Why Lions Gate Entertainment Signed a Deal With an AI Startup

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[00:00:18] [SPEAKER_04]: Welcome to Tech News Briefing. It's Thursday, September 19th. I'm Zoe Thomas for The Wall

[00:00:24] [SPEAKER_04]: Street Journal.

[00:00:25] [SPEAKER_04]: Facebook and Snapchat ads promised free cash. Instead, hundreds of thousands of people who

[00:00:32] [SPEAKER_04]: clicked unknowingly had their health insurance switched, sometimes more than once. We'll tell

[00:00:38] [SPEAKER_04]: you about the lawsuit claiming scammers used social media to target low-income Americans.

[00:00:45] [SPEAKER_04]: And then, coming to theaters and televisions near you, movies and shows created with the help of

[00:00:51] [SPEAKER_04]: regenerative AI. Our deputy media editor Jessica Tunkel will bring us her exclusive scoop on why

[00:00:58] [SPEAKER_04]: Lions Gate Entertainment, the company behind John Wick and Megalopolis, has signed a deal with

[00:01:03] [SPEAKER_04]: artificial intelligence startup Runway. But first, during the pandemic, the government made it easier

[00:01:13] [SPEAKER_04]: and less expensive, even free in some cases, for lower-income people to get health coverage under

[00:01:19] [SPEAKER_04]: the Affordable Care Act. People in the near-poverty group were also allowed to sign up for or switch

[00:01:26] [SPEAKER_04]: plans at any time. Scammers used those changes and the lure of free cash to sign up hundreds

[00:01:33] [SPEAKER_04]: of thousands of low-income Americans for government-subsidized health insurance. Often,

[00:01:38] [SPEAKER_04]: the starting point for the fraud were social media ads. That's according to insurance agents,

[00:01:44] [SPEAKER_04]: court documents, and federal officials. Here to tell us more is our reporter Joseph Walker.

[00:01:50] [SPEAKER_04]: Joseph, insurance agents get commissions by helping people sign up for health care plans.

[00:01:55] [SPEAKER_04]: In this case, the agents are accused of switching people's insurance without their consent.

[00:02:00] [SPEAKER_04]: How did those agents use social media to do this? A really significant number of agents will use

[00:02:06] [SPEAKER_01]: online ads, Google search ads, social media ads, and so on. It doesn't mean that they're all crooked

[00:02:12] [SPEAKER_01]: or doing a scam. What differentiated the actions that we're talking about in the story

[00:02:17] [SPEAKER_01]: is that the ads wouldn't advertise for a health insurance plan. It would advertise

[00:02:22] [SPEAKER_01]: free government money, like more stimulus money coming your way. It can pay for your daily expenses,

[00:02:29] [SPEAKER_01]: your rent, your groceries, and so on. Then when the person would eventually connect with somebody by

[00:02:34] [SPEAKER_01]: phone, that's when the bait-and-switch happens. The person is asking for a few personal details,

[00:02:41] [SPEAKER_01]: and then they're trying to sell you health insurance. Then people would find that their

[00:02:45] [SPEAKER_01]: health insurance had been changed or that they had been signed up for health insurance when

[00:02:49] [SPEAKER_04]: they never had in the past. Who was the target of these specific advertisements? Low-income people,

[00:02:56] [SPEAKER_01]: and that's for two reasons. Number one, somebody that's not making a ton of money is more

[00:03:00] [SPEAKER_01]: enticed by an ad promising to connect them with free government money. But also, because they're

[00:03:06] [SPEAKER_01]: low-income, they could be signed up for a free health insurance plan on their end, so no premium.

[00:03:13] [SPEAKER_01]: That way it would go undetected because the insurance company is getting their premium from

[00:03:18] [SPEAKER_01]: the government. The person themselves has no idea that their insurance has been changed because

[00:03:22] [SPEAKER_01]: they're not getting a bill every month. It made it very easy for the people who were

[00:03:27] [SPEAKER_04]: trying to do this fraudulently. Do we know how they targeted customers on social media?

