Jeffrey Katzenberg, Co-founder of DreamWorks and Founding Partner of WndrCo: Hollywood Must Discuss AI Terms
Jeffrey Katzenberg, co-founder of DreamWorks and founding partner of WndrCo, published a lengthy article titled "The World is Changing: Artificial Intelligence and Creativity," stating that Hollywood must accept that artificial intelligence will not disappear and shift its focus from preventing tools to negotiating usage terms.
He wrote about seeing a complete animated segment with lighting and composition in his Silicon Valley office, feeling reminiscent of the first time he saw the computer-generated 3D character in "Luxo Jr." in 1986. That day, an artist he had known for thirty years texted him asking, "Are we done for?" He replied, "Of course not." In 2023, he asserted that new tools could reduce the time and cost of world-class animation by up to 90% within three years, causing panic and anger among some colleagues.
He framed history as a battle over terms rather than a battle over bans. In 1906, John Philip Sousa criticized the phonograph as a substitute for skill and soul, with the real demand being royalties, which led to the 1909 copyright law. With the advent of sound films, the live work of thousands of musicians in global cinema orchestras was replaced by a pre-recorded soundtrack, prompting unions to publicly oppose "canned music"; while those jobs did not return, it gave rise to musicals, modern scoring, sound design, and a larger Hollywood. He specifically mentioned Kodak and Blockbuster resisting technology, while Apple and Netflix embraced it.
Walt Disney, as recorded in Disney archives, only discussed characters, emotions, and whether the audience believed, not pencils; when Katzenberg was head of animation, he collaborated with the then-young Pixar on CAPS, replacing hand-drawn cels with computer-generated systems, expanding the canvas with "The Little Mermaid," "Beauty and the Beast," "Aladdin," and "The Lion King." DreamWorks later shut down hand-drawn animation and fully transitioned to 3D, with some achieving their best work and others not making the leap. He quoted George Lucas: what matters is not how to do it, but why to do it.
He separated reasoning from creation: reasoning seeks correct conclusions based on existing facts, while creation faces a blank page with no single answer, relying on taste, intuition, and personal expression. He believes today's models are almost entirely on the reasoning side, with generation being statistical imitation, lacking empathy, dedication, and serendipity. The gap remains, and the tech field cannot provide a crossing path; a common ground should be built on acknowledging this line. Northern California has produced tools but not artists; Southern California has the century-old craftsmanship that models rely on. The positive path must incorporate storytellers by design: attribution, consent, and compensation. The debate over the existence of tools is a trap; first, acknowledge that terms must exist, then argue what fairness is.
WndrCo was established after selling DreamWorks in 2016 and has invested in over fifty companies; recently, it invested in Reactor, which can generate video in real-time, and he has publicly discussed starting a new video venture with the former head of Sora. He humorously noted that Quibi proved he is not omniscient. He concluded with a quote from Steve Jobs: technology must be combined with humanity for the heart to resonate.
In market mechanisms, this is a preview of pricing for copyright and labor terms. The buyers are model and tool companies needing legal training data and film distribution; the sellers are unions, studios, and rights holders with film libraries. Funding has shifted from pure content production to an intermediate layer of "real-time generation plus Hollywood taste." Beneficiaries are production alliances that can negotiate consent and revenue sharing, while the old structure of making one film every five years per person is under pressure, as are generative platforms that do not pay for training materials.
Additionally, in 2023, he stated in a public forum: about 500 artists produced one world-class animation every five years, but in three years, they may not need to use even one-tenth of that. This lengthy article places the same prediction within labor history and copyright history, framing the 2023 writers' and actors' strike as a contemporary version of Sousa's proposition.
Source: Public Information
ABAB AI Insight
Katzenberg is not urging artists to embrace models; he is negotiating prices for both sides. At Disney, he used CAPS, and at DreamWorks, he closed hand-drawn animation; each time, it was a shift in structure for a new canvas; WndrCo is rewriting the same logic as checks for generative video companies. Reactor and potential Sora-related startups are his bets on "production operating systems after terms are negotiated," not on the models themselves. The failure of Quibi is actively mentioned in the article to bring his voice down from that of a prophet to that of a negotiator.
Capital seeks to buy the legal rights to emotional production. Northern California has reasoning engines but lacks a blank page that can make audiences cry; Southern California has the blank page but lacks a schedule after cutting 90% of costs. Whoever first writes consent, attribution, and revenue sharing into enforceable contracts can transform generative video from an infringement demonstration into an insurable production process. Unions want that page from Sousa: machines can play, but they must be paid.
Similar structures include sound films eliminating orchestras, 3D eliminating cels, and streaming changing window periods. Each time an art form expands, the previous tool jobs shrink. The industry is at a stage where tools can produce "movie-like shots" but cannot produce "the line only that person can say." Katzenberg frames the gap as a temporary ceasefire, fearing Hollywood will expend all its energy on prohibition, leaving the terms table to lawyers and model companies.
The essence is the transfer of pricing power. The mechanism is: as generation costs approach zero, scarcity shifts from drawing manpower to taste, world-building, and authorized characters; terms determine whether these scarce items are settled as rent or wages. If terms are negotiated, tools become brushes; if not, tools become free extraction from film libraries.
ABAB News · Cognitive Laws
Technology is never banned; what gets rewritten are the payment terms.
Jobs may not return, but canvases often become larger.
Reasoning can optimize existing answers, but creation is still pricing on a blank page.