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--:-- Ryan Knutson: Aloha everyone from beautiful Hawaii. Standing on a beach with palm trees swaying behind him, the actor Dwayne The Rock Johnson made an announcement.
--:-- Jessica Mendoza: We are so excited and happy to announce that a live-action reimagining of Moana is in the works. The video came out in April 2023. And in it, Johnson revealed that he would be reprising his role as Maui in the live-action version of Disney's animated hit, Moana.
--:-- Ryan Knutson: Kidding. Hei Hei's going to be in it, but of course Maui will be in it too. But behind the scenes, Disney was planning something that didn't make the announcement.
--:-- Jessica Mendoza: Disney was looking at, is there a way we could do certain shots without having Dwayne Johnson be here every single time?
--:-- Ryan Knutson: My colleague Jessica Tunkel covers media and entertainment. Because, you know, when you're filming a movie, there's a lot of waiting around. That can also be expensive for everyone. Time is money. Dwayne Johnson's a big star.
--:-- Jessica Mendoza: And so the idea was, what if we could take his face and put it on his stunt double, who's also his cousin, and use that for a few shots?
--:-- Ryan Knutson: Johnson approved the idea. But in order to create these essentially deep fakes of Johnson's face, Disney turned to a third-party AI company.
--:-- Jessica Mendoza: And as discussions started, a big issue came up. The question was, would Disney own that final product? Whatever was created from Dwayne Johnson's face on his cousin's body, would they still own that imagery?
--:-- Ryan Knutson: Why was Disney so fixated on that question? Because Disney is its characters. And if they lose control and ownership of those, they risk a lot.
--:-- Jessica Mendoza: Disney, more than any other company, has the most to lose.
--:-- Ryan Knutson: After 18 months of negotiations, Disney decided not to move forward with using AI footage in the film.
--:-- Jessica Mendoza: The saga captured the conflict that Disney is facing when it comes to embracing AI. It's a bit of a fundamental challenge for Disney because I don't think Disney wants to be seen as not ahead of things and not being aggressive in embracing new technologies.
--:-- Ryan Knutson: They don't want to be seen as backward looking.
--:-- Jessica Mendoza: At the same time, they have to be super cautious.
--:-- Ryan Knutson: Welcome to The Journal, our show about money, business, and power.
--:-- Jessica Mendoza: I'm Jessica Mendoza.
--:-- Ryan Knutson: It's Wednesday, August 6. Coming up on the show, Disney wants to keep control of its most valuable assets and use more AI. Can it do both? We'll be right back.
--:-- Ryan Knutson: on NBC. Jimmy Fallon and Bozema St. John host the highly anticipated new competition show.
--:-- Jessica Mendoza: I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands.
--:-- Ryan Knutson: This is a huge opportunity. This is the battle for the next big idea.
--:-- Jessica Mendoza: This is not play play. We're spending millions of dollars.
--:-- Ryan Knutson: I'm so excited to embark on this adventure with all of you.
--:-- Jessica Mendoza: Make the best idea win!
--:-- Ryan Knutson: On brand with Jimmy Fallon.
--:-- Jessica Mendoza: Series premiere Tuesday on NBC.
--:-- Ryan Knutson: Disney is known for creating classic and beloved characters and fiercely guarding that intellectual property.
--:-- Jessica Mendoza: Well, think about it. Disney has a hundred year history of some of the most iconic characters in the world.
--:-- Ryan Knutson: We have Cinderella, you have Buzz Lightyear, you have Princess Belle, you have Donald Duck.
--:-- Jessica Mendoza: Like, these are characters that are known globally and have known through generations and generations.
--:-- Ryan Knutson: If they can't continue owning those, what is Disney?
--:-- Jessica Mendoza: But the media landscape is changing rapidly as more people look beyond traditional film and TV for content.
--:-- Ryan Knutson: That's eaten into studios' profits, and companies like Disney are already trying to use AI as a way to help cut costs.