[00:03:33] [SPEAKER_01]: On Facebook, Snapchat, Google search ads, you can really do very precise targeting without all that

[00:03:39] [SPEAKER_01]: much work. So that the people who are putting up these fraudulent ads, it wasn't so much

[00:03:44] [SPEAKER_01]: figuring out how to reach these people as much as just taking advantage of the tools that were

[00:03:48] [SPEAKER_01]: available to them through search ad platforms. What have the social media platforms said about

[00:03:52] [SPEAKER_01]: these ads? Facebook's parent company, Meta, says that it removed one of the ads that I had sent to

[00:03:58] [SPEAKER_01]: them and others promoting government cash cards for violating their policies on fraud, scams,

[00:04:03] [SPEAKER_01]: and deceptive practices. Snapchat said that it forbids misleading ads. Joseph, a lawsuit was

[00:04:09] [SPEAKER_04]: filed against a dozen insurance marketing and technology companies. Have we heard from any

[00:04:14] [SPEAKER_01]: of the defendants in this case? Yes, we have. And they say that they are not guilty of these

[00:04:21] [SPEAKER_01]: allegations that are in this civil lawsuit. Some have said that people that they work with, other

[00:04:26] [SPEAKER_01]: companies that they work with, may be responsible, but that they themselves haven't produced these

[00:04:31] [SPEAKER_04]: misleading and deceptive advertisements. Joseph, how have your former agents who did this kind of

[00:04:37] [SPEAKER_01]: thing, how they described their work? Some of the agents have said in affidavits filed in the class

[00:04:43] [SPEAKER_01]: action suit that they were given scripts to read in which they would be told to be purposefully

[00:04:49] [SPEAKER_01]: vague about whether or not a consumer was eligible for a cash card, you know, never give any specifics.

[00:04:56] [SPEAKER_01]: And some have said that their concerns that they raised about the calls they were getting being

[00:05:00] [SPEAKER_01]: about these cash cards were dismissed by management. What kind of an impact has this

[00:05:05] [SPEAKER_04]: had on individuals who had their insurance changed without their consent? For one thing, it sends

[00:05:10] [SPEAKER_01]: people scrambling at times to figure out how to pay for the health coverage that they need because

[00:05:16] [SPEAKER_01]: what often ends up happening is that somebody is switched into a plan where their doctors,

[00:05:21] [SPEAKER_01]: their specific drugs aren't covered or aren't covered as fully as they were under their old

[00:05:26] [SPEAKER_01]: plans. So then they have to either unwind what happened with the government, with government

[00:05:32] [SPEAKER_01]: representatives, or if they go through a reputable health insurance agent, they can try and do that.

[00:05:37] [SPEAKER_04]: That was our reporter Joseph Walker. Coming up, a Hollywood studio will give an AI startup

[00:05:44] [SPEAKER_04]: access to its library of movies and shows in exchange for a custom-built AI model.

[00:05:51] [SPEAKER_04]: We'll tell you what this will mean for the content you watch after the break.

[00:06:58] [SPEAKER_04]: Lionsgate Entertainment, the company behind The Hunger Games and Twilight,

[00:07:02] [SPEAKER_04]: plans to start using generative artificial intelligence in the creation of new movies

[00:07:08] [SPEAKER_04]: and TV shows. Our deputy media editor Jessica Tunkel is here to tell us more.

[00:07:13] [SPEAKER_04]: So Jessica, this is a first-of-its-kind deal with AI startup Runway. Tell us about the terms

[00:07:20] [SPEAKER_03]: of the deal. Under this deal, Lionsgate is going to give Runway all of its library of movies and

[00:07:27] [SPEAKER_03]: shows. So as you pointed out, it includes things like Twilight and The Hunger Games series. John

[00:07:32] [SPEAKER_03]: Wick is another big franchise they have to feed a model that Runway will keep just for Lionsgate's

[00:07:39] [SPEAKER_03]: use initially. So Lionsgate will be able to use the model for pre-production work, so think things

[00:07:46] [SPEAKER_03]: like storyboarding, which they can use internally. But eventually they want to be able to use it for

[00:07:51] [SPEAKER_03]: the big screen. Think about special effects, think about explosions, think about backgrounds.

[00:07:57] [SPEAKER_03]: What are Runway's tools capable of right now? A lot of these studios are using Runway for

[00:08:03] [SPEAKER_03]: background or special effects purposes. So one thing that, for example, we've written about in

[00:08:08] [SPEAKER_03]: the past is in the movie Everything Everywhere All at Once, there's a scene where a rock is moving

[00:08:15] [SPEAKER_03]: and instead of someone manually having to do multiple scenes to show that rock moving,

[00:08:21] [SPEAKER_03]: they use Runway so it could be just one quick go. And it just saved a lot of time for that special

[00:08:26] [SPEAKER_04]: effects editor to do that scene. You're reporting that Lionsgate and Runway are discussing potentially

[00:08:32] [SPEAKER_04]: licensing the generative AI model to other entertainment companies in the future.

