Authors:  Jonathan Davis (Partner, EMEA), Daniel Hart (Vice President, EMEA), Adam Gross (Managing Director, US)

The worlds of CGI, Animation and VFX are undergoing transformation, fueled by the proliferation of generative AI content creation tools. This wave of innovation promises to streamline workflows, unleash creativity and elevate audience engagement like never before.

In this article, we delve into the cutting-edge developments in AI, explore the potential challenges of copyright and fair compensation and discuss how innovation is reshaping the industry’s landscape.

The AI Revolution in CGI, Animation and VFX

Generative AI is taking center stage with a host of new tools, such as MidJourney, Runway.ai and WonderStudios. Alongside these, industry giants like NVIDIA are making groundbreaking strides with their Neuralangelo platform, which transforms 2D spaces into lifelike 3D environments. These developments are lowering the barriers of creativity, giving artists the power to swiftly ideate, develop and pitch concepts.

But the greatest impact could arise from automation. Once time-consuming manual tasks, like rotoscoping, are now being automated, cutting down laborious efforts from hours to minutes. Productions like “Everything Everywhere All at Once” are testament to this transformation, with VFX teams that once numbered in the hundreds now reduced to a core squad of 10 engineers.

Copyright Challenges and Fair Compensation

However, the rise of AI is not without its ethical and legal complexities. Generative AI technology often draws upon existing art, designs and content to create new outputs. This raises questions about copyright infringement and fair compensation for original creators. With outdated copyright laws ill-equipped to address these modern issues, the industry is calling out for reform.

In the US, writers staged a strike demanding higher pay and fairer contracts, particularly regarding the use of artificial intelligence in creative processes. Companies remain cautious about leveraging AI for client work, fearing high-profile copyright claims could significantly impact their reputations. This shift will particularly benefit those with vast databases of content, potentially creating a new hierarchy of content ownership.

One solution could be the implementation of smart contracts and non-fungible tokens (NFTs). These technologies have the potential to ensure fair compensation for creators by establishing transparent and immutable ownership records for AI-generated content.

Embracing Innovation

As AI continues to empower the industry, personalization emerges as a new frontier. The technology could, for example, be used to allow anyone to become the main protagonist in their favorite film or show, forging modern connections between audiences and content. Furthermore, leveraging Intellectual Property (IP) across multiple formats, from 2D to AR and VR, has become more feasible and cost-effective. This shift opens doors to interactive experiences, for example taking control of a VR spaceship, letting the audience play a pivotal part in a film.

The Human Touch

Despite the transformative potential of AI, it is crucial to remember that human intervention remains paramount in creating art with a soul. AI tools can revolutionize the production process, but they cannot yet replace the essence of human imagination and emotion. There will likely always be a need for artists and storytellers who breathe life into AI-generated concepts, bringing authenticity and depth to the finished product.

Profit Margins and Production Dynamics

The impact of AI on profit margins is a subject of both hope and concern. While automation could potentially lead to cost savings, questions arise about whether these benefits will be passed onto brands, content owners and studios. Will the increased efficiency of AI-driven workflows result in increased procurement pressure, more productions or simply lead to larger profit margins for production studios?

As AI democratizes certain aspects of the process, lowered barriers to entry may inadvertently lead to increased competition, subsequently impacting the pricing and value of Animation and VFX services.

Key themes related to AI in the market

Conclusion

The CGI, Animation and VFX industries stand at the precipice of an extraordinary era driven by generative AI, where human creativity and technological innovation converge in powerful harmony.

However, the industry must address the challenges of copyright and fair compensation to ensure that creators are duly rewarded for their contributions. With mindful regulation and the integration of human artistry, AI promises to elevate storytelling to new heights, redefine audience engagement and unlock an unprecedented realm of possibilities. As we navigate this new frontier, we look forward to the potential opportunities AI has to offer while valuing the human-led businesses that will take the industry to the next level.

M&A Role

Although fast-moving, AI-technology in Animation and VFX remains relatively nascent, and the sector has yet to witness a slew of AI-driven M&A deals. 

Indicators of a game-changing future are apparent with venture capital increasingly flowing into AI enterprises.  Notable among these are Move.ai, which is transforming movement in digital settings, Speech Graphics, with their speech-based facial animation software, and MARZ, introducing a ready-to-deploy AI solution for VFX.

These investments herald a promising era of AI-driven creativity and efficiencies in Animation and VFX.

We look forward to continuing the conversation as the AI-story unfolds. If you have any queries or would like to have an in depth discussion on this topic or the broader market please Contact us. Our next AI article delves into the world of Legal and Compliance Technology.