--:-- Jessica Mendoza: That was the idea behind making an AI version of The Rock in the Moana live-action movie.
--:-- Ryan Knutson: Disney puts out some of the most expensive movies in the world.
--:-- Jessica Mendoza: That is happening at the time that fewer people are going to movie theaters.
--:-- Ryan Knutson: They need to find ways to cut costs and grow revenue and profits.
--:-- Jessica Mendoza: So if they can figure out a way to use AI around the edges and things, that will help them make movies much cheaper.
--:-- Ryan Knutson: But also maybe they're able to put out more movies because they're not spending as much on a single film.
--:-- Jessica Mendoza: And when you say use AI on the edges, what are the kinds of things Disney is envisioning?
--:-- Ryan Knutson: Some of that is work you do before you're actually shooting the movie, like just things on set when you're trying to figure out what goes where and what a scene will look like, that could be done by AI rather than have people drawing out what things will look like and having actors stand around.
--:-- Jessica Mendoza: Like there's a lot of that pre-work that you don't need.
--:-- Ryan Knutson: And the same thing with the special effects.
--:-- Jessica Mendoza: And you're seeing this already where you can just make the special effects team's jobs faster.
--:-- Ryan Knutson: Some of the grunt work where they have to like do all this stuff to make one thing move across the screen, they could just use a tool and it would happen much faster.
--:-- Jessica Mendoza: Disney has already started turning to AI as it diversifies its business, particularly in gaming.
--:-- Ryan Knutson: Last year, the company took a $1.5 billion stake in Epic Games, the owner of the popular online game Fortnite.
--:-- Jessica Mendoza: Disney had already licensed some of its Marvel and Star Wars characters to Fortnite, and fans loved it.
--:-- Ryan Knutson: So earlier this year, Disney and Epic experimented with generative AI to up the ante for fans.
--:-- Jessica Mendoza: They created an AI-generated Darth Vader within Fortnite that gamers could chat with for a few days.
--:-- Ryan Knutson: Darth, do you realize I'm your son Luke Skywalker?
--:-- Jessica Mendoza: The Skywalker line, always so eager to announce itself.
--:-- Ryan Knutson: This AI Darth Vader was trained on the voice of the late actor James Earl Jones, who voiced the character in the original Star Wars trilogy.
--:-- Jessica Mendoza: So how did it go?
--:-- Ryan Knutson: Unfortunately, the gamers figured out a way to get the Darth Vader to curse.
--:-- Jessica Mendoza: Of course. Like, within minutes.
--:-- Ryan Knutson: Epic Games fixed the cursing issue within half an hour.
--:-- Jessica Mendoza: But this kind of slip-up is exactly why Disney keeps such a tight grip on its characters and has traditionally been wary of trying these kinds of experiments.
--:-- Ryan Knutson: Because they would have been worried about the bad publicity associated with it wouldn't be worth the good publicity, right?
--:-- Jessica Mendoza: So yes, we might have gotten a lot of people to talk to Darth Vader, but oh my God, everyone saw this happen and this is terrible.
--:-- Ryan Knutson: But that wasn't how Disney responded this time.
--:-- Jessica Mendoza: On June 3rd, not long after the incident took place, a Disney executive who heads up the company's gaming division took to the stage at an Epic Games event and talked about the AI-generated Darth Vader.
--:-- Ryan Knutson: He called it a historic moment for video games.
--:-- Jessica Mendoza: This experimental feature offers a glimpse into the future, showing how Disney and Epic are responsibly embracing emerging technologies to expand the boundaries of storytelling and reimagine what's possible in gameplay.
--:-- Ryan Knutson: The president of Epic Games said the company is committed to innovation, storytelling, and consumer engagement, and that it's excited about its future with Disney.
--:-- Jessica Mendoza: Ultimately, Jessica says, the company's considered the experiment a win.
--:-- Ryan Knutson: They had like 10 million people, I think it was, that had a conversation with the Star Theater, and it was all over social media.
