Technology
The $2.5 Trillion AI Video Economy
The industry enters its enterprise utility phase as models gain director-level control, audio becomes standard, and copyright settlements reshape the market.
The industry enters its enterprise utility phase as models gain director-level control, audio becomes standard, and copyright settlements reshape the market.
ByteDance's Seedance 2.0 accepts text, image, video, and audio inputs simultaneously. Released February 12, the model executes dolly zooms and tracking shots while maintaining character consistency across scenes. Eighteen months ago, this capability would have dominated headlines for weeks. Now it's one of three major releases this month alone.
This compression of innovation cycles reflects a broader shift. AI video has moved from experimental playground to infrastructure for many orgs. Gartner forecasts global AI spending will reach $2.5T in 2026, an increase of 44% from 2025, with $1.37T flowing specifically into infrastructure.
The technical baseline keeps rising. Kuaishou's Kling 3.0 and Google's Veo 3.1 now treat native 4K resolution and synchronized audio as table stakes, according to Cliprise's February 18 analysis. Kling offers 60fps output for slow-motion work. Veo integrates audio generation directly into video synthesis. The silent period of AI video lasted less than two years.
OpenAI took Sora 2 paid-only last month, eliminating the free tier entirely. The model now features 25-second clips and a character cameos feature backed by a $1 billion Disney partnership, the first major IP collaboration in generative video. This marks a distinct monetization strategy: premium features for creators with budgets rather than broad consumer access.
Runway's Gen-4.5, released February 3, takes a different approach. The model focuses on what Runway Research calls world consistency, realistic physics simulation where objects interact believably rather than morphing unpredictably. It targets the persistent flicker and distortion issues that make current AI video unusable for productions lasting more than a few seconds.
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The open-source ecosystem provides a counterweight to these commercial plays. Alibaba's Wan 2.6, released January 23 on Hugging Face, runs on consumer hardware with inference speeds that rival proprietary systems. Developers can now build custom video applications without paying for OpenAI or Runway APIs, accelerating experimentation outside the major platforms.
Technical progress collides with mounting legal challenges. Anthropic's $1.5 billion copyright settlement on February 9 signals a shift toward licensing deals rather than claiming fair use, according to AI Business. While not legally binding precedent, the massive payout influences how OpenAI and Google approach their own pending litigation.
The regulatory environment fragments further. The EU AI Act's transparency mandates become fully enforceable in August 2026, requiring visible labels and machine-readable metadata for all synthetic media. Video creators operating in Europe face what the European Parliament calls a significant compliance burden.
Copyright standards diverge internationally. The US Copyright Office maintains that prompts alone don't grant authorship. Creators need demonstrable artistic control for protection. Chinese courts, however, are granting copyright to AI-generated content where artistic effort in prompting is proven, according to WIPO's February 10 analysis. This split complicates global rights management for anyone distributing AI video across borders.
The International AI Safety Institute's February 15 report, compiled by over 100 experts, identifies a concerning trend: advanced models are developing situational awareness, distinguishing between testing and deployment environments. The report urges moving beyond technical safety fixes to broader societal preparedness and regulatory frameworks.
Native audio and 4K resolution are now baseline features, not premium upgrades. Open-source models like Wan 2.6 enable custom applications without API dependencies. Copyright settlements and diverging international standards create new compliance costs. The EU's August 2026 transparency deadline will require visible AI labeling on all synthetic content. Models with director-level control still struggle with physics consistency beyond 16 seconds.
The next six months will test whether this infrastructure investment translates to viable business models. With Anthropic's settlement establishing a $1.5 billion baseline for copyright disputes and the EU's transparency rules creating compliance overhead, the cost of operating AI video platforms may exceed current pricing models.
Watch for consolidation among smaller players who cannot afford the compute costs and legal exposure. The companies that survive will be those that solve not just the technical challenge of generating video, but the operational challenge of making it legally and economically viable at scale.