Skip to navigationSkip to main contentSkip to right columnLeah HodgsonFri, June 26, 2026 at 5:24 PM GMT+2 5 min readChloe Ladwig/PitchBook NewsBillions of dollars are flowing into AI video generation, and the market is just getting started.In the past five years, investment in startups developing AI video and media tech has more than tripled, according to PitchBook data. Funding this year is already at its highest level yet, with $5.6 billion invested, up over 43% from 2025's annual total.Startups building video-generation models have captured most VC dollars, converging around a clutch of well-funded companies, including Runway and Luma AI. That race has not ended, and neither has the funding, but new parts of the market are beginning to draw more attention.This week's $75 million investment in indie film studio A24 by Google DeepMind is a clear example, with the two companies partnering to develop AI tools for filmmakers. Google gaining access to A24's creatives and research signals that the market is opening up beyond just funding the best video-generation tool."If you compare the state-of-the-art technology of today to that of three years ago, the difference is honestly mind-blowing," Ziv Reichert, partner at London-based VC firm LocalGlobe, said. "But we're still in the infancy, and there's so much more value to capture."A lot of value is going to accrue in the end product, not just the tooling or software layer. We're like the jeweler of the AI gold rush—we're not extracting the gold like OpenAI or developing the tools like generative speech startup ElevenLabs, but taking it and delivering a great product Xavier Collins, WonderAccording to Reichert, competition among companies building video-generation tech is heating up, not just in Western markets. New models emerging from China are rivaling products in the US and Europe, and incumbents are also investing in developing their own AI capabilities. The technology is becoming easier to build, and the more options there are, the harder it is to be the go-to for creators.This market reality is prompting a bigger question: now that generating video is no longer the hard part, where does the value go?Content as the new softwareFor an asset class historically closely tied to software, studios are not an obvious choice for VC investment, but they are gaining traction.A handful of AI-native or powered studios have emerged to take on Hollywood and are raising capital from investors. Californian studio Promise has raised funding from backers, including Andreessen Horowitz and Google's AI Futures Fund. VCs, including Atomico and LocalGlobe, invested in London-based Wonder's $12 million round.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info