Nikola Todorovic has heard all the panic. He’s scrolled through the Instagram reels of AI-generated shots, read the think pieces predicting cinema’s imminent extinction, and sat through more than a few conference panels at the Cannes Film Market where the word “disruption” was wielded like a cudgel. He gets it. He also thinks most of the conversation is completely missing the point.

The Bosnia-born co-founder, of Wonder Dynamics, now an Autodesk company, has spent a decade trying to build something more precise than the blunt instrument the industry argues about: AI tools designed to reduce the technical drudgery of visual effects production without pulling the human artist out of the equation. His pitch at Cannes this week is the same one he’s been making since 2016. “We were really focused on how do we make AI that coexist with the existing pipeline,” he says.

It is, in its way, the defining argument of the 79th Cannes Film Festival — one that has run as a persistent undercurrent beneath the red-carpet premieres and the Palme d’Or competition. The question is no longer whether AI will reshape the film industry. That debate, to many here, already feels settled. The more urgent and thornier question is which version of AI Hollywood is actually talking about — and whether the industry has the sophistication, or the will, to tell the difference.

At the opening jury press conference, The Substance star Demi Moore, serving this year on the nine-member feature film jury led by Park Chan-wook, offered her own pragmatic read on the moment. “I think the reality is that to resist — I always feel that against-ness breeds against-ness,” she told reporters. “AI is here. And so to fight it is to fight something that is a battle that we will lose. So to find ways in which we can work with it I think is a more valuable path to take.” She acknowledged that the industry was “probably not” doing enough to protect itself, but added that whatever ground AI might gain, “what it can never replace is what true art comes from, which is not the physical. It comes from the soul. It comes from the spirit of each and every one of us sitting here.”

Moore’s nuance was appreciated by at least one camp on the Croisette — the faction of filmmakers and technologists who have spent years trying to carve out a middle ground between wholesale resistance and uncritical embrace.

Todorovic knows that ground intimately. In 2016, he and actor Tye Sheridan — fresh off the set of Steven Spielberg’s motion-capture-heavy Ready Player One — founded Wonder Dynamics to automate the most technically and economically burdensome parts of visual effects production without removing the filmmaker from the creative act. Motion capture without a suit. Lighting and compositing driven by machine learning. The company attracted seed funding from Peter Thiel’s Founders Fund, board members including Joe Russo and early involvement from Spielberg himself. The Russo brothers used the technology on The Electric State, their Netflix production starring Millie Bobby Brown and Chris Pratt. In 2024, Autodesk acquired the company.

The practical results, Todorovic says, have been considerable. “We’ve had animation studios tell us they basically increased their productivity from doing 30 seconds a day of animation to three and a half minutes a day,” he says. “And we’ve had production companies of five to seven people that said they could now do things they could never do before.”

But what Wonder Dynamics is emphatically not building, Todorovic insists, is a replacement for the filmmaking act itself. “We’re not in the business of ‘let’s prompt a movie,'” he says. “I’m not a believer that you can prompt a movie, prompt a performance, prompt a camera move. Tye is an actor, and I think the beauty of filmmaking is having an actor give a performance, having a cinematographer set up the frame, having a director direct.”

The economic logic for AI-assisted production is hard to argue with. One French director, Xavier Gens, told Reuters here that AI tools could have cut the visual effects budget of his Netflix hit Under Paris in half and shaved eight months off the schedule. Morgan Stanley analysts have estimated generative AI could reduce film and TV production costs by as much as 30 percent.

The broader absurdity of current industry economics drives Todorovic. “We think it’s normal that a film should cost $90 million, $100 million, $200 million — which to me is absolutely absurd,” he says. “A hospital will cost you $20 million to build, and it’s there for two hundred years. And one movie, maybe based on a terrible idea, can cost $200 million plus marketing. And it could flop.”

