Goldman Sachs: AI Drives Entertainment Content Supply Towards Infinity, Production Value May Face Continued Pressure

Beating AI Newsflash: Goldman Sachs' latest research report highlights that AI is reshaping the value chain of China's entertainment industry. Content supply is approaching infinity, while user time and attention remain limited. This contradiction is expected to drive industry profits to further concentrate on top-tier IPs and distribution platforms. The report reveals that multimodal AI has reduced production costs for animations, music, advertising videos, and short dramas by 80% to 95%, while improving production efficiency by 5 to 10 times. In the first eight months of 2026, the output of short dramas and mini-series increased 13 times compared to the entire year of 2025, and the release of new games grew by over 8 times. On the leading short drama platform, Hongguo, over 90% of series have already adopted AI-generated content. Goldman Sachs believes that the explosion of content supply driven by AI does not mean all segments of the value chain will benefit. The value of traditional production and execution processes will be compressed, while the scarcity of top-tier IPs and creative assets will become more pronounced. Content distribution platforms are likely to benefit from the growth in supply, but the competitive barriers of licensed content libraries may face challenges from the flood of AI-generated content. In terms of specific sectors, Goldman Sachs views online gaming as relatively more resilient. Leading companies like Tencent and NetEase are expected to leverage AI to extend the lifecycle of mature IPs. Long-form video platforms may benefit in the short term from cost reductions but face long-term pressures such as declining user engagement and the impact of AI content on the competitive advantage of licensed content. Additionally, AI-driven entertainment still faces two major risks: difficulties in monetization and increasingly stringent regulations. [Original Link]