Hollywood actors and screenwriters are on strike. Ad revenues are down. Movie ticket sales lag pre-pandemic levels. Fewer households are paying for cable TV.
All told, the media industry is in a very public state of turmoil lately. An unusually broad collection of players in the space — from artists to studios to distributors — are all seeing income slide.
Media-focused startup investors, meanwhile, are largely sitting out the tumult.
Per Crunchbase data, venture investment in U.S. media-related startups is on track to hit the lowest level in years. Fewer rounds are getting done too, as illustrated in the chart below:
AI is a hot spot
To the extent they are making bets in media, startup investors are often wagering that artificial intelligence will play a growing role in producing content. Case in point: The largest U.S. media round so far this year was a $141 million June Series C for Runway, a developer of AI-enabled tools for video creation.
Runway’s motto is: “No lights. No camera. All action.” It helped develop the AI image generator Stable Diffusion, and launched its video-to-video generative AI app in April. The app lets users transform videos into different styles, such as claymation or watercolors.
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On the early-stage front, New York-based Captions, a 2-year-old startup that bills itself as an “AI-powered creative studio,” picked up $25 million in a June Series B round led by Kleiner Perkins. And Brooklyn-based ElevenLabs, a 1-year-old developer of an AI voice generator for content creators, landed $19 million in a Series A financing.
The ability of AI to further disrupt media business models is not exactly news to Hollywood. The potential for generative AI in scriptwriting and image creation are well documented. Both striking actors and writers, meanwhile, are demanding contracts that contain specific AI regulations to protect writers and the works they create.
While industry business models are in flux, media isn’t facing a demand problem. Consumers continue to consume vast quantities of digital content.
Increasingly, however, that consumption has shifted online and to social media. Today, there are an estimated 5.16 billion internet users globally. They average over six and half hours a day online, per research firm Meltwater, and spend more time on social media than they do watching broadcast and cable TV.
As media consumption splinters into more channels, the big-budget studio production model faces more challenges. Everyone wants to attract eyeballs without spending a fortune to produce content.
That might explain why beyond AI, one of the largest media-focused startup rounds went to Atmosphere, a streaming TV platform for businesses that serve the public. The company, which offers streams around cute animals, sports clips and funny home videos, among other themes, picked up $65 million in Series D funding early this year and recently crossed the $1 billion valuation mark.
The financing drives home the reality that, despite all the difficulties producers and distributors of screen-based content are facing, there is one area of apparent insuppressable growth: the number of available screens blasting videos.
Related Crunchbase Pro query
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