Why Netflix Bought Ben Affleck’s AI Company, and If Hollywood Should Worry

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New series, streaming March 14, only on Paramount Plus. It is Monday, March 9th. Over the past few years, one of these smartest voices on the subject of AI in Hollywood

has been Ben Affleck. He's argued for using AI as a tool for both efficiency and creativity. He's downplayed concerns that AI will take over the role of the creative person,

particularly when it comes to filmmaking. He was good on Joe Rogan discussing that issue and it's done a lot on his press tours. Turns out there's a reason why Ben Affleck notes so much about AI.

We learned last week that he's quietly founded an AI startup. It's called Interpositive and Boom. He's now sold it to Netflix. People in town may have seen that headline to become concerned.

But first, this is not a text prompt to video AI model.

It's basically a filmmaking tool where a director can upload dailys and other pieces of his or her own movie. And the model can help fill in holes or streamline scenes, help with visual effects, sound mixing, all of it. But it's not a stretch to believe that Netflix is doing this

in part because it wants AI to help deliver more content for less cost. And if you're afraid of people in the creative community getting spooked about AI, there's probably no better strategy than getting a filmmaker like Ben Affleck on your side.

To that end, Netflix put out a little propaganda video with Affleck explaining this model and how it can take out stunt wires, fix sunset, lighting, et cetera. It's going to make things better, not just cheaper. They argue, do we believe that?

And with all the AI technology startups out there,

“why did Netflix acquire the one co-founded by Ben Affleck?”

At the same time, Netflix closed a big deal with Affleck's artist equity for exclusive rights to movies. That's part of that deal. So we've got Lucas Sean here to discuss it all. We'll also get into the live nation anti-trust settlement

with the government, but mostly today is Ben Affleck, Netflix, and the next steps in AI. From the ringer and puck, I'm that felony and this is the town. OK, we are here with Lucas' shot from Bloomberg. Welcome back.

Lucas, how is your weekend at the Indian Wells tennis tournament? It was great. It was the event of the season. You were missed, where were you? It felt like a music festival as a couple of people told me.

I know. Did you spot any elephants there? Larry Ellison famously owns the tournament. I did not spot David. I did not spot Larry.

I actually didn't-- the only famous person I saw was the basketball player, Jimmy Butler, who the huge tennis fan. And his on-cretches, because he's rehabbing. But he was there to see Carlos Alcaras.

No, I'm sure they have some VIP area that you can't see. No Tom Cruise. Tom Cruise was in town. He was spotted on his motorcycle.

“I'm sure they do, but that's why I was so surprised”

to see Jimmy just walking down Main Street. We are not talking about the Ellison's or Indian Wells today. We are talking about AI because this announcement last week, that Ben Affleck's AI company. That nobody knew was a thing.

Is it thing and has been purchased by now? It made a lot of the public comments on AI, in which he looked quite intelligent or at least more thought about the average public. It made a lot more sense.

Yeah, exactly. Also, it was kind of funny, though, because he was also shooting on Netflix and how their movies need to tell you the plot five times.

And they need to have action in the first 10 minutes.

And lo and behold, he does a big deal where Artis Equity is now producing movies exclusively for Netflix, not just the ones he's in. They got them to take the ones that he is not in. And this AI company, I think, was not just thrown in.

It was part of the deal where they paid certain undisclosed amount and got this company. So let's go through what this is and what this is not.

“Because I think on the surface, this is a pretty benign deal.”

But it may signal some things that are less benign. So give me your take on this deal. Do you get the sense that people are upset about this? No, not really because it's been athlete. I guess if you were to structure a deal

especially one like Netflix that sort of comes from Silicon Valley and some people in Hollywood do not trust. This is what you would structure. You would say, OK, go and do a deal with a top tier filmmaker who has developed tools that are trained primarily

on what they're already making. And so you're not violating copyrights. It is totally kind of within the system. And oh, by the way, it is because it is made by an artist. It is for your fellow artist.

“So that's why I also, we're going to have different takes on this.”

