Artificial intelligence is quietly reshaping Hollywood, and 2026 could mark the moment when studios stop whispering about it. Despite underwhelming returns this year, industry insiders predict the coming months will bring a significant leap in adoption.
“Everyone in Hollywood is eager and in their bathing suits and standing around the pool,” said Jason Zada, founder and chief creative officer of AI studio Secret Level. “They’re waiting for the first person to jump in. Early in the year, you’ll see someone jump in the pool.”
Disney’s $1 Billion OpenAI Bet
Disney made the boldest move of 2025, investing $1 billion in OpenAI and licensing 200 characters from Pixar, Star Wars, and Marvel to the startup’s Sora AI video platform. The deal signals that major studios are ready to partner with AI companies at scale.
However, not every experiment succeeded. Lionsgate discovered that AI technology wasn’t mature enough for its ambitious goal of producing films through simple prompts.
Disney faced both technical hurdles and pushback from talent, according to TheWrap’s exclusive reporting.
96% of CEOs See No ROI
A sobering reality check emerged from Atlassian’s AI collaboration report: 96% of CEOs said they failed to see any meaningful return on their AI investments. Still, the technology proved useful in specific areas.
Universal found AI helpful for pre visualization and breaking down scripts into shooting schedules. Fox used it to quickly repackage sports clips into vertical shorts optimized for viral moments.
Amit Jain, CEO of Luma AI, believes the pace will only intensify. “If it seems fast right now, it might actually be faster,” he told TheWrap. His prediction: the first film “significantly aided by AI” will arrive in 2026.
Legal Battles Intensify
The courtroom is becoming another battleground. Disney and Universal sued Midjourney over AI-generated outputs that mimicked characters like Elsa from Frozen and Darth Vader from Star Wars. Warner Bros.
Discovery filed its own lawsuit in September, while Disney sent a cease and desist letter to Google over alleged copyright infringement in training its Gemini AI model.
News Corp CEO Robert Thomson issued a warning to AI companies scraping media content: “If you have received stolen goods, we intend to pursue you relentlessly.”
Adding complexity, Anthropic won a court case over the summer that effectively created a loophole around formal licensing deals for training content. Legal experts are watching to see if this precedent will influence future battles.
Trump’s Executive Order Disrupts State Protections
Just hours after New York Governor Kathy Hochul signed AI protection bills requiring transparency for synthetic performers, President Trump signed an executive order on December 11 that curbs states’ ability to regulate AI.
His preference is for a unified federal framework, but no such framework currently exists. The NO FAKES Act, working its way through Congress, would hold individuals or companies liable for producing content using someone’s voice or likeness without permission.
Whether Trump supports this approach or plans to create his own rules remains unclear. His position leans toward looser regulation, and he previously stated that AI companies can’t pay for all the content used to train their models.
SAG-AFTRA Sounds the Alarm
SAG-AFTRA President Sean Astin described the use of performances for AI training as “a radical new thing” that requires consent and compensation.
“There’s a way in which ingesting the material from our performances into the models for training is a form of exhibition of our work that isn’t being reported,” he said.
Rather than feeling overwhelmed by AI’s rapid advancement, Astin said he prefers focusing on protecting union members. He encouraged industry professionals to educate themselves about how AI could impact their livelihoods.
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What 2026 Holds
Secret Level recently hired former Netflix and DreamWorks executive Christina Lee Storm to lead its narrative studio. The company plans to launch an AI-powered production platform next year aimed at making film production more efficient.
“Our bet is a resurgence in indie films and stories that previously couldn’t be told,” Zada said.
AI’s cost-cutting potential could greenlight more projects than ever before. But it also threatens jobs in a sector already battered by the pandemic, strikes, and media consolidation. Below the line workers like set builders and grips face the greatest risk.
Zada compared the transition to when digital effects began replacing practical effects. “There are roles if you’re willing to evolve,” he said. The question is how many will adapt and how many will be left behind.
Source: TheWrap
