“A tsunami is coming, we can either ride it or get wiped out by it. But it’s going to be really fun to ride it, and it’s going to make us faster and better.”
Nicholas Carlson, Editor in Chief of Insider.com
For the past decade, I have been involved in the media and entertainment industry, both as a worker and an investor. During that time, I’ve witnessed several hype cycles come and go, from AR/VR to the dream of “watch-click-buy” and addressable TV, to the Metaverse, and more. However, the current hype around generative AI feels different. Naturally, a technology like generative AI has the potential to transform and impact many industries, if not all. Many intelligent individuals and consulting firms have written about various industries and their potential use cases for generative AI. To me, however, the entertainment, media, and gaming industry seems the most obvious industry to be disrupted by this technology, far beyond any other. In its simplest form, my argument is the following:
- The entire entertainment industry is driven by a creative process that creates and combines text/code, images, audio & video into compelling storytelling. Whether that is for TV, a game, a newspaper or a podcast.
- What do the current fundamental generative AI models allow you to do? Create text/code, images, audio and video.
- The entertainment industry is one with very low barriers to entry and moats.
So the elemental tasks that generative AI is currently great at are also the fundamental building blocks of the entertainment industry. The potential to democratise content creation, decrease cost structures and increase productivity are enormous and exciting – and scary at the same time.
The 4 elements of creation of generative AI: Text, audio, images and video
Generative AI technology is revolutionising the way we create content by providing individuals with the ability to generate text, code, images, audio, and video using machine learning algorithms. At its core, generative AI technology uses transformer models, a process called deep learning, which involves analysing vast amounts of data to identify patterns and generate new content that mimics the characteristics of the original data. This technology has enabled users to create high-quality content without the need for extensive technical expertise, making it accessible to everyone.
For instance, generative AI can be used to generate realistic images, even of objects or scenes that don’t exist. It can also be used to generate realistic speech, music, or even entire songs. Furthermore, generative AI can generate entire paragraphs of text that sound like they were written by a human, as well as generate code for software development. With the use of generative AI technology, individuals can create content that meets their specific needs and preferences, without the need for specialised skills or resources. Ultimately, this technology is democratising content creation and enabling everyone to express their creativity in new and innovative ways.
At its core, media, entertainment, and gaming are all built from the same 4 building blocks: text, images, audio, and video that are coded together to create immersive and engaging experiences for users. For example, ProSiebenSat.1 Media, a German broadcaster (and one of our investors at Remagine Ventures) is using Hour One, (also a Remagine Ventures portfolio company), to create short news stories from text. What would usually take hours to film in a studio, produce and edit now takes a few minutes – and anyone can do it.
Combining these four elements and using generative AI technology is also what another portfolio company of ours does. Piggy allows anyone to create powerful and informative stories with a single prompt – all on your mobile phone. For example, here’s my piggy on the ‘Best rap albums of the 90s‘. In the world of gaming, the combination of these elements is used to create unique and engaging experiences that challenge players and keep them coming back for more. For example, in role-playing games, text and dialogue are used to create complex and dynamic characters that players can interact with, while images and video are used to create vivid and immersive environments that players can explore. Overall, the combination of text, images, audio, and video is essential to the creation of media, entertainment, and gaming experiences that capture the imagination and engage the senses.
The entertainment industry is perhaps the most susceptible to disruption among all industries
In recent decades, the emergence of new tools and technologies has made it increasingly easier for users to generate and distribute content, such as blog posts, videos, and simple games, on platforms like Roblox or Minecraft. Moreover, with the advent of the internet, social media, and online marketplaces such as Amazon and Shopify, the distribution channels in the entertainment and media world have broken down. The rise of platforms like YouTube and Twitch has further accelerated this trend. As a result, the barriers to entry that once existed in the entertainment industry have virtually disappeared in a short period of time.
From expensive TV networks to trucks distributing newspapers and magazines, the erosion of moats along the value chain has facilitated the emergence of influencers and thousands of individuals who can now create and distribute content worldwide. In 2016, a survey of executives by the Harvard Business Review (HBR) identified media as the industry most impacted by digital disruption.
When compared to other industries, such as healthcare or fintech, which require more complex products, have entrenched distribution channels, and face greater regulatory scrutiny, it becomes clear why the media and entertainment industry is more susceptible to disruption.
Despite the relative ease of disruption, the “90%-9%-1%” rule of engagement has long been a guiding principle in the industry. This rule of thumb suggests that 90% of internet users consume content, 9% comment and edit on other people’s content, and only 1% create content. However, with the emergence of user-generated content (UGC) platforms, this rule of thumb has been evolving in recent years. Companies like Minute Media (a Remagine Ventures portfolio company), Roblox, TikTok, Substack, and a host of video creation and editing tools have made it easier for users to create and distribute content. Consequently, more and more users are becoming content creators, shifting the balance of the 90%-9%-1% rule of engagement.
Generative AI technologies are about to take UGC content creation to a whole new level
It’s therefore no surprise that our sector is the biggest user of generative AI technologies. Generative AI can be used to generate high-quality audio and video content (e.g. our investment in HourOne), such as music and movies, by analysing vast amounts of data to create content that is on par with professionally produced content. This technology can also be used to create engaging and informative social media content that captures the attention of users and drives engagement. We have made an investment in this category as well with Munch.
Generative AI will be used to create realistic and immersive gaming experiences by generating environments, characters, and even entire game mechanics that mimic the style and feel of established games. Our latest investment, not public yet, is aiming to create exactly that, a gaming platform where everyone and anyone can create games via a few prompts.
Overall, generative AI technologies are enabling a new era of creativity and innovation in the entertainment and content production industries. With the ability to generate high-quality content at scale using generative AI tools, anyone with an idea a computer or a smartphone can become a content creators. Incumbents, including news rooms, are paying attention too and experimenting with generative AI as well. For example, Business Insider and Buzzfeed started using AI to write articles.
As generative AI continues to evolve and improve, we can expect to see a new wave of content creators and innovators emerge, changing the way we create, consume, and interact with media forever. I have written about the long-term impact that generative Ai technology will have on the world of media before. This explosion of synthetic content will create new challenges that need to be solved and we look forward to partnering with exceptional entrepreneurs to tackle them
Thoughts by Kevin Baxpehler, edited by ChatGPT, images created by Midjourney