You're going to say, well, don't tell me what I'm going to say. I'm going to say what I'm going to say. I'm going to say my only question about this is, does it really, like, doesn't matter, right? Does I assume that in the span of the last three to four years

that Ben Affleck has not come up with God's gift to AI filmmaking tools, I could be wrong? No, but what I think happened is they looked at this tool, Netflix. And they said, OK, this is a few years. I had of what we are doing here.

We will eventually get there. But Ben's been doing this for three or four years now. And we can buy this and just get a three or four year head start. And we're already in business with this guy.

And this is the key thing here.

It's Ben Affleck. They want AI to be incorporated into all of their filmmaking. And this is, you know, kind of a Trojan horse, where if they're in business with Ben Affleck on AI, no one is going to question what Netflix is doing in the AI world.

And that's the real value here. It's a big press release. They put out this propaganda video with Ben Affleck and Bella Bajaria and their chief product officer talking about how great this tool is.

And every filmmaker is looking to say, OK, I can get on board with this. So this tool itself is pretty innocuous. They can get rid of wires. They can, you know, if they miscoverage of a certain reaction shot,

they can use the daily's to recreate that reaction shot. All stuff that filmmakers, I think, would agree is just an extension of visual effects and using AI to super power this stuff, a great tool. But it's what it's signaling about what's coming

that I think is more interesting. OK, what do you think it's signaling? Well, it's signaling that Netflix is going all in on AI. I think how you make the leap from they're doing a deal for a relatively small company

with a specific use case, too. That means that they're going all in on AI.

It is the first sign of what Netflix is the aspirations in AI.

I think this is all nice speculation. They are not saying this. If you look at the financials, they have to bring down the cost of content. If they want to compete with YouTube for engagement,

they got to make more and more and more. And they want to bring down the cost. So AI is certainly going to be a part of this, not just Netflix also. It's all of these studios.

They want to figure out how to bring down the cost of content through AI. And if you can get a huge talent like Ben Affleck in your corner,

“you have a little bit of runway there to experiment, I think.”

I want to talk about that YouTube point for the second. Yes, they are all trying to compete with YouTube. But I don't think that any of these Hollywood companies is trying to compete with YouTube on volume, because they just can't do that.

That's not a winning game. You know, but they want to win. Why do you think Netflix is doing podcasts? Right. But again, that's not a competing on volume.

That's a different category that can boost engagement. It produces a lot of volume of hours for not a lot of money. Yeah. And very few of those podcasts will generate significant viewership.

They're doing, you know, how dare you. The Craig's podcast is like to find the one or two that can be hits and touchdowns for them. Sure. But OK, but back to AI.

So you don't think that this is a volume play. Ultimately, with AI.

“I think that they would like to find ways to bring down costs.”

And they would like to find ways to make the product better. But I don't think that what they're going to be trying to do. And I could obviously be wrong is suddenly like now we're going to be pumping out like, you know, a new series every day. No, no, but it's more efficiencies.

Sure.

They're always looking for efficiencies.

And the cost of content keeps going up. Yes, because they're advantage on YouTube right now is actually profitability, they're more profitable than YouTube by based on. We don't have the YouTube numbers. But based on outside estimates, they're more profitable.

Yeah, they look, you said it every studio Amazon has been very public over the last couple of months about what they're trying to do. And AI Disney obviously has a deal with Open AI, although that has been less around the production of their film and television properties. Lionsgate has that deal with runway.

Every Hollywood studio is trying to figure out a strategy. And they want to do so without terrifying and antagonizing the creative people with which they work, which is why aligning with the major filmmaker,

again, of all the companies other than Amazon is probably going to be met

with the most fear and skepticism on this topic. And we know Amazon has a whole division run by Albert Chang, who is job is to figure out how to incorporate AI into the production process. Yeah, mandate from CEO Andy Jassie on down, there was already coverage of how it was used in the show House of David, which is kind of one of the

biblical ethics that they have. And then I know that they're working on it with animation and a bunch of other areas. And everybody, I guess this is not news, but I just think that the value of a Ben Affleck AI company to Netflix goes beyond this particular

tool that he is totally into them. Yes, it gives them some license to to fuck around over the next couple of months. Yeah, it's like a year.

