AI is shaking up Hollywood. Here are the startups and investors jumping into the fray.

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Hollywood companies continue to integrate AI, even as they challenge its applications in court.
AI startups like Toonstar and Chronicle Studios are innovating in animation.
Studios are using the tech to promote content discovery and reduce production costs.

Hollywood giants are pushing back on AI's encroachment. Disney and Universal recently sued Midjourney, accusing it of using tech to rip off their famous characters.

But inside entertainment companies, it's a whole different story. The biggest studios and filmmakers are using AI technology in various ways — and people in Hollywood are taking note. The AI on the Lot conference in May has doubled its attendance to 1,200 over three years, while AI editing company Runway attracted some 1,000 people to its third film festival.

The tantalizing promise of AI is that it could solve big problems in the entertainment business, like content discovery and high production costs.

"No matter how you feel about AI tools in the media and entertainment business, they're here to stay," said Peter Csathy, who advises media companies.

Investors are climbing on board companies like Ecco, an AI startup that helps people find titles across multiple streamers using queries like "find me all the shows about F1." It has raised $7 million from Ben Silverman, Shaquille O'Neal, and others.

One such investor is Ishan Sinha, a consumer partner at Point72 Ventures. He said the hype around AI-generated video hasn't translated into consumer interest. He sees the most potential in companies that use AI to promote distribution through personalization, translation, and IP ownership.

"We believe the winning consumer businesses aggregate eyeballs — they have some type of a hook, whether it's content aggregation, playlists, proprietary IP, etc., that acquires and retains users," he said.

Point72 Ventures' investments include GlobalComix, which uses AI to bring recommendations and language translation to comic book and manga readers that they couldn't otherwise find, and Cheehoo, which is working with studios to simplify animation.

The firm also invested in Chronicle Studios, which aims to help animators grow their audiences and monetize their projects beyond YouTube.

Here are some AI companies transforming different areas of Hollywood, and the pitch decks some of them used to raise funding.

Faster, cheaper animation

AI may still be a long way from making full-length movies, but it's quickly making inroads in animation. Toonstar, a startup behind "StEvEn & Parker," uses AI for tasks ranging from developing storylines to creating images and says it can make episodes at a fraction of the cost of conventional methods.

Chronicle Studios is a startup cofounded by Chris deFaria, a former animation president at Warner Bros. and Comcast's DreamWorks, that's using AI to help creators level up, with a focus on animators. Others chasing the animation or independent creator opportunity are Further Adventures, a new studio that's investing in digital creators and independent filmmakers; Invisible Universe, an animation studio backed by Seven Seven Six; and Promise, an AI studio backed by Peter Chernin's North Road, Andreessen Horowitz, and Google.

"AI can't really make stories that are enduring," deFaria told BI. "The biggest pain point is getting an audience."

AI is transforming special effects

Other companies, such as Runway, which has raised $545 million from General Atlantic and others, and Connect Ventures-backed Deep Voodoo, are using AI to provide tools for de-aging and other special effects work.

Some have entered the rollup stage. Metaphysic, which was known for de-aging Tom Hanks and Robin Wright for the Robert Zemeckis film "Here," was acquired in February by DNEG Group's AI company Brahma. Papercup's voice-cloning IP was acquired in June by RWS, a content solutions company, while its team was acquired by Scale AI.

AI is also being applied to speed the dubbing process, recreate the voices of bygone actors, and restore old films and TV series. With streamers going global, there's a big demand to translate titles for new markets, and new approaches to AI promise to eliminate awkward dubbing of the past.

Runway made news this past year for deals with Lionsgate to train an AI model on its library and with AMC Networks, which will use its tools to generate promotional material for its shows.

One player, Deepdub, which uses AI to dub movies and shows, just extended its tech to real-time dubbing of live sports commentary, esports shoutcasting, and breaking news coverage.

"For the first time, broadcasters can deliver real-time, multilingual dubbing that captures not just words, but the energy, urgency, and authenticity of live content," said Ofir Krakowski, the company's CEO.

Startups are tackling different phases of production

A third area where AI startups have been active in Hollywood is in the content creation process more broadly.

This can involve everything from AI in the script reading phase to scouring video libraries to generate new ideas for titles based on what's performed well in the past.

One, Paris-based Moments Lab, recently raised a $24 million round from backers including Oxx and Orange Ventures to expand its AI tools that are used by Warner Bros. Discovery, Hearst, and others.

Moments can make clips for social media seven times faster than the conventional approach, cofounder Phil Petitpont recently told BI, citing internal research. He said media companies would be able to use AI to help make full-length documentaries based on their video libraries in several months, while predictive modeling tools that can suggest audience-boosting changes are a year away.

"We're not very far from that because audience data is very easily available on YouTube," he said.

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