Busan 2026: AI Studios, a New Asian Alliance, and Keanu Reeves' Handcrafted Samurai

The Busan International Film Festival has always been where Asian cinema takes its own temperature — part red carpet, part marketplace, part laboratory. At this year's 31st edition, running October 6–15 with 247 official selections from 59 countries, the laboratory is dominating the conversation. Three stories emerging from the festival's Asian Contents & Film Market (ACFM) point in the same direction: artificial intelligence is reshaping how Asian films get made, who gets to make them, and who owns the results.

Consider the weekend's trio of dispatches. A VFX veteran argued that tiny AI-native studios can now build original intellectual property from scratch. Independent producers from five Asian territories launched a cross-border alliance to make films together and defend creators' rights. And Japan's Dwarf Studios, behind the Keanu Reeves-voiced stop-motion samurai film Hidari, told a packed industry session that it is hunting for a new partner after talks with a deep-pocketed American company collapsed. Together, they sketch a film industry in the middle of a power realignment — one where the old advantages of money and scale no longer decide everything.

The AI-native studio thesis

The clearest statement of that realignment came from Hong Jae Cheol, a producer-director at the Korean creative technology company Viscode, speaking at the InnoAsia AI Creators Camp, held on Sunday at ACFM in Busan. Hong has unusual authority on the subject: he began his career at Industrial Light & Magic and has worked on films including Iron Man, Transformers, and Pirates of the Caribbean — the very peak of the old, expensive VFX order.

His argument was two-sided, and the nuance is what made it interesting. On one side, he contended, small AI-native companies running automated pipelines can now develop their own intellectual property — characters, worlds, franchises — without the massive capital that once made original IP a big-studio privilege. On the other, traditional studios retain their advantages in established franchises, production infrastructure, talent, and distribution. This is not a story of replacement, in other words. It is a story of two different games being played at once.

Hong described the industry as moving "from using AI to generate individual images toward using AI as part of a complete production workflow." He contrasted the conventional live-action-and-VFX process — 3D assets, animation, rendering, compositing — with an emerging AI-assisted model: actors perform on a controlled set, AI generates environments and visual elements, and VFX artists handle tracking, integration, and finishing. He walked through current applications of the technology across VFX, animation, and filmmaking: rotoscoping, cleanup, previs, character design, camera tests, and environment creation.

The crucial point, and the one that separates this from the usual AI hype, is his insistence that traditional visual effects remain essential. AI-generated material still needs to be made usable on screen — tracked, lit consistently, composited, finished — and that is skilled human work. Hong's vision is a hybrid: a partnership between AI and human creativity, in which automation handles the labour-intensive middle and people handle the judgement-intensive edges. The message to both camps was deliberate. To the AI maximalists: you still need VFX artists. To the traditionalists: the pipeline is already changing under your feet.

Why the old guard is not finished

Hong is probably right that this is the near-term equilibrium, and the reasons are structural. Building a world is only half the battle; the other half is getting it in front of audiences. Traditional studios own decades of recognisable IP, deep benches of specialised talent, physical production infrastructure, and — most durably — distribution networks and marketing muscle. An AI-native studio can generate a universe for a fraction of the old cost. It cannot yet generate a global release slot, a merchandise pipeline, or a theme-park ride.

That is precisely why the Busan conversations kept circling back to infrastructure and alliances. If the technology has democratised production, the battleground has moved to everything around it: financing, rights, distribution, and the legal frameworks that protect creators when a US company offers to fund your entire budget — and asks for all the rights in return.

Five territories, one alliance

Which brings us to the weekend's second big story. On Sunday, independent producers from five Asian territories launched the Asian Producers Alliance (APA) at ACFM, a new cross-border coalition aimed at advancing co-production across the region and strengthening protection of creators' rights. The founding declaration was read by Kim Ji-yeon, a producer of Squid Game and a board member of the Producers Guild of Korea (PGK) — a symbolic choice, since few people embody the global reach of Asian storytelling better.

The alliance brings together five regional organisations: the Producers Guild of Korea, the Indonesian Film Producers Association (APROFI), the Philippine Independent Producers Group (PIPG), the Hong Kong Movie Production Executives Association (HKMPEA), and the Taiwan Producers Association (TPA). Two features of its composition stand out. First, it consists entirely of independent producers — no studios, conglomerates, or state bodies. Second, it was built bottom-up: PGK and APROFI initiated the network, and online approvals from all five participating organisations finalised its formation.