Remember how everyone freaked out when Lionsgate did that deal with runway to

essentially hand over their library to this AI company to create tools for them that they can use in the process? I've heard that deal has not been bearing much fruit or not as much fruit as they wanted to, but imagine if runway was started by James Cameron or someone like that, like there would have been a lot more good will towards Lionsgate's efforts.

There. What you just said is why I guess I am short-term at least skeptical of how big it deals some of this stuff will be, because it just feels like we're still in the phase that AI, and I don't know that this is going to change, but the utility of it will AI will create a bunch of tools that are useful for filmmakers, but we don't

yet have a lot of evidence that it's like massive job replacement, which is obviously the fear. And Africa has had some smart comments on that. He thinks that that fear and that messaging is coming from the AI companies themselves in order to scare everyone and to justify the cost of their investments in this

technology. He said that on Joe Rogan, I believe, or one of his interviews. And if you're already kind of a leader or a really powerful company, like OpenEye or

“Anthropic, if you scare people enough that they feel like you have to create guardrails,”

but you've already gotten big enough to be powerful, you can sort of create the guardrails that enshrine your power. It's like Elon trying to get rid of the EV tax credit because Tesla is already big enough. And it would just prevent others from getting his biggest aim. Or in the Hollywood example, if Netflix and Disney banded together to sort of set the rules,

to basically establish the kind of rules with guilds, rules with production, all of that. You just set it up in a way so that it perpetuates their dominance. What I like about AFLIC is he's very blunt about what AI can do and not do in the writing capacity because I agree with him.

I don't think that AI is going to be able to write quality scripts because it always reduces

to the mean. Have you written a newsletter in the style of Matt Melanie using Claude or chatchipyT? I tried it once in chatchipyT was God awful. Did you feed in all of your reporting? I did not.

Put in my reporting. I would help. But I asked it to create a newsletter on a topic that had widespread reporting and more of like and it just spat out garbage. It was just generic and nonsense.

And I imagine the similar results would come out for you as well. Have you done it? I don't think I... It's okay, you're not going to get fired. No, no, I'm trying to remember.

I've obviously fooled around with them quite a bit, but I don't.

“I think I have tried to see if it could mimic my writing style.”

But I don't know that I had it right in newslight, I don't remember. Okay. We are in agreement that the Ben Affleck thing sort of a nothing burger, not a nothing burger. Good for him. A strategically useful deal for both of them where Ben Affleck looks like a very forward

thinking filmmaker with this new technology. Netflix gets to align itself with a top-tier filmmaker and seems less threatening in terms of how it's applying AI. And look, it could be a useful tool for a bunch of people, right? Does this instill your trust at all in any of these major companies in Hollywood that they

will be using AI ethically going forward? I think they will do whatever they need to do to comply with guild rules. I'm not worried. I think this is... I'm not really worried about the studios.

I continue to believe that this is the wrong place to worry about artificial intelligence. You've got to worry. You think it's going to come from outside the system.

“The concern is how to open AI and endthropic and Google and Facebook use technology, right?”

It's how do these big tech companies that have proven that they don't really give

great tools and technology that users like. How are they going to kind of roll out products and how will they be adopted and what

“will that mean for the assets that these companies owed?”

This is a topic it's why I've always been confused on the guild negotiations.

I think that for the most part, the guilds and the studios are on the same side. There are obviously areas where they are going to disagree and I understand why some of the guilds are worried about ways in which the studios could reduce some employment. But I think NetNet, they're on the same side and that they are trying to protect copyright. They are trying to protect the work and jobs and yes, the studios might try to save a

little money. But for the most part, their incentives are more aligned than not when it comes to their relationship with these big tech companies. But you're more concerned about the whack-a-mole of Sora and seed dance and we'll see it already, right?

See it already, right? I know. And how many times can they send season to Sisletters and get an apology after the fact?

It's always going to be asked for forgiveness.

