At the Zanuck Theater at Fox Studios, creators, studio executives, and technologists gathered for a Hollywood X event hosted by FBRC.ai and Fox Entertainment to address how AI is forcing structural changes in entertainment. The discussion covered not just production tools, but economics, deal-making, and workforce education.
Key takeaways from the panel:
Economics are broken: Studios still charge 25% distribution fees to "press a button" while creators build audiences and monetize independently. Legacy deal structures haven't adapted to the attention economy.
Education is non-negotiable: Industry professionals must learn about AI even if they choose not to use it. One Oscar-winning director took nine months to accept AI-assisted reenactments over traditional animation.
Studios must invest or lose: Legacy studios have massive data repositories that could power "clean models," but they need to reinvest AI cost savings (estimated at 40%) into technology and experimentation instead of returning it to shareholders.
Talent remains the moat: Despite automation fears, human creativity and storytelling remain irreplaceable. The question is whether production infrastructure will support or suppress that creativity.
The panel was moderated by Joanna Popper (Laurel Beach) and featured Diana Williams (Kinetic Energy Entertainment), Eric Wilker (FBRC.ai), Todd Makurath (Perfect Storm), and Jeff Clanagan (HartBeat). Panelists offered practical examples of how companies are already experimenting, from social media focus groups to AI-generated sci-fi environments with real actors.
Building Infrastructure for an Uncertain Future
Todd Terrazas, co-founder of FBRC.ai, opened the event by referencing William Fox's decision to build Movietone City in the 1920s, a bet that sound technology was worth the infrastructure investment when most of Hollywood thought it was a passing fad.
We're here because the future requires infrastructure that doesn't exist yet, and someone has to build it. And you can only build responsibly with courage and persistence.
Hollywood X isn't about defending old structures or evangelizing new ones, Terrazas said. It's about building sustainable systems that protect creative labor, develop better workflows, establish ethical frameworks, and keep Los Angeles as the epicenter of storytelling.
A Disruption on Top of Disruptions
Moderator Joanna Popper opened by listing the compounding challenges: COVID, strikes, runaway production, massive layoffs, M&A consolidation, the LA fires, and three years ago, ChatGPT's public debut. "Do you feel like the disruption actually is different than what we've seen before?" she asked.
Diana Williams pointed to information accessibility as the key difference. "We have a lot more information than we did before because of the World Wide Web," she said. "This is one of those technologies that actually reach beyond just this industry. It feels like it's so much right now because it's on top of everything."
Todd Makurath of Perfect Storm framed it as the final phase of a three-part transformation. "One was the digitization of capture with digital cinematography. One was the digitization of distribution with the ability to distribute content over internet pipelines around the world instantaneously," he said. "Now we are at the moment of the digitization of the creative process."
But Eric Wilker cut to a structural issue:
If you look at the call sheet, if you look at the way that entertainment has done business over the last 50-plus years, it hasn't changed that much. When you're designing a new company, you'd ask yourself, “Does that call sheet still pertain in the same way? Or do I need people who have lots of different skills and are adaptable in different ways?”
The Economics Problem
Jeff Clanagan brought the conversation to deal-making. "The most valuable resource is attention," he said. "And the people who are taking people's attention are creators."
He shared a recent experience: A studio opened distribution negotiations at a 25% fee. His response? "To press a button to send my digital file to a platform, you're going to charge me 25%? That doesn't work. That's the old model."
The imbalance is stark. Creators are now entrepreneurs, studios, and distributors. They've found ways to build audiences and monetize content without traditional platforms. Legacy deal structures haven't caught up.
Diana Williams put it bluntly:
We don't have a demand problem; we have a business model problem.
Her company, Kinetic Energy Entertainment, is built around three pillars: ownership, technology, and franchise. The company operates as both B2B and B2C. The goal is sustainability and protection for the creative, the business, and the investment. "When you have something that can be disrupted, it stops you from innovating," she said. "Anchors can be good in a storm, but anchors also keep you from moving forward."
Three Keys to Winning the Decade
Eric Wilker offered a three-part framework for studios that want to compete:
Build clean models. Legacy studios have massive data repositories like Fox, Warner, Disney, and Marvel. These libraries could power AI models that solve the copyright issues studios are simultaneously suing over and depending on. "You have all of this sitting there," Wilker said. "It requires taking that information and doing something with it or you'll lose your advantage."
Reinvest cost savings. AI is already reducing production costs by an estimated 40%.