"For years, we have faced the same changes alone — in our own markets, in our own languages. Today we choose to face them together," the declaration stated. "We will advance co-production across Asia, so that our stories can be made together and travel further."

The logic is straightforward. Streaming platforms and AI tools have made cross-border production technically easier than ever, but financing, legal frameworks, and rights management remain stubbornly national. A Korean-Indonesian-Philippine co-production still has to navigate five different systems for funding, labour, tax incentives, and IP protection. An alliance of producers' guilds is exactly the kind of unglamorous institutional plumbing that makes ambitious creative collaboration possible — and its emphasis on creators' rights suggests the members have been watching what happens when small independents negotiate alone against global money.

The samurai that lost its deal

They have good reason to be cautious. The weekend's third story, told at ACFM's "Co-Producing with Japan: Opportunities and Challenges" session, was a cautionary tale in real time. Japan's Dwarf Studios is seeking a new partner for Hidari, its stop-motion samurai film voiced by Keanu Reeves, after negotiations with a US company stalled, producer Matsumoto Noriko told the audience.

The backstory is worth the telling. Hidari is directed by Kawamura Masashi and produced by Dwarf, Whatever, and Tecarat — an expansion of Kawamura's viral 2023 proof-of-concept short, which told its story through intricately carved wooden puppets and racked up more than 4.9 million YouTube views plus awards at over 20 festivals worldwide. Set in Edo-period Japan, it follows Jingoro, a legendary master craftsman caught in a conspiracy during the reconstruction of Edo Castle. He loses his mentor, the woman he loves, and his right arm — then returns with a weaponised prosthetic, his woodcarving tools reborn as instruments of vengeance, accompanied by his partner, the "Sleeping Cat." The film weaves real historical figures into an original revenge story about rebirth. Reeves — whose name topped Kawamura's dream casting list, partly because John Wick was a reference point for the pilot — called the project "truly extraordinary" when he joined, his first role in a Japanese original production.

The pitch was a highlight of the Annecy Animation Showcase at Cannes and Annecy itself earlier this year. Then came the American offer: a US company would fund the entire budget — but wanted all the rights. As Matsumoto explained it, the company respected Dwarf's creativity and was prepared to pay enough, but full funding would have left the studio with no control over a fiercely original project. Dwarf wanted to hold on to half the rights. Before the talks could advance, the people Matsumoto had been negotiating with lost their jobs amid Hollywood's ongoing upheaval — and the deal died. "Even with Keanu, we cannot stop the fire," Matsumoto told the session, in a line that neatly captured both the project's heat and its precariousness.

Japan is the Producer Hub's focus country this year, and the session — co-hosted by VIPO, with Questry CEO Ibe Tomonobu and Knockonwood founder Yamaguchi Shin alongside Matsumoto — underscored the paradox. Japanese animation and craft cinema have never been more desired internationally, yet the terms on offer can require surrendering the very thing that makes them valuable: ownership of the original vision.

Why this matters

Read together, the three Busan stories describe a single shift. Hong's AI thesis says the means of production are being democratised — small teams can now build worlds. The APA says the structures around production need democratising too — independents negotiating together rather than alone. And Hidari shows what is at stake when they don't: an original, handcrafted film, voiced by one of the world's biggest stars, still hunting for a partner who will fund it without swallowing it whole.

The festival itself is adapting to this reality. This year's BIFF earned formal A-list recognition from the International Federation of Film Producers Associations, and its top prize — the Busan Award — now makes winners eligible for submission to the Academy Award for Best International Feature, strengthening the festival's role as a launchpad. ACFM is running 64 programmes across IP, global investment and distribution, cinematic AI, and new media, with Japan as the Producer Hub's focus country and an InnoAsia showcase of AI and hybrid theatrical works. The infrastructure of Asian cinema is being rebuilt in real time, with AI at the centre of the blueprints.

The through-line is control. AI gives small studios the power to create; alliances give them the power to negotiate; and the Hidari episode shows that creation without negotiation power is a trap. The Asian film industry arriving in Busan this October is not just adopting new tools. It is trying, in public, to rewrite the terms on which those tools get used — before someone else writes them first.