They're going to create the product and especially for talking about Chinese companies. They're not going to give a shit about American movie copyrights. I know. And then all of a sudden there's going to be Chinese videos of Brad Pitt and Tom Cruise starring in separate movies that the US can't really do anything about and that people

can pirate on the internet. And they only brought it to heal with YouTube initially because they just like, they bothered YouTube enough that YouTube decided it was more in their interest to sort of build a tool to police the platform that was imperfect but good enough. And guess what, it worked out pretty well for YouTube.

Do you think it's more likely that the first kind of mostly AI movie comes from a traditional studio and not including people like Netflix and Amazon and that or is it going to be open AI studios presents the first AI film? Yeah. Well, no, it's not at can yet.

They say they are trying to get this animated movie into can. I would be shocked if can let an open AI movie into the actual festival. My guess is they will bring it there and show it outside of the official festival and then everyone will write about it and it'll be a big controversy. Yeah.

But yes, there's no way it comes from a major studio first. It's going to be either, I mean, there already are, you know, it'll be an independent using existing tools or it will be bankrolled by one of these big companies to say this look at what our tech can do. Yeah, Pixar, this journal piece this weekend, Pixar said they haven't even incorporated

any AI tools into their workflow and they're resisting it and they are now doing more commercial movies in order to justify their costs because they don't want to do that stuff. So we'll see how long that lasts.

“On to the live nation settled because I know you've written about this, I think it's”

a big deal. I think most people don't really understand what was at stake here.

Live nation has tentatively agreed to settle the federal case $200 million and some promises

buy live nation that they will and exclusive booking practices and what else? Am I missing anything? There's some disagreement at the moment over whether they're going to sell certain venues or exactly some of the details about it, they haven't announced yet. Like we basically we broke the news Sunday night, the political followed up Monday morning

with some more details. I think they've announced it by now. They haven't announced it, but I don't know that they haven't announced all of the details. So this is nothing for them. This is a huge win for live nation, $200 million.

That's like Michael Repino's tip for the ballet when he goes to shows. That is nothing, right? Yeah. $200 million to a company that makes billions of dollars in revenue a year. The money is not the issue.

I mean, it sucks, but the money is not the issue. Yeah. The issue is they were facing a potential break up. Well, Dave, there's no, yes, the Department of Justice was trying to get live nation, which owns ticket master to divaster ticket master, and that is not going to happen.

They will create, they will open up, kick getting a little bit by which, you know, the way it works is venues tend to have an exclusive relationship with a particular ticket seller, which in a lot of cases for the big venues is ticket master. And ticket master's competitors would like seatgeek access would like to be able to either have it be completely open, or the same venue or local arena you can buy tickets from

two or three different places, or at least have a lot in where ticket master gets some, and they get some.

“And so I think there's going to be a little bit more of that, but you know, the, the, the,”

the huge change for the way ticketing works that I think some people are hoping for is, is not going to happen. No, no change to the ticket prices, no change to, well, they're not going to, you know, litigate pricing and a settlement like this. No, no, but I'm saying if the whole point of this was to address the skyrocketing price

with this, at least New York has already put out a press release saying they are not

on board with this. So could the case continue even if there's a federal settlement? It probably will because like the majority of the state attorneys general in the country joined the suit, and it's an easy, it's a bipartisan issue. Everybody hates ticket master.

Everybody hates ticket master, which is also sort of ticket master's job. I know we've talked about this a little bit, but if we have, it's not like ticket master is operating in a vacuum. You have the artists who say this is how much I want my tickets to cost, you have the venues, and who say this is what I want, and they are taking all the flag for them.

That Bruce Springsteen is charging three grand for his no kings tour. Yes. You know who's not saying you have to charge three grand, like what a peanut, the CEO of live nation. He's not mad about it, but he's not, he's not going to be the one to say, hey Bruce,

you really got a charge only a thousand, unless he's going to say it's not going to sell

“you need to bring it down, but it's charging three thousand because that's what the market”

is for those premium tickets for Bruce Springsteen. I know. So, why did this happen? Is this because they played audio of Rapino threatening venues in the opening argument? Is this happening because Trump, for some reason, wants it to happen?

