The entertainment and media (E&M) sector has crossed an inflection point. The era of scale-at-all-costs is over, replaced by a mandate for operational discipline, margin expansion, and structural reinvention. As the global market marches toward a projected multi-trillion-dollar valuation by 2030, executives must navigate four interconnected vectors: strategic deal-making, live experiences, hybrid business models, and the disruptive paradox of AI.

Deal-Making: Convergence over Consolidation

M&A has shifted from legacy scale-building to capability acquisition. Strategic buyers now prioritise deals that bridge premium IP with interactive ecosystems – gaming, creator platforms, and proprietary ad-tech. Rather than pursuing debt-fuelled mega-deals, legacy studios (the few that remain) are forming creative joint ventures and distribution alliances to aggregate reach while preserving capital. This convergence, however, invites intensifying antitrust scrutiny and unresolved AI-copyright issues that will shape which deals actually close.

Live Events: The Last True Moat

Live sports and events have become the sector’s load-bearing asset – the final form of appointment viewing in a fragmented attention economy. Global tentpoles like the FIFA World Cup and the Olympics command unrivalled simultaneous audiences, anchoring subscriber acquisition, pricing power, and premium sponsorship inventory. Streamers now recognise this and are aggressively acquiring rights once reserved for broadcasters – Amazon, Apple, Netflix, and YouTube are bidding directly for leagues, matches, and marquee events. Live rights are no longer a programming line item; they are the strategic centrepiece around which bundles, ad tiers, and sponsorship ecosystems are built. The risk is that escalating bidding wars erode the very margins these rights are meant to protect.

Business Models: The Hybridisation of Monetisation

The pure-play subscription model has matured, forcing a transition to diversified revenue. Companies are blending ad-supported tiers (AVOD/FAST), vertical content, transactional video (TVOD), commerce integrations, and fast-growing retail-media ad pools – the fastest-expanding segment of the mix. Growth is also increasingly weighted toward Asia, where mobile-first markets in India and Southeast Asia set the pace. Bundling has returned as the antidote to churn: consolidating streaming, live sports, and utility services into unified interfaces lowers acquisition costs and lifts customer lifetime value.

AI and Technology: Expanding Supply, Fragmenting Discovery

Generative AI is both a margin lever and a structural threat. It drives immediate savings across VFX, localisation, and post-production, lowering the cost floor of content. But it also unleashes a supply shock of synthetic content, while conversational search agents bypass traditional platforms – threatening legacy referral traffic. It further strains talent relations, as guilds press for guardrails on likeness rights and unauthorised training on creative work. The imperative: build direct-to-consumer brand equity and defensible metadata to remain discoverable.

Imperatives for the Boardroom

Leadership must sequence deliberately: divest non-core distribution, then redeploy capital into owned IP, live rights, and proprietary data. Deploy AI aggressively across production and back-office workflows while establishing rigorous IP safeguards against unauthorised model training. And extract full value from a single IP across streaming, live, gaming, and consumer products. The goal is to balance the creative workers, who are pillars of our industry, with technology that continues to advance more quickly far beyond human exploration.

The winners will not be the biggest – they will be the most disciplined owners of scarce, unreproducible experiences.

AI as Driver of Corporate Growth

AI has become a transformative corporate asset within the entertainment industry, reshaping investment strategies, business partnerships, and governance frameworks. Beyond enhancing creative production, AI is influencing how companies raise capital, negotiate commercial agreements, manage intellectual property, and expand into international markets. Commercially, AI enables businesses to reduce production costs, improve operational efficiency, strengthen audience engagement, and develop innovative revenue streams. As AI becomes embedded throughout the entertainment value chain, companies must balance technological innovation with legal compliance, strategic collaboration, and effective corporate governance to remain competitive in an increasingly global market.

Investment, financing, and strategic alliances

The growing commercial importance of AI has transformed how entertainment companies attract investment and structure corporate partnerships. Venture capital firms, private equity funds, technology companies, and multinational media groups are investing heavily in AI-powered production studios, content-generation platforms, gaming companies, and digital media businesses. Investors increasingly regard AI capabilities as a source of competitive advantage, long-term enterprise value, and sustainable growth.

Rather than developing AI technologies internally, entertainment companies are increasingly pursuing strategic alliances with AI developers, cloud computing providers, software companies, and data analytics firms. These collaborations frequently take the form of joint ventures, licensing agreements, research partnerships, technology-sharing arrangements, minority equity investments, and acquisitions of AI start-ups. Such corporate structures enable businesses to access proprietary AI technologies, reduce development costs, accelerate innovation, and share commercial risk while maintaining operational flexibility.

