MorganStanleyRESEARCHFOUNDATIONSeptember21,202509:00PMGMTMedia&Entertainment|North AmericaBenjaminSwinburne,CFA+1212761-7527Tech Diffusion -What's New inBrianNowak,CFAGen Al's Impact on the+1212761-3266wak@morganstarley.comCameronMansson-Perrone,EntertainmentBusinesss+1212761-7079pmorganstarley.com+1212761-1740The pace of Gen Al investment and adoption in Entertainment isacceleratine.We continue to seeOWsNFLX.SPOT.META, and+1212761-4831GOOGL as well positioned to benefit. Legal and talentcomplexities remain. with more litigations Launched and thespecter of expiring Hollywoodlaborcontracts looming in2026MEDIA&ENTERTAINMENTNorthAmericaKevTakeawavsIn-LineContenteffiency.-NFLXusedGenAltomakecost-prohibitvefectsacessibleContent creation-OpenAlbacking animated flm *Crtterz?#Alis alreadyspikingcontent volumesDeezerreports~30%of dailymusic unlads are *fullvAlDistibution and produrt-Spotfy's/AlRemixtol and Netflix'sMyNetflixaimtoenhancepersonalization with Gen AlMonetization.-GenAltolsare quicklyerteringthe advertising, market, focusing#Copyright and Talent-Disney, Universal, and WarnerBros are suing Midjourne,over copvright.Netflix oublished its first"AlGuidelines'tohelomanagerislThisreportfollowsour-July9thdepadiveas we continue to track the ropidly evolvingGen Allandscaope impactingthe ertertahnment industrv. For amoredetoledreport:OWsNELX.,SPOT,GOOGL(YouTube), and,andcontent cost efficiencies.Long-term. there2.1POowmers:Fr TV& filnstudosand musc abels he portuntesand isks ofGenAlbeghwiththeneed tofirst defend and then furtherexplot ownedintellectual oronerty.Defendine the valueofconvright andartist renertoireisparamount Gen Al can enhance artist and fan connections and moreficiently andeffetvelysurface new content worldwide.sonlyasingle factorin makingtheir investmenconsumerwithanincreasinglycustomizedexoerience.As ourdigitallivesfurthe fragment, we believe the demand for live, shared experiences will increase
MoraanStanley|weseaerFOUNDATIONaccelerating thetrends we havesen post-pandemic. This should beneft owersof4.Sports Assets: As Gen Alfuelsa surge n overall content supply and platformsagressively compete in the attention economy,sports rights holders shouldbeneft. Global sports, nparticular, are well positioned astechnology bowershistorical national and regional bariers. This plays to thestrengths of OWFWONKand EWTKO.Exhilbit 1;TheEntertainmentindustry is rapidly adoptingGen Altols: the artsusage onAnthropic's Claude.AldnessandFinancialOparaionsAnchihectuneandEinghnooing一aManagemo10115%TechDiffusionA Morgan Stanl
MorganStanley|weseaen,FOUNDATIONContent Creation(Innovation and Efficiency,What's new?DContert innovation-From OpenAls new feature-length animated flm CritterztoNetflx'suseofAl-drivenVFXtoolstocreateanactionsceneintheArgentineserlesElEternaut both incumbents and new studio entrants are finding ways toleverage Alfor content creation. Lionsgate Studios cited experimentation withusing Al to adjust the tone, format, and rating ofits existing library content (e.gturningallve-actionflminto acartoon)2)Contenteficiency.-Studliopa...