--:-- Jessica Mendoza: I think Disney now recognizes that we need to do these kinds of things even if that might happen because this is the future of entertainment.
--:-- Ryan Knutson: Even though Disney has become more willing to push boundaries with AI, it's still moving carefully with the technology.
--:-- Jessica Mendoza: The company has set up all kinds of guardrails internally, including requiring employees to get permission before putting corporate content into an AI tool.
--:-- Ryan Knutson: You would need to submit that to an AI committee at Disney who would have to approve you using whatever tool you wanted to use.
--:-- Jessica Mendoza: And, you know, some people I'd spoken to not that long ago, it would take some time to get that approval.
--:-- Ryan Knutson: Now they've gotten it down to like 48 hours.
--:-- Jessica Mendoza: But that just speaks to how cautious they're being.
--:-- Ryan Knutson: But even as Disney tries to control it, AI is spreading like wildfire.
--:-- Jessica Mendoza: And it's changing the shape of the entertainment industry.
--:-- Ryan Knutson: That's next.
--:-- Ryan Knutson: In June, Disney took a major step in trying to protect its copyrighted material from being used by generative AI.
--:-- Jessica Mendoza: And it was joined in the effort by a longtime competitor, Universal Studios.
--:-- Ryan Knutson: Two major studios have sued an AI startup claiming it has, quote, blatantly copied famous movie characters.
--:-- Jessica Mendoza: The two studios filed a joint lawsuit against MidJourney, an artificial intelligence provider that lets users generate images from text prompts.
--:-- Ryan Knutson: And they are alleging that they basically are stealing their characters.
--:-- Jessica Mendoza: And they have about 100 images in the lawsuit where they show examples of how the AI company is stealing their characters without their consent.
--:-- Ryan Knutson: So the issue is that Mid Journey, like most generative AI, has been trained on content that includes Disney IP.
--:-- Jessica Mendoza: Right. That is exactly it.
--:-- Ryan Knutson: And in a lot of those, what they're spitting out, you will see Darth Vader or other Disney, or in this case, universal characters like Minions and things like that.
--:-- Jessica Mendoza: So there's not a lot of regulation around all of this right now.
--:-- Ryan Knutson: Disney said in its lawsuit that Mid-Journey ignored earlier requests to cease violating their intellectual property rights.
--:-- Jessica Mendoza: It called Mid-Journey, quote, the quintessential copyright free rider and a bottomless pit of plagiarism.
--:-- Ryan Knutson: Mid-Journey has not yet responded to the lawsuit.
--:-- Jessica Mendoza: What would be the ideal outcome for Disney and Universal?
--:-- Ryan Knutson: Well, definitely that no AI provider could do anything where it would output their IP.
--:-- Jessica Mendoza: Gotcha.
--:-- Ryan Knutson: And at what point is the lawsuit in its journey?
--:-- Jessica Mendoza: And what would the implications be?
--:-- Ryan Knutson: So we are in early days of this lawsuit. They just filed it several weeks ago.
--:-- Jessica Mendoza: But I think what the lawsuit speaks to, it's a bigger question.
--:-- Ryan Knutson: And the bigger question is becoming this brewing battle between Silicon Valley and Hollywood.
--:-- Jessica Mendoza: In that companies like Meta, Google, OpenAI have been arguing to the Trump administration that all copyrighted material, we should have access to all of it to train our models.
--:-- Ryan Knutson: And we need it because the companies in China are training off of it.
--:-- Jessica Mendoza: And if you want us to compete with the companies in China this is what we need.
--:-- Ryan Knutson: Hollywood companies and you know the CEO of Disney Bob Iger and his general counsel met with administration officials a few months ago and said like no if you start taking all of our content and letting it feed these models, you lose what America's great for, which is the creativity and all the things we do.
--:-- Jessica Mendoza: So this is the core battle.
