lennon's documentary without that material, and I've seen the version with the material that we produced, and the version with that material is a better version of the film," says Soderbergh. Here's what's really funny to me: If I told people it was 9 minutes and 40 seconds of VFX that cost two and a half million dollars over two years, there was no discussion at all. So what are we talking about?"

That's the mindset Liman brought to "Bitcoin," a Casey Affleck and Gal Gadot-led picture that follows a man's quest to prove the invention of the controversial currency. The project hired Acme, which specializes in "gray box" soundstages that host real humans, while a team of 150 AI artists produced the visuals and location lighting.

According to Jed Weintraub, CEO of Lyman's content studio 30 Ninja, Lyman "likes to push the envelope" and thinks AI tools can be "real superchargers for storytellers." "We're creating a world that would be almost financially impossible to build without this technology," he says.

Kavanagh claims that the industry's shift toward embracing artificial intelligence was driven by Lehman's decision to go public using it. After the initial reveal, Acme had several meetings with a mix of studios and filmmakers eager to understand how a project could dramatically reduce costs. (Cavanagh would not reveal the band's name.)

After those meetings, Cavanaugh says, the creatives realized that “we're not killing art. We promote art." "It makes it more efficient," he adds. Creates a better set of tools. And all of a sudden, we saw a really big shift... from people who we thought were going to be like, "No, we can't do that," to, "Well, can we use that in this show?"

However, such curiosity does not translate into universal acceptance—either by the industry or by the audiences that sustain it. This summer, the Academy of Motion Picture Arts and Sciences barred artificial actors and scripts written with artificial intelligence from awards, while the Cannes Film Festival banned products produced by artificial intelligence. When the Urbanworld Film Festival announced in June that it would accept AI-produced productions for its 30th edition, the Writers Guild of America ended its longtime sponsorship. The move was in line with the union's concerns about the misuse of AI, but it was a choice, says Urbanworld CEO Stacey Spikes, which risks creating a "very slippery slope" – after all, should anyone be dictating what tools aspiring filmmakers can experience?

Actors have taken action against the harmful effects of artificial intelligence. Soderbergh acknowledged the Human Consent Foundation, a nonprofit founded by Cate Blanchett in June, which created a database where people are encouraged to document how their likenesses can or cannot be drawn by artificial intelligence models. Blanchett told Variety at the time that while the registry may not revolutionize the way people interact with AI, "the more people adopt it, the more chance it has of having a real impact." "We have to start somewhere, because thoughtlessness is the enemy of creativity," he added.

Audiences have also rebelled against AI's intersection with Hollywood, criticizing an early anonymous use of the technology for a sequence in Eli Roth's horror film "The Ice Cream Man" and a podcast-dog marketing campaign for Warner Bros. Discovery's "The End of Oak Street."

Jeffrey Katzenberg, a veteran Hollywood executive who penned a 2,377-word article in X last month urging the film industry to work with Silicon Valley to embrace the technology responsibly, says he's noticed a pervasive sense of "concern and fear" surrounding the presence of artificial intelligence in Hollywood. Resistance mimics what he calls a pattern of preventing "innovation and change." But, he warns, "Resisting technology means risking irrelevance."

Katzenberg is jumping into the fray himself, creating an AI animation studio that serves as a vehicle for tools he thinks the industry could use. But he hopes to create a project that can create real emotion the way his former studio Pixar's Toy Story created CGI in the '90s. "We'll all know it when we see it," says Katzenberg. "The means are never the end. What is important is taste, creativity and imagination."

For Hollywood to thrive, Katzenberg says, it must embrace the wave of change and progress that AI can bring. It's part of the AI ethos of the animation studio, capitalizing on what it sees as "a veritable renaissance for Hollywood storytelling" and "a complete transformation of all forms of video creation."

Walking the tightrope between acceptance and resistance leaves studios eager to save money with AI in a pinch. How do you greenlight original stories that might use AI in the face of tech-wary audiences and creatives? "I really don't know," admits one director of an AI adoption studio.

But many people are baffled by how US political leaders and tech executives are handling messages around artificial intelligence, the executive says, and fear of its impact on jobs, a factor over which Hollywood figures have little control. Right now, the political context would be, “Well, honey, if you used AI, you'd displace people's jobs. "Instead of 100, you would hire 1,000 people." "Yes, that's probably true," says the executive. But, he claims, studios can now take on 10 times more projects because of the efficiency of AI. And more projects end up working for the same number of people. No one can argue with the fact that the industry would benefit from having more stories to tell.

Hollywood's next battle? Creating AI-powered work produced by industry professionals to resonate with audiences, unlike online videos created by people with no industry experience.

"The reality is the excellence that you see in cinematic storytelling is because there are creators, directors, filmmakers, costume designers, production designers. "The people who make this gradient haven't thought about it deeply."