Welcome to Gonzowood
AI, Unreal engine and the birth of a new media ecosystem
It’s 1991. You’re in a video store in Manhattan Beach. The guy behind the counter is practically screaming about his new movie script. “Five strangers, one perfect crime.”
His intensity is off-putting; his excitement so childlike it’s hard to take him seriously. Besides, he has no pedigree, no film degree and no connections.
“You gonna bark all day little doggie, or are you gonna bite?“, you mutter, half‑teasing. Who does this guy think he is?
Reservoir Dogs marked the debut of Quentin Tarantino, and the arrival of the “video store generation”—a group of scrappy autodidacts and iconoclastic outsiders who converted an obsession with VHS tapes into iconic careers as the next great auteurs.
Today, AI models are poised to collapse the cost of production—radically lowering the barrier to high-quality filmmaking. With them, another new generation of filmmakers is coming. But this time, their destination isn’t Hollywood. In this generation, director-founders will start their own companies, creating a new ecosystem that competes against the major studios. In an era of cultural stagnation defined by endless sequels and franchises, this is most welcome. We’re heading for a new era of independent film, and if we’re lucky, a creative renaissance.
Welcome to the gonzo generation.
An emerging generation of AI-native film studios
For decades, Hollywood has been controlled by a handful of powerful studios. They dictate what films get made, how they get made, and who gets to make them. The lynchpin here is cost. Blockbuster budgets routinely exceed $100 million—numbers that only major studios can absorb due to the scale of financial risk.
So, it’s worth paying attention when new technology offers a cost advantage. And that’s exactly what we’re seeing with emerging AI workflows, fast becoming the foundation of a new generation of AI-native film studios.
One early example is Staircase Studios, founded by Divergent producer Pouya Shahbazian. They recently announced plans to release 30 films over 4 years, starting with a WWII epic directed by Brett Stuart. It will be produced using a hybrid AI/3D workflow for under $500k. While the quality differential is currently unclear, this is already 10-20x under average for an independent film.
Promise Studios offers another glimpse of what’s coming. Founded by former YouTube execs George Strompolos and Jamie Byrne alongside AI filmmaker Dave Clark, the team is similarly combining 3D workflows and AI models to produce original films. A recent behind-the-scenes showcase demoed their upcoming IP, NinjaPunk.
The quality of AI-generated content isn't fully mature yet, but if the last two years have taught us anything, it’s that things move quickly in AI. Eventually, the gap will close, providing small studios the means to compete on visual fidelity and storytelling ambition at a fraction of the cost.
Historically, brutal economics meant that breakout indies like Pulp Fiction, The Terminator, American Psycho were just a way into the studio system. Those dynamics still dominate—this year's Oscar-winning filmmakers Sean Baker (Anora) and Brady Corbet (The Brutalist) worked unpaid for multiple years in order to get their films made.
This pipeline was economically unavoidable because major studios control theatrical distribution and capture nearly 80% of box office revenue. If filmmakers wanted to “make it” at the highest level, indies were a way to prove their talent before being handed a real budget and mainstream distribution by a major studio. Unfortunately, it often came at the cost of creative control. There are countless horror stories of filmmakers investing years into projects that were cancelled at the last minute, or creatively destroyed by overbearing executives.
Today, the centre of gravity is moving away from the box office. Streaming services like Netflix and Amazon now dwarf the box office in both revenue (SVOD revenue is about 4x box office revenue worldwide) and viewership (streaming viewership is about 100x box office). In these ecosystems, who makes the content matters far less than how good it is. This gives small studios a real competitive advantage. If they can deliver the same quality at a lower cost, they don’t need studio backing, and can compete directly for licensing deals.
Contrary to popular thinking, this is an ideal environment for filmmakers. That is, true filmmakers—the people who actually make the films rather than the ivory tower executives who fund them. AI-driven cost reduction and shifting distribution habits make the small studio model more viable, meaning that filmmakers no longer need to orient themselves towards major studio backing. Instead, they can start their own production companies and retain full creative control, while still competing at the highest level.
That’s gonzo. A new ecosystem of small studios led by visionary director-founders, each empowered to tell their own stories on their own terms.
Emerging studios use a blend of AI and traditional filmmaking techniques
Traditional filmmaking is notoriously slow, expensive and labor-intensive. The use of AI, combined with traditional techniques, promises to compress the pipeline without compromising on quality.
In recent weeks, Runway released Gen-4—their most advanced model to date. They followed shortly after with References, a new workflow that enables you to reliably place a character inside a scene and view it from many angles. Together, by my own estimation, it’s the first time AI is usable for serious production work. It’s still not “there” yet, but it’s getting very close, and you can see the results in their latest festival submissions. We can expect OpenAI’s Sora, Google’s Veo and other competitors to follow up soon.
Of course, video models don’t operate in isolation. They build on a wave of generative models across language, voice, and music—all of which are being folded into the film pipeline.
In pre-production, image models like Midjourney or Runway Frames let directors and storyboard artists iterate visually at near-final fidelity. Models like Odyssey will make 3D asset creation faster and cheaper than manual pipelines ever allowed.
In production, Gen-4 can generate short VFX sequences or even entire scenes, either as references for live shoots or as final outputs. Actor performances can be translated from the camera into simulated worlds via cheaper form of motion capture.
