00:00Certainly this is quite interesting. A look at what's making headlines in national newspapers
00:03and sparking some conversation on social media. And get this, plans to make an AI-generated movie
00:08out of a popular web series called Soul Fairy, not sure if you've heard of it,
00:13is a subject of hot debate on Weibo. Let's bring in our team, shout out correspondent Min Min Lo
00:18and our Robert Lee, Bloomberg Intelligence Senior Analyst here. Min Min, I'll start with you. Tell
00:22us more about this new film. Why is there so much buzz about it? Yeah, you just saw a snippet,
00:28a trailer there. That was a real one. That is a real one. It's not the AI movie. It's still
00:33in
00:33the works and it's not out yet. I couldn't find any trailer. But this is a web series that is
00:37very
00:38well known in China. It started in 2014. There has been multiple series. There's been movies made as
00:42well. So people have an emotional connection to some of the old actors and actresses involved in
00:48that series. So ITE, which is China's version of Netflix, has said they're coming up with a new
00:53movie, but it's entirely made of AI. And guess what people say? They're really disappointed. They're
00:57like, don't destroy my childhood. We want those actors back. And people are saying that it's crazy.
01:04I'm going to send my AI friend to watch it. I'm not going to watch it myself. It'll be cool
01:07if they
01:08can make up those AI audiences, some of them say. And you know, they're asking, is it going to be
01:12cheaper because it's made of AI? People are really quite disappointed. I think because of the emotional
01:17connection to the to the actors, right, they really want that authenticity. They never really look like
01:22the AI characters never really look like the celebrity. To be honest, I have to tell you, I was quite
01:27surprised by the reaction because if there is anywhere in the world that AI films can take off, I think
01:32it is in
01:32China. Because already, if you look at particularly because China has this very unique form called the
01:37micro dramas, like it's vertical films that you watch on a phone. It's only one minute long. And people are
01:44not
01:44really obsessed with the quality. And there has been so many AI films already out in the industry that is
01:50quite
01:50successful. So I was quite surprised that they were not open to this movie. But perhaps because
01:54this is a cult classic that people are familiar with. But perhaps if it's a new film that is not
02:00bringing back the old actors, people might be more. I don't know how I feel about it. Avril, what do
02:05you
02:05think? I mean, I'm not sure how I feel about AI generated content. Yes, same. You know, stripping away our
02:16childhood. Yeah, but it was also interesting, because when you talked about one of the popular
02:21content forms that have been coming out of ITE, I thought you were talking about Pursuit of Jade,
02:25another very popular Chinese drama of late. But Min Min, talk to us as well about this pivot that ITE
02:33has been making into AI films. You know, does it really feel the strategy is going to pay off?
02:41I mean, it is obviously putting money where its mouth is. It is saying that it's committing capital
02:46allocation, because it wants to ensure that most of its film is going to be made by AI in five
02:52years
02:52time. And it's even encouraging AI content creators by promising that they will give them an additional
02:5820% cut of the advertising and subscription fees. They're coming up with an AI toolkit that can make
03:05pretty much every aspect of filmmaking, from script writing to the final rendering. And they're
03:10creating an IP library of digital AI assets as well that content creators can tap into. And this is
03:16coming amid this context where ITE's revenue has been under pressure because of the rise of these
03:22other short video tools like Kuaishou, like Douyin, that has been putting pressure on traditional
03:29entertainment formats. So they're sort of pushing ahead with this new strategy to maybe run ahead of the
03:34curve to come up with new innovative formats. And perhaps in that process also compress the
03:40production timeline and the cost of making films as well. Yeah, I mean, we haven't even talked about
03:45Pursuit of Jade. Everyone and their mother, I feel, has been watching that show.
03:50They have been analyzing the facial features. I really have to think about whether I need to invest
03:55myself in that show. 40 episodes is a lot. Robert Lee, tell me about IG, though. Are they going to
04:01be
04:01able to deliver on this promise? Okay, without bringing too much skepticism to it, look at IG's share
04:08price. This is a stock that has massively underperformed. The ticker is IQ space US for anybody who wants to
04:15check it out. And also, they're a Baidu subsidiary. Their profitability has been under substantial pressure.
04:22So obviously, from a management point of view, they need to say something positive. They need to restore confidence to
04:28the
04:28market. So guess what? You know, AI, I think, will definitely benefit their business. It's a good productivity efficiency
04:34tool. But will it be as transformative as the management are making out at the moment? Yeah. Then probably not.
04:40And the prime example, the best example to look to is OpenAI, which within the last couple of weeks has
04:46dropped its Sora tool. So Sora was a text to video generation tool. The economics of that did not make
04:53any sense
04:54whatsoever. So anecdotally, they were losing around five US dollars for every 30 seconds of video
05:00that was generated. Because the computational cost tied up with generating video, particularly high
05:05definition video, and, you know, movies at 24 frames a second, it consumes a lot of compute. Somebody has to
05:15pay for that. So the economics behind text to video or video generation don't make any sense, which is why
05:20OpenAI have dropped it. So ITE is now claimed or is now projecting that they're going to go all in
05:27on
05:28this. Well, all I say is good luck to them. Robert, I guess for ITE, OpenAI's example is a bit
05:38of a
05:38cautionary tale. And I wonder, as we talk about AI and, you know, jobs going obsolete, what is this going
05:46to
05:46mean for Chinese actors that have been protesting about the plan? Are they right to be concerned?
05:53Okay, well, clearly I don't work in the movie industry, but here I am sat on TV at the moment.
05:57There is a lot more than TV and video than the video itself. There's the script, there's the plot,
06:02there's the nuance that an actor can bring, the facial expressions. I don't think there's any evidence
06:07that AI is anywhere close to generating that. And also, if we go back to basics, AI as we know
06:12it is
06:13based on pattern recognition, it's basically regurgitating or giving you a mashup of human-made
06:19content, which is why on social media, et cetera, you're getting so many complaints from consumers
06:24about so-called AI slop. So I think that's the danger. We get an averaging down where, you know,
06:30basically generic plot lines, you know, very bland content, lacking in the character that you get from,
06:38you know, live Bloomberg TV. I think all of you should rest easy. I cannot see within my working
06:44career, AI replacing any of us. Oh my goodness. Famous last words. Thank goodness. Have you seen the AI
06:51version of me reporting the news? I made a package of that last time. I remember that. But I'm just
06:57going to beg to differ a little bit because I know you mentioned about OpenAI Sora, but you look at
07:02the
07:02Chinese landscape is completely different. The cost sort of picture there when it comes to the
07:08electricity and energy usage. You look at Kling app that belongs to Kuaishou. It's actually one of the
07:14most monetized, the leading app when it comes to video to text generation. I've looked at ByteDance's
07:20tool as well, and it's really impressive. I mean, I can barely tell that it is made by AI. And
07:27I've also
07:27spoken to people in the entertainment industry. And there are these gaming studios, um, production
07:33studios. They are all switching to AI because they're talking about using, you know, AI to create
07:39graphic rendering versus using a human artist. You're talking about 90% sort of cost efficiency.
07:44So if I'm a production house, why not? And they're saying they just, you know, they're creating things
07:49that they wouldn't have the capability to do without AI. So it's really huge sort of shake up we're
07:55seeing in the industry right now.
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