--:-- Ryan Knutson: The mid-journey lawsuit is one piece of that, but that is really what's at stake here, is what can you or can you not, can these models train on?
--:-- Jessica Mendoza: And it's not just the ownership of the content that AI is training on that's at issue.
--:-- Ryan Knutson: The people who are making that content are also worried.
--:-- Jessica Mendoza: Actors, writers, artists, and other creatives have been raising concerns for years about losing their jobs to AI.
--:-- Ryan Knutson: Disagreements about the technology were part of what shut down Hollywood for months in 2023, costing the industry billions.
--:-- Jessica Mendoza: Fran Drescher is the president of the labor union representing performers, broadcasters, and recording artists.
--:-- Ryan Knutson: She gave a speech at the time.
--:-- Jessica Mendoza: If we don't stand tall right now, we are all going to be in trouble.
--:-- Ryan Knutson: We are all going to be in jeopardy of being replaced by machines.
--:-- Jessica Mendoza: Eventually, studios and unions did make a deal.
--:-- Ryan Knutson: One that included worker protections when it came to AI, including getting consent and paying some creatives when AI is being used.
--:-- Jessica Mendoza: But it was a long and costly negotiation for the industry.
--:-- Ryan Knutson: And with a new round of contract talk set to begin next year, Disney and other studios are reluctant to make any moves related to AI that might upset unions.
--:-- Jessica Mendoza: Disney considers itself, especially Bob Iger, tries to be very talent-friendly.
--:-- Ryan Knutson: They want to be seen as a friend to the actors and the writers.
--:-- Jessica Mendoza: So they don't want to be seen in any ways doing anything that would replace their jobs.
--:-- Ryan Knutson: So how is Disney dealing with the concerns from workers and union leaders this time around?
--:-- Jessica Mendoza: Has anything changed?
--:-- Ryan Knutson: I do think that it's going to be interesting to see as those conversations start, like, not the loud conversations, but the quiet conversations between the sides will start soon.
--:-- Jessica Mendoza: It'll be interesting because, you know, a few years ago, the writers and the actors definitely had, I would argue, they had the public's support.
--:-- Ryan Knutson: And they had leverage.
--:-- Jessica Mendoza: I think as these tools get better and as there's more pressure on the Hollywood companies to make money, it'll be interesting to see how that plays out.
--:-- Ryan Knutson: What would be at stake if Disney's not able to figure out how to walk that line between pushing forward on AI and protecting their IP?
--:-- Jessica Mendoza: I mean, I would argue that the worst case scenario is that they lose ownership of some element of some character.
--:-- Ryan Knutson: I think that would be part for Disney.
--:-- Jessica Mendoza: If it came out one day that, like, oh, my God, OpenAI owns this version of Darth Vader.
--:-- Ryan Knutson: How much money might they lose if they lose a character like Darth Vader?
--:-- Jessica Mendoza: I mean, think about these characters. They're on posters. They're on lunchboxes.
--:-- Ryan Knutson: They are in movies. They're in TV shows.
--:-- Jessica Mendoza: Like, they're on T-shirts.
--:-- Ryan Knutson: Like, think about all the different revenue streams that come from a character.
--:-- Jessica Mendoza: I think the heart of it is, on some level, Disney is like every other Hollywood company in that they're trying to figure out how to embrace these technologies.
--:-- Ryan Knutson: They recognize this is the future.
--:-- Jessica Mendoza: But at the same time, they also want to protect themselves.
--:-- Ryan Knutson: I think they're going to be super cautious because they have the most to lose.
--:-- Jessica Mendoza: But the days of AI being thought of as a bad word in Hollywood are over.
--:-- Ryan Knutson: That's all for today, Wednesday, August 6th.
--:-- Jessica Mendoza: The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Ryan Knutson: Additional reporting in this episode from Connor Hart, Amrith Ramkumar, and Eric Schwarzel.
--:-- Jessica Mendoza: Thanks for listening. See you tomorrow.