This is why Gale Slater stepped down in the anti-trust division, like give us the inside on why this is... Look, live nation has been trying to settle this for a while. They made a proposal last Spring, I believe, and had been trying to settle with the DOJ for a bunch of last year.

I think it was in their interest to not have it go to court and have embarrassing things like the audio of my Corpino threatening the Barclay Center played. The longer that would go on, the more you'd have these embarrassing things that probably wouldn't change the case materially in the sense that once the judge made a ruling a few weeks ago, it's clear that there wasn't going to be a full-on break-up, and so it was...

There was going to be... There were going to be remedies, there were going to be changes to how the business operates, and so it was like, do you want that to happen after the case or do you want that to happen during the case? Live nation obviously wanted to get it done sooner rather than later.

And the Trump...

“I don't think the Trump White House, even though I believe the initial investigation might”

have even started under them many, many moons ago.

The first Trump administration, you know, because the Biden administration filed the case...

Correct. And then the Trump people were litigating it. Look, it's the same reason why I didn't think that the Netflix deal was going to get blocked. I certainly don't think the Paramount deal is going to get blocked. I don't think the Trump administration has a lot of interest in blocking deals or causing

huge problems for businesses. Police of all ones that are politically not opposed to them in some material way. But honestly, this is such a bipartisan issue. You'd think the populist Trump people would be like, "We got to stick it to the ticket people."

That's what everybody cares about. It could be a winning political issue for them. It just doesn't seem like one that he was... Itching the fire. I'm sure the Department of Justice will say that Trump was not personally involved in this

other than spending time with Kid Rock to talk about the problems and ticketing. He's been used at phrase Trojan Horace earlier. He's sort of been the Trojan Horace for some of the live-nation arguments I would say during this whole process. I know we have not seen video of Michael Rapino visiting the White House.

Is that by design?

“I think Rapino has definitely met with Trump.”

I don't remember if it was Mara Logo or the White House or both, but yeah, I don't think it's in anyone interested to advertise that. Look, it's not that any of the people that we cover want and advertise when they meet with Trump for the most part, everyone's in a while like useful to their point, but... Sure.

Yeah, yeah, yeah. I know, when are you and I going to visit with Trump? I feel like we need an audience. Well, you just made your plea here. There's probably someone in the White House who listens to the show and they'll follow up

with you. Or you'll get a call. I'll probably get a call. And then I'll get audited. All right.

Thank you, Lucas. We're going to have you stick around for the call. She'd a very important update to our box office draft. All right, we're back with the call sheet. Special call sheet today, Lucas is here.

But first, Craig's some accountability corner. I hit on both movies last weekend, correct? Yes, under on the bride easily and over on hoppers, relatively easily. Yeah, both kind of came in as I expected. Over, I had over on 38, I believe on hoppers and it came into 46.

And the bride came in under 14 way under about 7 million.

Yeah, you took the under on 16. But the bride gets us into the real topic. Yes, call sheet. The real topic, we need to, I am arguing. We need to redraft from our box office draft because it's not an argument.

OK, well, Lucas is, state your case, Lucas. Because the rule was each movie that we give each other. If you remember the box office rules, we pick six movies. And then each of us gives the other a movie that we believe is going to bomb.

The rule is it has to have a production budget of $100 million.

There was a question about the bride. Warner Brothers is absolutely low-balling with its $80 million number. My reporting suggests that the actual cost of that movie is $92 million, which is under $100 million. So we got to redraft.

My argument was pretty simple, which is that I did not think it was more than $100 million. I was encouraged by you to take it because you believed that Warner Brothers was lying. And thus, well, they are lying. And that's just not a much as I thought that you said that was allowed to take as opposed of the show.

But if you go back and listen, we said, go ahead. And if it comes in under a million, $100 million, you'll have to redraft. OK, this is great. You get the official judge on this one. You tell us what the rule is.

It's coming in under $100 million. We discussed this. So Lucas will have to give Matt a new bomb. Unfortunately, because it looks like a bride is going to, absolutely. So sorry.

So sorry. That would have been a big loser. I know. I've been the easy one. You have to redraft me a bomb.