But Todorovic is equally clear-eyed about the disruption that is coming regardless of how the debate is framed. “I think a lot of you’ll hear people saying, ‘Oh, we’re accelerating, we’re not replacing’ — I think there’s just being politically correct. There’s a shift, 100 percent, and I think visual effects get hit first, because it’s very tech dependent.” The jobs that were created because CGI was slow and difficult — character creation artists, rigging artists, texture artists — face real risk. “Those are the jobs that are in danger,” he says. “It would be a lie to say otherwise.”

And yet he remains, by his own account, optimistic about the longer arc. His vision is less about Hollywood’s incumbents and more about the filmmaker who currently has no path into the industry. “Me coming from a small country, it took me a long time to break in,” he says. “I’m very optimistic long term, and it is going to open up for more people to tell stories, more voices to be discovered.”

There is, however, a precondition. “I think we need to step in and build AI how we want it to be used,” Todorovic says, “otherwise we’re going to have the tech industry leading it for the wrong reasons — to create videos for TikTok in a day versus creating an actual film.”

That friction — between Silicon Valley’s incentives and cinema’s — was visible throughout the Marché du Film this week, where startups pitched everything from automated VFX pipelines to AI-generated simulated focus groups. Representatives from Alphabet, Disney Accelerator, NVIDIA, and OpenAI all made appearances in the market’s new Innovation Village, overlooking the yacht-filled harbor.

But for every figure willing to embrace AI as a production tool, others on the Croisette were drawing harder lines. Seth Rogen, here to present Tangles — the hand-drawn animated film he co-produced with his wife Lauren Miller Rogen about a family navigating Alzheimer’s disease — was direct when asked about AI in filmmaking. “Every time I see a video on Instagram that’s like, ‘Hollywood is cooked,’ what follows is the most stupid dog s— I’ve ever seen in my life,” he told Brut. “And if your instinct is to use AI and not go through that process, you shouldn’t be a writer. Because you’re not writing. Go do something else.”

On Tangles specifically, Rogen was unequivocal: “Not at all. It’s hand-drawn animation. Every frame has a human touch to it.” The film received a seven-minute ovation at its Cannes premiere.

It is, in its own way, the same argument Guillermo del Toro has been making for years — and never more pointedly than this week. Del Toro returned to Cannes to present a 4K restoration of Pan’s Labyrinth, marking the 20th anniversary of its world premiere and the still-unbroken record of a 23-minute standing ovation, having personally supervised every stage of the restoration from the original 35mm negative.

Speaking to The Hollywood Reporter, del Toro offered what may be the most precise diagnosis of the festival’s central argument. “The thing is, to have the discussion, we have to start defining AI, because they’re trying to pass five types of things under one single name,” he said. “So what are you talking about? Are you talking about a tracking program? Are you talking about rotoscope? Or are you talking about generative AI, where you remove the artist from the equation? The nomenclature has to change before we can have a real discussion. Otherwise it’s just a headline.”

Taking the stage before the restoration screening, del Toro took a more impassioned tone. “We are, unfortunately, in times that make this movie more pertinent than ever,” he said, “because they tell us everything is useless to resist, that art can be done with a f—ing app.”

Todorovic, for his part, would not disagree with the sentiment, even if his instrument is different. “We like art because it’s difficult,” he says. “We like film because it’s difficult. We admire work where only that one person can do this, because that’s their voice, and it’s so hard to do that. We’re not going to go pay to watch something someone spent a few days prompting.”

What he is betting on — and what Wonder Dynamics was built around — is a version of cinema’s future that looks less like a prompt box and more like a wider door. “Technology has always driven the film industry,” he says, “and there’s always been resistance, but we’ve always depended on each other.” The first Hollywood studios, he notes, were founded by producers fleeing Thomas Edison’s technology monopoly on the motion picture camera. “The first studio was created by producers who were saying storytelling should be for everyone, and there shouldn’t be one company that holds the technology and holds us hostage.”

In the Innovation Village, on the Croisette, and in the Debussy Theatre where a Cannes audience gave Pan’s Labyrinth a hero’s welcome all over again, the argument at this festival is clarifying. The question isn’t really about AI. It’s about what makes a film worth making in the first place — and whether the tools Hollywood reaches for help answer that question, or quietly make it disappear.