For example, in 2026, OpenAI CEO Sam Altman announced that start-ups participating in the current Y Combinator batch could receive up to USD2 million in OpenAI API credits through a Simple Agreement for Future Equity (SAFE). Under this arrangement, OpenAI receives equity in a future funding round rather than immediate payment, illustrating how AI companies are adopting innovative financing models that strengthen long-term commercial partnerships while supporting business growth.

AI is also reshaping corporate transactions and investment decisions. Investors increasingly evaluate whether entertainment companies possess scalable AI capabilities, proprietary datasets, valuable intellectual property portfolios, and governance frameworks capable of managing legal and regulatory risks. Consequently, AI readiness has become an important consideration in corporate valuation, due diligence, mergers and acquisitions, and financing decisions.

Governance, compliance, and commercial risk management

While AI creates substantial commercial opportunities, it also introduces significant corporate, legal, and regulatory challenges. Questions concerning ownership of AI-generated works, licensing of training data, protection of performers’ likenesses, copyright compliance, privacy, cybersecurity, and contractual liability have become central to corporate and commercial decision-making.

As a result, intellectual property has become a critical component of corporate transactions, with businesses placing greater emphasis on contractual provisions governing ownership, royalties, licensing rights, liability allocation, confidentiality, and the commercial use of AI-generated content. These issues increasingly influence due diligence processes, investment decisions, and the structuring of mergers, acquisitions, and strategic partnerships.

The integration of AI also requires boards of directors and senior management to strengthen corporate governance practices. Companies must implement governance frameworks that address AI accountability, regulatory compliance, ethical decision-making, data governance, cybersecurity, and enterprise risk management. Compliance with evolving privacy, copyright, consumer protection, and AI-specific regulations is becoming an increasingly important consideration for investors, lenders, and corporate boards. Strong governance frameworks enhance investor confidence, facilitate cross-border transactions, and improve long-term corporate resilience.

Conclusion

Artificial intelligence is transforming far more than the creative processes of the entertainment industry; it is reshaping its corporate architecture. AI is influencing how entertainment companies secure investment, structure strategic partnerships, negotiate commercial agreements, manage intellectual property, and expand into international markets. At the same time, it requires businesses to navigate increasingly sophisticated legal, regulatory, and governance challenges.

Companies that successfully integrate AI into their commercial strategies while maintaining robust governance frameworks, effective risk management, and strong intellectual property protection are likely to achieve greater competitive advantage, attract sustained investment, and strengthen their position within the rapidly evolving global technology-driven entertainment market.

From Influencer to Enterprise: The Creator-Founder

Today’s creators are increasingly operating as more than just individuals posting online. A single post, video, or piece of media now serves multiple functions simultaneously: building audience loyalty, strengthening brand positioning, driving visibility, and generating revenue. What was once an era driven primarily by one-off sponsorships and brand deals has matured into an entrepreneurial ecosystem where success depends less on audience reach and size and more on audience trust and long-term loyalty.

Increasingly, creators are becoming founders, building scalable businesses around their personal brands rather than relying solely on third-party advertising revenue. Many are diversifying their income by establishing subscription-based models like Patreon and Substack, launching their own merchandise or consumer products, and entering into long-term strategic partnerships with brands. This new wave recognises creators as more than mere content creators – they are entrepreneurs and community builders with the power to cultivate highly engaged, dedicated consumer bases.

This shift has also transformed the legal and commercial role of content itself. Rather than being viewed as a one-time creative output, content is increasingly structured as an intellectual property asset that compounds in enduring commercial value.

Managing AI and the value of authenticity

Many creators now operate with the reach and commercial power of traditional celebrities without ever entering legacy entertainment industries like Hollywood. Their influence stems directly from the authenticity and trust they have built with their communities.

That authenticity, however, is also giving rise to new legal complexities, especially as generative artificial intelligence tools continue to be integrated into production workflows. Brands are increasingly sensitive to copyright ownership and platform safety risks associated with AI-generated assets.

Consequently, a prominent trend in brand endorsement and influencer agreements is the inclusion of AI-related representations and warranties. Brands now routinely demand that creators disclose any use of artificial intelligence in the creation of deliverables or represent that no generative AI tools were used at all. These provisions reflect a clear market reality: a creator’s authenticity and the human connection with their audience are the core commercial assets and key components of the partnership.

The rise of vertical programming

Entirely separate from the expanding role of creators is a technical shift in how content is produced and consumed. As consumer media habits are dominated by mobile devices, storytelling formats are evolving to match the hardware. This shift has established vertical video as an increasingly used narrative medium rather than a temporary trend. Designed specifically for portrait-mode viewing, these videos capture attention within seconds and often incorporate platform features like automatic looping to encourage repeated engagement.

