OpenAI’s Sora 2 app update kicked off October with existential questions for Hollywood and the tenacity of corporate-owned IP, amid a flood of user-generated content appropriating the likes of Nintendo characters and South Park’s Cartman, among others.
But there’s another implication of this emergent tech these industries must reckon with.
Over two panels I moderated at Asia Society’s “How Leaders Are Shaping the Next Generation of Technology” event in Los Angeles earlier this month, the potential for AI to facilitate the launch of new IP outside established franchises was front of mind.
“With all these AI content creation tools, what does that mean for storytelling and our ability to reach people with the thing that we do?” said Abhijay Prakash, president of horror mainstay Blumhouse. “That’s my biggest professional fear.”
Kyu Lee, chief business development officer of mobile gaming company Com2uS and partner at CRIT Ventures, stated the issue plainly.
“These [types] of IPs that are being developed — AI is going to play a significant role in it,” said Lee. “It may not be a world that the creators are defining. It might be the world that the users are defining, which could be utilizing AI.”
UGC dominates gaming and creation platforms including Roblox, which reached 111 million daily active users in the second quarter of 2025. The company, which relies on AI technology to assist creators in crafting experiences, announced a suite of updates to its AI features at the Roblox developers conference in September, having previously released its open-source model for using AI to generate 3D models in March.
Roblox has yet to receive the Hollywood treatment Minecraft did this year through Warner Bros.’ A Minecraft Movie. But the plethora of game experiences created within Roblox, such as mega-popularGrow a Garden, could form a use case for the company to eventually pursue something akin to the biggest overall deals of the streaming era, when creators such as Ryan Murphy were paid as much as $300 million to make programs for Netflix.
Haiyan Zhang, general manager and partner of gaming AI at Microsoft, described how Xbox takes meetings with startups to explore avenues for AI in game development.
“More startup studios [are] coming to Xbox and talking to us about, like, ‘We’re creating this new kind of game we’d love to show you,’” Zhang said. “There have been a lot of [exciting] discussions in the last few years where the AI is really going to break open the genres of gaming and create the forever game. We’re just starting to see some new titles coming out that have that capability.”
Zhang went on to describe how Status, a game exhibited at GDC earlier this year that sees teenagers roleplay as influencers, trained its language model on Gen Z lingo to boost the authenticity of its AI game agents — and reached 500K daily active users in its launch month.
Moonlit Beshimov, Google’s head of gaming and apps, strategic partnerships and industry solutions, explained how the company focuses on the “technology layer” for users of its AI products as they work on developing their own games.
“Google’s DeepMind published a new research solution called Genie 3, where they can procedurally generate an interactive world that’s realistic,” Beshimov said. “The physics work.”
But startup fund Patron’s co-founder and general partner, Jason Yeh, noted how AI-generated experiences will simply add to the spectrum of storytelling, as opposed to replacing traditional forms. “AI is just a tool, and generative AI models are going to allow very talented storytellers, showrunners, directors, game makers to make more [stories],” he said.
“It’s important to not fall in the trap of AI is bad slop and not-AI is handcrafted, like stories,” Yeh added. “It’s going to be a spectrum. It’s going to be even more important to create meaningful, resonant, deeply engaging content for things that actually break out.”
Despite his trepidation regarding AI, Prakash did express willingness to experiment with AI-backed tech in order to present Blumhouse narrative experiences in new ways, pointing to the Sphere venue in Las Vegas.
“I was at the Sphere recently,” he said. “We’re in early conversations about what’s a core type of experience you could have in there. There’s not really a limit of what the technology can allow in terms of storytelling.”
As the prodco learned the hard way when its M3GAN 2.0 flopped this summer, it’s never enough to assume strong IP can automatically sustain itself. If AI can be utilized by up-and-coming developers and creators as a bridge to get new IP off the ground, the upside could be tremendous.
