Hollywood’s new AI studios say they can make films for far less

AI-focused film startups are opening studios in Hollywood and pitching generative tools as a cheaper route to independent production. Companies such as Promise and Obsidian combine human performers with AI-generated sets, effects and characters, challenging the need for large sound stages and traditional studio financing.

Robert Booth reports for The Guardian that Promise has launched near Sony Pictures’ Culver City lot. Its team is using US AI systems as well as Chinese models, including Seedance 2.5, to generate backgrounds in real time during filming.

For its horror film Touch Grass, Promise films actor Tori Thomas against a simple white-sheet setup. Software then places her performance in a generated meadow or cavern, visible immediately on a director’s monitor. The company says such hybrid productions, which combine live actors and AI tools, could cost 20% to 50% less than conventional films.

A bet on smaller productions

Obsidian, an AI studio working with Ron Howard’s Imagine Entertainment, puts potential savings at 30% to 40%. It is producing The Code, an animated feature based on drawings by US prisoners of war held in Vietnam. Netflix has also said it used AI in 300 of its 1,000 titles in 2026, according to the report.

Supporters argue that lower costs could help directors make mid-budget films and give smaller teams more control over projects. Kavan Cardoza, founder of Phantom X, says AI tools allow filmmakers to avoid formulaic demands from major studios and develop a more distinctive authorial voice.

Critics warn that the shift could displace actors, writers and other production workers. Directors Christopher Nolan and Guillermo del Toro have publicly criticised generative AI. Actors have also objected to AI recreations of deceased performers and to synthetic actors. Joanna Popper, a producer and AI adviser, says the technology can broaden access to filmmaking, but cautions that a small group of technology companies could capture much of the industry’s financial value.