Streaming Wars Heat Up: How Moonvalley's $123M AI Bet Could Shape Hollywood's Future

Toronto startup Moonvalley is having no trouble raising additional capital since securing a $70 million seed round in November. The developer of AI tools for video creation has added another $53 million to its checkbook, according to last week's Securities and Exchange Commission filing.

Fourteen unnamed investors have now come on board, with potentially good reasons for their anonymity. The company has opened operations in Los Angeles, tracking an eyebrow-raising game plan in this overcrowded tech venue.

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Moonvalley is building the Marey AI learning model in collaboration with animator Asteria, operating out of the Mack Sennett soundstage. According to a press release, Marey will bring "unparalleled power and control to film and media production, while distinguishing itself by relying exclusively on ethically sourced data owned and licensed by the company." Given proximity to Hollywood studios, unnamed investors may include major industry players making plans for the future.

Content creators have been taking aggressive action against video AI startups that train models on public data, arguing fair-use violations of their copyrighted materials. Moonvalley hopes to jump legal hurdles by obtaining licensing and purchasing agreements prior to use. Videos will then be packaged into datasets and fed into Marey while clients retain authority to delete their data or request removal.

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Moonvalley still has to tread lightly. Hollywood's Animation Guild represents top-tier creators, animators and cartoonists. The union commissioned a study in 2024 that predicts disruption to more than 100,000 U.S.-based film, television and animation jobs within two years. Following the study's release, the union signed a three-year contract that expires at the end of 2027, setting the stage for a showdown that rivals last year's Hollywood strike.

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Of course, AI has already infiltrated the entertainment industry, led by widespread use of computer graphics in action films in the 1990s. However, the tech may also revive careers of dead actors. Imagine "Gone Again With the Wind", featuring a robust Clark Gable galloping past a perfectly rendered Charleston, South Carolina in ruins. It's the kind of pipe dream that thrills Hollywood producers while nervous actors call their lawyers.

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The Marey interface is still under construction and not available for public scrutiny. The company said the software will feature storyboarding and granular clip adjustment tools, generating videos from text prompts, sketches, photos, video clips and other media. Initial HD rendering is expected to produce clips up to 30 seconds long, which doesn't sound impressive. However, string them together and a fully-fledged cinema experience might emerge.

Given industry crosswinds, Moonvalley faces an uncertain path from build out to full-scale production. From a profit perspective, future investors should remain cautious because the ethical approach will be duplicated by competitors if it gains traction in Hollywood, undermining the start-up's competitive edge.

That's one reason the growing list of unnamed investors is critical to this venture's long-term success, especially if they’re bankrolled by Hollywood or Netflix NFLX.

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