[00:08:37] [SPEAKER_04]: What does this say about how Lionsgate and Runway are thinking about the applications and the

[00:08:42] [SPEAKER_03]: business potential of AI across the industry? On the first part, Lionsgate will have their own

[00:08:47] [SPEAKER_03]: proprietary model, which they'll be able to use for their own purposes. But then the two companies

[00:08:52] [SPEAKER_03]: are talking about licensing it to other studios. So let's say Studio XYZ really likes how beautiful

[00:08:59] [SPEAKER_03]: the explosions are in a Lionsgate movie. They could license this model and create the same

[00:09:04] [SPEAKER_03]: imagery at a substantially less cost than they would if they did it on their own.

[00:09:09] [SPEAKER_03]: Jessica, why is Lionsgate turning to AI now? All the studios, including Lionsgate,

[00:09:14] [SPEAKER_03]: realized this is coming regardless of whether they want it to happen or not. Someone said to me that

[00:09:20] [SPEAKER_03]: in three years these models will be able to just train themselves. They're not going to need

[00:09:25] [SPEAKER_03]: studios. So Lionsgate's thought was we better get ahead of this and we may as well take advantage

[00:09:31] [SPEAKER_04]: of it. How are other entertainment companies and rival studios approaching AI? Our sources have

[00:09:37] [SPEAKER_03]: told us that everyone is talking to everyone. There are some major studios that have signed

[00:09:41] [SPEAKER_03]: deals with AI companies to do something for internal purposes, but I have not heard of anyone

[00:09:47] [SPEAKER_03]: who is really doing a deal like this, A, that'll end up on the big screen and B, that they'll want

[00:09:55] [SPEAKER_04]: to license this to other studios. The use of AI was a major sticking point in negotiations last

[00:10:01] [SPEAKER_04]: year with the Screen Actors Guild and with the Writers Guild of America when they each went on

[00:10:05] [SPEAKER_04]: strike. So how are actors and writers reacting to this deal? Just from the conversations I've had

[00:10:12] [SPEAKER_03]: since this story broke, it is a bit of a, oh my god, this is really happening now. I don't think

[00:10:17] [SPEAKER_03]: anyone's surprised, but they're like, wow, we're here. One TV executive posted on my LinkedIn page

[00:10:24] [SPEAKER_03]: after I put the story up, I think I need AI to generate a response because I am speechless.

[00:10:30] [SPEAKER_04]: Okay, but I mean, how does this deal fit with those contracts that the Screen Actors Guild

[00:10:37] [SPEAKER_03]: and Writers Guild of America reached with studios? So to be clear, Lionsgate, what they're

[00:10:43] [SPEAKER_03]: planning on doing, even when the tools are ready for the big screen, they're not planning on copying

[00:10:48] [SPEAKER_03]: the likeness of actors, which was a big concern of the actors. They are going to be using it for

[00:10:54] [SPEAKER_03]: background and special effects. If at some point they do decide they want to use the likeness of

[00:11:00] [SPEAKER_03]: actors, they will negotiate that with the talent as the contract stipulates. Okay, so that's what

[00:11:06] [SPEAKER_04]: it means for people on the screen. What about for those of us watching the screens? Is this going to

[00:11:12] [SPEAKER_03]: change the content or the speed at which we get new films and TV shows? One thing that will be

[00:11:17] [SPEAKER_03]: interesting to see is, I don't know if it's going to change the content or the speed because there's

[00:11:23] [SPEAKER_03]: a lot of other variables that go into creating a movie or a TV show. However, for lower budget

[00:11:29] [SPEAKER_03]: projects and lower budget movies, it may give them the same resources that the higher budget big

[00:11:34] [SPEAKER_03]: pictures get. So you may be able to see more of that coming to your screen and higher quality.

[00:11:41] [SPEAKER_04]: All right, that was our deputy media editor Jessica Tunkel. And that's it for Tech News Briefing.

[00:11:46] [SPEAKER_04]: Today's show was produced by Julie Chang with supervising producer Katherine Millsop.

[00:11:51] [SPEAKER_04]: I'm Zoe Thomas for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute.

[00:11:56] [SPEAKER_04]: Thanks for listening.