In post-production, AI is already helping with ADR, music, scoring, and sound design.
Developments in AI are building on the trend of virtual production—a technique that uses Epic Games' Unreal engine to render environments in a studio rather than travelling to a location. It combines a physical set for actors and a background provided by a large wraparound screen. Unreal engine renders a virtual background that responds to the camera, and a visual effects team ties everything together in post-production. Recent titles like Matrix Resurrections, Netflix’s 1899 and Fallout are standout examples using these techniques.
For now, Unreal offers more precision than AI. It's predictable, stable, and free from hallucination. But its limitations are also clear: generating final-quality scenes in Unreal is painstaking and labor-intensive. It can be done—that's how video games and animated films are made—but it's truly a labor of love. So as things stand, virtual production still favours the use of real cameras.
AI will take virtual production to another level. Rather than using a real camera with a virtual background, AI will increasingly be the camera, generating performances and environments directly inside a simulated world. Physical sets will become even more minimal, and perhaps even unnecessary for anything but the highest budget content.
In the short term, emerging studios will combine techniques, using AI where possible and either virtual production or on-location filming for everything it can't yet do. It's too simplistic to say that AI will take over everything, and each studio will have their own way of combining tools. But expect a trend in which AI does an increasing majority of the work for forward-looking teams.
In the longer term, it suggests a future where the pixels we watch are digitally generated instead of physically filmed. Not because it's "better", necessarily, but because it's cheaper, faster, and more expressive to generate. Live-action shoots may become rare exceptions, used only when physicality is essential or stylistically preferred.
This won’t be welcomed by everyone. Stalwarts like Tarantino and Nolan are famously allergic to new technologies and will almost certainly continue doing things the way they always have. And good for them—I hope they can continue to provide work to the artisans working at the highest levels of visual effects and cinematography. But inevitably, it will render many technical roles oddities or entirely obsolete. And it remains to be seen whether job losses due to obsolescence will be offset by the emergence of new studios seeking experienced talent.
Either way, combining AI with traditional filmmaking techniques offers the next generation of studios a viable model to produce high quality films cheaper and faster than has ever been possible before.
New studios can help to end an era of cultural stagnation
The tools are exciting—but they’re not the real story here. The real story is the disruption of Hollywood’s oligopoly. For decades, the cost of making a feature film has acted as a moat, protecting a handful of major studios from meaningful competition. Over time, that moat has become a trap. To manage financial risk, studios have retreated into creative risk-aversion in the form of endless sequels, reboots and franchises.
The result has been a cultural stagnation. The problem isn't just that movies have gotten worse—it's that no one outside the system has been able to do anything about it.
If there is one rule to learn from Silicon Valley in the past 50 years, it’s that small teams obsessively shipping can outperform even the largest companies in the world. And what’s changing here is that the startup model is becoming viable in cinema. Feature film budgets are tumbling within range of a typical seed round, enabling visionary director-founders to launch their own companies rather than competing to enter the studio system.
The explosion of next-generation studios will provide the competition that film so badly needs. Where many Hollywood-adjacent commentators see this as the darkest days of film, I would argue the opposite. Disruption is what is needed to end the structural dynamics causing cultural stagnation. While it will come at the cost of some major players in the current ecosystem, the new tools guarantee two critical changes:
They lower the barrier to entry. Anyone with a vision and a seed round will be able to make something that looks good.
They widen the creative frontier. Stories that were once too expensive, too niche or too technically impractical can now be told.
I can't say that this will be unanimously good because the same democratization that enables new creative brilliance will also flood the market with mediocrity. We're about to witness a thousand amateur Kubricks convinced their AI-generated fever dreams are high art. Strange vanity projects, bizarre genre mashups, and films that make you question the creator's sanity will proliferate across every platform.
And that's exactly what we need.
The way forward isn't through careful curation by studio executives worried about quarterly earnings. It's through radical experimentation at scale—letting a million weird flowers bloom and seeing which ones survive. Many of them will make your eyes bleed, but that is the price we have to pay to discover the next generation’s defining voices. Given the state of movies today, that price is worth paying.
Besides, Hollywood won't simply vanish. The major studios still own theatrical distribution and control A-list talent. And there are signs of existing players integrating the tools themselves—the Russo brothers are investing $400 million into AI production workflows at AGBO, starting with Electric State. A24 is quietly building out its own AI team, and we can expect others to follow suit. We should expect the Hollywood machine to be leaner, faster, and—hopefully—more creatively ambitious.
Towards a new cinema ecosystem
In the past era, Hollywood enjoyed a monopoly on production. But the arrival of powerful AI models represents a power shift away from the big studio monopolies towards a more open playing field. Emerging filmmakers are empowered to compete against the landed gentry, bringing the full weight of their gonzo energy.
This generation will do what the video store generation did in the 90s. But they will do it bigger, better and weirder. We are going to see a Cambrian explosion of new content at a time when new blood is sorely needed. It’s time to move away from the MCU, and back into an era of thoughtful, original cinema.
Each new generation has its foundation film. For the 90s cohort, it was Reservoir Dogs. For this one, it’s not clear yet, and we’re probably still some time away. But mark my words—it’s coming. After all, you know what they say.
Every dog has its day.