Studios, I implore you not to take that margin expansion and return it to shareholders. Take that margin expansion and invest it in new technology, in experimentation, in skunk works.
Talent is your moat. Despite automation fears, human storytelling remains the competitive advantage. "AI does not need to tell a story. Human beings need to tell stories," Wilker emphasized. "Ever since we started using caves, we have to tell stories."
He closed with a provocative idea: Someone could invest $10 billion to create "the AWS of AI for entertainment."
Innovation in Practice
The panel shared specific examples of how companies are already experimenting:
HartBeat's experiments:
Instead of traditional paid test audiences, HartBeat creates proof-of-concepts, posts them on social, and forms focus groups around IPs. "You're getting real fans. They're not bought. They're not paid for."
For a horror movie with Tubi, HartBeat posted a proof-of-concept trailer online with a call for writers. They received 280 submissions based on what people saw.
GenJam hackathon partnered with Luma AI to pair comedians with prompt engineers. Teams had two hours to create stories. The winning animated short is now being developed into a series.
HartBeat has done 250 million vertical video views and is building a platform for serialized short-form content.
Jeff Clanagan, co-founder and president of HartBeat, has a longer-term goal of combining AI-generated environments with real actors:
I want to be able to create the world, but put real actors in these worlds because I would never be able to create or do a sci-fi movie on a $2 million budget. But I can do with AI, I can make a $2 million budget look like a $100 million budget and actually put real actors in it.
Todd Makurath and Justin Lin have launched Wolf Crow, a "creative operating system" that lets creators use natural language to interface with AI tools while preserving creative provenance, which is critical for proving copyright and ownership.
Diana Williams highlighted King Willonius (Will Hatcher), whose viral song "BBL Drizzy" is becoming an immersive storytelling universe. "Every creator can become their own startup at this point."
The Education Challenge
Joanna Popper, who works with the Television Academy's AI toolkit program, framed the urgency. "It's optional to use AI in your work, but it's not optional to learn about AI," she said. The academy has been running sessions for about half of its 15 peer groups to ensure people can make informed decisions.
Diana Williams emphasized that education must cover tools, legal, and business. "It's just a choice that you make," she said. "There's no wrong decision, but there's going to be consequences." She also warned against losing creative POV in the rush to adopt tools: "By jumping onto these tools, the context is missing. The creative drive can get lost."
Jeff Clanagan shared a telling example. HartBeat is producing a Bernie Mac documentary with the estate, working with an Oscar-winning director. The director initially insisted on traditional animation for reenactments, his area of expertise.
It took me probably nine months to convert him. That's part of it, I think, educating the talent community on what you can do.
Clanagan started creating scenes himself to demonstrate what was possible. The director eventually came around to a hybrid approach, but the process revealed a larger issue: the time it takes to change established mindsets.
Eric Wilker's company, FBRC.ai, is doing community education "day in and day out, week in and week out," providing opportunities for people to learn and share ideas.
The Power Question
The balance of power between tech and media has shifted. "You just look at the trillion dollars being passed back and forth in tech in terms of AI," Wilker noted. Hollywood has been comfortable investing in content but resistant to investing in technology. "In order to be taken more seriously, you're going to have to spend significant money to pull engineers away from OpenAI, engineers away from Google to try and build some things at the studios," he said.
Diana Williams raised the ownership question. The 103-year-old studio model, where studios take all the risk and all the ownership, is being reopened for discussion. A conversation about The Wizard of Oz at Sphere illustrated the tension: Warner Brothers owns the IP and can do what they want with it. But what happens when AI makes it possible for original creators to realize their visions without massive financing?
Todd Makurath saw the potential shift:
This may be one of the greatest benefits to creators themselves. These technologies will drop the barriers to accessibility of realization.
What's Next
The conversations at Hollywood X made clear that the industry faces a choice. Studios can continue with outdated deal structures and distribution fees designed for physical media, or they can invest in clean models, reinvest cost savings, and build infrastructure that supports both creators and technological advancement.
The timeline for change remains uncertain. If an Oscar-winning director takes nine months to accept new tools, widespread adoption across the industry will take years. But the companies already experimenting with social media focus groups, AI-generated environments, and new ownership models are building the frameworks that will define entertainment's next era.
For media professionals, the message from the panel was direct: learn about AI whether you plan to use it or not. The tools are evolving faster than the business models, and understanding both will determine who adapts successfully.