Importantly, this shift has also fundamentally changed the economics of content production by lowering the barriers to entry for high-quality storytelling. Because vertical formats are optimised for mobile viewing, they can be produced with leaner crews and more agile budgets than traditional horizontal film or television projects. This structural agility allows independent filmmakers and emerging studios to directly reach large global audiences without significant financial investments.

Currently positioned between user-generated social media clips and traditional long-form entertainment is the rapidly growing format: the vertical drama – a fast-paced, portrait-mode micro-series consisting of ultra-short episodes lasting only about one to two minutes. Despite their brief runtimes, these vertical dramas are effectively engineered for high retention. They hook viewers through compact narratives, quick character introductions and story arcs, and visually dynamic scenes to deliver impactful dramatic sequences in a highly compressed timeframe.

For legal practitioners, the rise of vertical programming introduces new and complex operational challenges requiring an understanding of legacy union and guild frameworks (such as SAG-AFTRA, WGA, and DGA) that apply to micro-content and mobile-dominant models. As this landscape continues to evolve alongside consumer behaviour, the vertical drama represents a distinct, highly agile segment of the entertainment market. Keeping pace with these format changes will be essential for legal counsel advising the next generation of digital media ventures.

AI and the Evolving Global Regulatory Landscape for Entertainment and Media

From innovation to regulation

Artificial intelligence has become part of the entertainment industry’s day-to-day operations. From brainstorming for content development and enhancement of created work, AI is now reshaping how creative works are produced and commercialised, sometimes without human creative work involved. As adoption accelerates, governments are moving beyond traditional intellectual property, privacy, and consumer protection laws and are introducing AI-specific regulatory frameworks. For businesses operating in the entertainment and media sector, AI is no longer solely a technology issue. It has become a legal, commercial, and strategic consideration that influences how projects are structured and how rights are managed across multiple jurisdictions.

A fragmented international landscape

There is no unified international approach shaping the regulatory environment. The European Union (EU) has adopted a comprehensive legislative framework through the AI Act, while the USA continues to rely on a combination of existing legal principles, federal guidance, and state legislation addressing issues such as digital replicas and AI-generated performances. Other jurisdictions, including the UK and China, continue to refine their own regulatory and policy approaches, reflecting different priorities for balancing innovation with the protection of creators and consumers.

This evolving setting means that businesses operating internationally can no longer assume the sufficiency of a single compliance strategy. Requirements relating to transparency, consent, copyright, and personality rights increasingly differ from one jurisdiction to another. As a result, entertainment companies involved in global productions and international licensing must understand the local legal requirements at an earlier stage of a transaction.

Regulation is influencing market practice

The market has responded as quickly as regulators. Entertainment companies are increasingly adopting internal AI governance policies while revisiting long-standing contractual frameworks that were never designed with generative AI in mind. Provisions addressing the use of AI in content creation, ownership of AI-assisted outputs, digital replicas, training data, and disclosure obligations are becoming increasingly common in production, talent, and licensing arrangements. These issues are no longer emerging risks; they have become routine negotiation points. AI governance is becoming embedded in commercial decision-making rather than treated solely as a compliance exercise.

Regulatory developments are also shaping broader market behaviour. Investors, content creators, and platforms are paying closer attention to how AI is used throughout the content life cycle, from training AI systems to generating creative outputs and exploiting those works commercially. Questions surrounding ownership of AI-generated content, authorisation to use a person’s voice or likeness, and the attribution of training data are becoming routine topics during contract negotiations, due diligence, and licensing discussions.

At the same time, ongoing litigation and policy initiatives in several jurisdictions continue to influence commercial expectations, encouraging businesses to adopt stronger contractual protections while legal standards continue to develop. Rather than waiting for complete regulatory certainty, many organisations are proactively updating internal governance policies and contractual frameworks to address AI-related risks.

Looking forward

Although AI regulation continues to evolve, the overall direction is becoming clearer. Governments are expanding oversight, policymakers are actively considering additional safeguards for creators and consumers, and courts continue to define how existing legal principles apply to emerging technologies. For participants in the entertainment and media industry, the challenge is no longer whether AI will be regulated, but how to operate effectively within an increasingly complex international legal environment.

Businesses that proactively incorporate AI governance into their contracting practices, rights management strategies, and compliance processes will be better positioned to navigate regulatory change while continuing to take advantage of the opportunities AI presents across the global entertainment marketplace.

The pace of technological development suggests that regulatory fragmentation is likely to remain a defining feature of the global entertainment industry for the foreseeable future. Businesses should therefore expect compliance obligations to evolve alongside commercial practices rather than stabilise under a single international standard.