WSJ Tech News Briefing: The AI-Powered Hollywood Studio
Release Date: November 20, 2024
Host: Belle Lynn, The Wall Street Journal

Introduction

In the November 20th episode of WSJ Tech News Briefing, host Belle Lynn delves into two major topics shaping the tech and entertainment landscapes: Nvidia’s highly anticipated earnings report and the emergence of Promise Studios, a new entertainment venture harnessing the power of generative AI for filmmaking and television production. This episode provides insightful discussions with WSJ reporters ASA Fitch and Deputy Media Editor Jessica Tunkel, offering a comprehensive overview of these developments and their broader implications.

Nvidia’s Earnings Report: Expectations and Market Impact

Belle Lynn opens the episode by focusing on Nvidia’s upcoming earnings report, a critical event for investors given the company's pivotal role in the AI revolution. Nvidia recently reported a quarter where sales and earnings more than doubled compared to the previous year, surpassing expectations. However, despite these impressive figures, investor enthusiasm appears tempered.

Key Discussion Points:

• High Expectations and Investor Sentiment:

  • ASA Fitch explains the subdued investor reaction by highlighting the sky-high expectations set for Nvidia:
    “It's basically because expectations have become extremely high for the company. Investors have gotten used to the company just blowing people away with its numbers...” (01:58).

• Manufacturing Challenges with Blackwell Chips:

  • Fitch details concerns over Nvidia’s next-generation Blackwell chips, which experienced manufacturing issues:
    “Blackwell is going to be at the top of investors minds... they revealed they had a manufacturing issue with their next generation Blackwell chips...” (02:49).
  • He anticipates that CEO Jensen Huang will provide updates on resolving these issues and the rollout timeline during the earnings call.

• Execution and Market Dominance:

  • The discussion shifts to Nvidia’s ability to maintain its dominance in the AI chip market amidst increasing competition and potential antitrust scrutiny:
    “The question really for the company now, and the question for investors is execution. The company has a dominant market share in AI chips and the question is, can they continue to just dominate...” (03:56).

• Broader Implications for the AI Industry:

  • Fitch suggests that Nvidia’s performance serves as a bellwether for the broader AI sector:
    “If Nvidia delivers a quarter that people are unimpressed with, they might see it as a signal that, okay, people aren't spending quite as much as we hoped on these chips that drive AI...” (04:29).

Investor Expectations:

Most analysts anticipate that Nvidia will continue to beat sales and profit forecasts. However, the critical focus is now on Nvidia’s execution capabilities and strategic responses to market challenges, particularly regarding the Blackwell chips.

AI in Hollywood: Promise Studios' Revolutionary Approach

After discussing Nvidia, Belle Lynn transitions to the fascinating intersection of AI and the entertainment industry, spotlighting Promise Studios, a pioneering venture dedicated entirely to utilizing generative AI in content creation.

Promise Studios: A New Frontier in Entertainment

• Founding and Vision:

  • Jessica Tunkel explains that Promise Studios is backed by industry veterans Peter Chernin and Andreessen Horowitz. Unlike traditional studios that are gradually integrating AI, Promise is built from the ground up with AI at its core:
    “They are developing their own software that will tap into all the AI tools out there to create their own content.” (07:10).

• Comparative Approach to Established Studios:

  • Tunkel contrasts Promise with established studios like Lionsgate, which are partnering with AI startups to enhance specific aspects of production:
    “Lionsgate... are working with Runway right now to create a model that Lionsgate will use for their own shows and movies... Promise is a startup and they're starting from scratch...” (06:31).

Industry Context and Challenges:

• Historical Skepticism and Labor Concerns:

  • Reflecting on past industry tensions, such as the actors’ and writers’ strikes over AI's potential to disrupt livelihoods, Tunkel outlines how studios are navigating these challenges:
    “...the guild and the industry came to an agreement that would satisfy everyone that they would be compensated for any use of tools and that they had to give their permission for anything.” (07:18).

• Economic Pressures and AI Adoption:

  • The post-COVID landscape has led to reduced production budgets, making cost-effective AI tools increasingly attractive:
    “Production is not ever coming back to the levels that it once was before the COVID pandemic... tools like Generative AI are pretty attractive because you can create things for much less expensive and you can do things much faster.” (07:18).

Competitive Edge and Democratization:

• Promise’s Strategic Advantage:

  • Tunkel highlights that Promise’s fresh, AI-centric approach could give it a competitive edge over traditional studios that are merely integrating AI tools:
    “...starting from scratch using these tools, as opposed to these traditional studios... they think they'll have an edge.” (08:45).

• Empowering Independent Creators:

  • The studio aims to democratize content creation, enabling creators to produce high-quality stories without relying on major studio financing:
    “You're going to see more people be able to create very quality stories at the same level at some point as these big studios. And you're not going to have to rely on these big companies.” (09:19).

Concerns and Future Outlook:

• Intellectual Property and Ethical Considerations:

  • While Promise is optimistic, Tunkel acknowledges ongoing concerns regarding IP protection and ethical use of AI in content creation:
    “How you protect that IP is still really not clear. They say they will deal with it as it comes to them.” (10:36).

• Timeline for AI-Driven Content:

  • Promise anticipates releasing its first AI-generated content within three years, starting with smaller formats to establish its capabilities:
    “They expect to have things out in the next three years. They'll probably start smaller, like smaller interactive formats and shorts...” (11:20).

Conclusion

The WSJ Tech News Briefing episode on November 20th provides a deep dive into the evolving dynamics of AI in both the tech and entertainment industries. Nvidia’s earnings report serves as a critical indicator of AI’s economic viability and market sentiment, while Promise Studios exemplifies the transformative potential of generative AI in redefining content creation. As AI continues to advance, its integration into diverse sectors underscores both the opportunities and challenges that lie ahead, shaping the future of technology and media.

Notable Quotes:

• ASA Fitch on Nvidia’s Expectations:
  “It's basically because expectations have become extremely high for the company. Investors have gotten used to the company just blowing people away with its numbers...” (01:58).

• ASA Fitch on Blackwell Chips:
  “Blackwell is basically the first big chip advancement from Nvidia since the AI boom kind of kicked off... a lot of Nvidia's future hinges on Blackwell succeeding...” (02:49).

• Jessica Tunkel on Promise’s Approach:
  “They are developing their own software that will tap into all the AI tools out there to create their own content.” (07:10).

• Jessica Tunkel on Democratization:
  “You're going to see more people be able to create very quality stories at the same level at some point as these big studios.” (09:19).

This comprehensive summary encapsulates the key discussions, insights, and conclusions from the episode, providing a clear and engaging overview for those who haven't listened to the podcast.