Craig, you want to say the teams? Sure.

So Lucas's team, Lucas had the first pick in the draft.

Spider-Man, Super Mario Brothers Galaxy, The Odyssey, Mandalorian and Grogo, Doom 3, Jubanji 3, Devawar's Prodo 2, and his bomb that Matt gave him is Masters of the Universe, which is a real gem. I love that. I'm feeling pretty good about that.

Especially now that Paramount saw the weakness, and they put the scary movie reboot on the top of that movie. Matt's team is Toy Story 5, Avengers Doomsday, Minions 3, Moana, Michael, Disclosure

“Day, and Hunger Games, and now Lucas, what will his new bomb movie be?”

I think I'm going to take a risk, which is going to bite me in the ass here, probably, which is I'm going to give you a digger. That's the right call. Yeah. Oh, the Tom Cruise, Alejandro, Interretu movie, digger.

That's the right call. That's the right call. So, it's a comedy, which are automatically limits its global appeal. In your E2 has really only ever made one movie that was a big hit, which was derevenant with Leo, which is the risk case here, right?

It's him again being paired with a major star in Tom Cruise. The fact is, I want to be wrong on this, because I like in your E2, I like Tom Cruise doing something other than action. I just think the odds of this movie being like a massive hit are really low, and it's expensive.

And it's expensive. Cruise is in prosthetics. I am told for most of the movie, so it's not like you get to see Tom Cruise as, you know, the Tom Cruise we know. So I think the other options were super girl, which I don't think is going to be a big

hit. It doesn't look great.

But the floor on that is still probably like $300 million.

And then this untitled, or not untitled, the JJ Abrams movie, which it's sort of like this fieldberg movie. Obviously, Spielberg wave, bigger filmmaker than JJ, but like, I don't really want to touch it because it could be commercial and work. Yeah, we don't know what it is.

The great beyond is what it's called it, but it was recently dated for this year. And I will say that the October and November, like the fall window, September, up through about Thanksgiving, is looking pretty follow. And so one of these movies, whether it's the JJ movie, digger, some other stuff in there, is like, one of those movies is going to hit, and I just don't know which one it's going

to be.

“But recently, when in doubt, you should probably bet against an original comedy.”

Correct. Although, I don't know, I mean, it's cruise and e-retu, I could at least, it could totally work. I mean, you could pick movies other than Warner Brothers movies, find me a $100 million non- Warner Brothers movie that we haven't taken.

Yeah. We don't know the budget of social network, too. No way. That's one. That's one.

100 million dollars. I don't know. But I don't think there's going to be a lot of interest in that movie. I feel like people are over a Facebook. I could be wrong.

But, yeah. We'll see. If it's what Sorcan originally said, it was going to be, which was a January 6 movie? No, it's a Korean version of the movie, right? Yeah.

“But I think he intercuts it and connects it to January 6 in the whole, you know, lead up”

to what radicalized so many people in this country. So we'll see. All right, Craig, are you, are you, if we started a calcium today on who's going to win? Who would you put money on? I think Toy Story 5 is going to be massive and I've been convinced that Avengers

Doomsday will do well as well. But no, I mean, look, Lucas has Spider-Man and Super Mario, Mandalorian's tough. Odyssey's a risk. I probably don't team Matt now. Oh, Craig is team Matt, officially.

Well, why don't we have a calcium for this?

“Maybe because it's a derivative of box office, it doesn't matter.”

But my understanding was that you could not, they can't do box office. It's illegal.

Because people know about it.

“No, I have a conversation with someone a calcium about it and I don't remember that explanation.”

It's not illegal because people know about it. That seems to be totally fine. I know.

That seems to be totally fine.

No, it's something. There's like specific, there's some specific, you can see that on which world leaders are going to be murdered. So I think that's totally fine.

“There's some specific law about box office, I don't remember what it is.”

We'll see. Alright, that's the show for today. I want to thank my guest Lucas Shaw. We're going to need to crack oral bags already here at John Jones, and I want to thank you.

We'll see you a couple more times this week. It's Oscar Week. We got some Oscar shows coming up.