The impact of AI on the film industry

AI appears to have finally moved from buzzword to business in the Film and TV sector. As a tool, AI is composing scripts, scouting locations and animating characters with old ways of working and certainties disappearing in the rear-view mirror. This post will take you through key developments through the lens of the UK market and see our previous posts giving the lie of the land in Italy and Belgium.

Critterz

Produced by UK-based Vertigo Films and Native Foreign, Critterz will be a full-length animated feature built using AI tools. The film is a follow-up to a 2023 short film and the industry is keeping a keen eye on its development as a 'proof-of-concept' for AI-assisted filmmaking. Crucially, the feature is being billed as 'human-guided' with writers James Lamont and Jon Foster (credits include Paddington in Peru) taking on script polishing duties. With an ambitious nine-month target for all pre-production, production and post-production (for context, the award-winning Toy Story 4 took around five years), the venture is gunning for a Cannes 2026 premiere. This shorter production period also means a lighter monetary burden for Vertigo Films with a reported budged coming in under £25 million (again referencing Toy Story 4 which had an estimated production budget of $400 million).

Critterz Jitters

The film will be a technical milestone regardless; however, I imagine readers will already be cognisant of some clear issues that could arise. We have broken down some of these below:

• What is the copyright position? As we've covered previously when looking at AI, in the UK copyright law still hinges on human authorship. Section 9(3) of the Copyright, Designs and Patents Act 1988 provides that for computer-generated works, the author is “the person by whom the arrangements necessary for the creation of the work are undertaken.” But the issue of whether the "arranger" will be the coder who built the AI, the filmmaker who directed or 'prompted' its use or simply "no one", is far from settled. While Vertigo will no doubt have robust assignment provisions from all AI Providers and human AI prompters (and the company appears to be addressing this with human penned script, human artists are providing the input for animation (so that the AI output would be viewed as an adaptation or derivative work) and human voice actors being retained), there remains the possibility that elements of the final film could be argued to not be covered by any copyright protection.

• Derivative Works AI tools are trained on existing creative works. If an AI model generates a scene or element of the film that closely resembles a copyrighted film or script element, is that a derivative work and how will Vertigo check for this?

• Training Data AI models often learn from existing scripts, music, and footage. If that material is copyrighted, it is important to consider if there has been infringement (for more on this point, see DLA Piper's post on the recent Getty v Stability AI case here. The UK’s fair dealing exceptions offer limited protection for AI developers using copyrighted material for training. The government’s 2024 consultation acknowledged that rights holders struggle to control how their works are used in AI training and proposed a rights reservation mechanism to allow creators to opt out of such use. However, this opt-out model has been criticised as unworkable and unfair to creators and seems unlikely to get the go-ahead any time soon.

• Digital Doubles & Moral Rights AI-generated avatars and voices raise serious concerns about performer rights. UK law does not currently offer a unified framework for personality rights, leaving performers to rely on a patchwork of protections such as passing off, data protection, and moral rights. The use of synthetic voices or likenesses without individuals' consent could breach moral rights, arguable the right to object to derogatory treatment and Vertigo’s decision to retain human voice actors may be a strategic move to avoid potential pitfalls.

• Legal uncertainty Major studios remain cautious with cases such as Getty Images v Stability AI (see link above) highlighting the difficulty of enforcing copyright claims when AI training occurs outside UK jurisdiction. The recent English High Court decision (rejecting copyright infringement but upholding trademark claims) has intensified calls for clearer legislation. Until UK law is modernised (which doesn't appear to be high on the current government's legislative plate), productions like Critterz will need to tread carefully, balancing innovation with legal compliance. The film’s success may well hinge not just on its artistic merit, but on whether it can navigate this evolving legal terrain without misstep, as well as…

• Will it make money? Ultimately, the legal debate surrounding Critterz may prove secondary to a more fundamental question: will audiences show up? The commercial success of Critterz and successor films that follow its AI-assisted model will be the true test for the viability of this new mean of production.

The film’s budget is lean by animation film standards, but profitability will depend on whether the film can attract viewers beyond the novelty factor. If Critterz performs well at the box office or garners critical acclaim, it could embolden other independent studios to adopt similar workflows, potentially accelerating a shift in industry norms.