OpenAI invests in Merge Labs

What happens when someone who grew up in the Lucasfilm Games golden era decides that today’s AI tools are failing creatives? Mike Levine has spent more than 30 years building at the intersection of games, XR, VFX, and interactive storytelling—and his verdict is clear: the current AI stack is a fragmented, overcomplicated mess that turns directors into prompt engineers.

Mike started as a tester at Lucasfilm Games (later LucasArts), working his way into the art department on titles like Sam & Max and The Dig before helping ship live-action Star Wars games such as Rebel Assault and Jedi Knight II. He later built rotoscoping tools used across the VFX industry, collaborated with ILM and Pixar, experimented with mobile AR games for Hasbro and HoloLens, and dipped into crypto gaming—before finally co-founding MovieFlow (now FilmSpark), an AI-native production platform designed so that filmmakers, agencies, and showrunners can move from script to screen without needing a computer science degree.

The AI XR news you should know: Apple taps Google Gemini to power Siri, acknowledging that building world-class LLMs in-house makes little financial sense. Meta cuts 10% of Reality Labs, right-sizing its VR bets while pivoting toward wearables. Xreal raises another $100M amid questions about Chinese state influence and data flows. Higgs Field lands $80M at a $1.3B valuation for AI cinematography tools that many filmmakers still find unreliable. Wikipedia signs licensing deals with major AI companies after years of being scraped for free. OpenAI invests $252M in Sam Altman–backed Merge Labs, raising fresh conflict-of-interest questions.

Key Moments Timestamps:

[00:23:02] From Boston journalist-to-be to accidental hire at Lucasfilm Games

[00:26:24] The “test pit” culture at Lucas and how Nintendo experience got Mike in the door

[00:28:45] Moving into the art department, learning Photoshop from early legends, and shipping Sam & Max

[00:31:15] Live-action Star Wars games: Rebel Assault, Jedi Knight II, and convincing George Lucas

[00:34:38] Visiting Pixar with new VFX tools and recognizing the same creative “magic” as LucasArts

[00:36:24] Doug Trumbull’s influence on Mike’s sense of cinematic possibility and immersion

[00:43:27] The urinal meeting at Magic Leap and what early spatial computing got right (and wrong)

[00:49:00] Why most AI tools are “dark ages” for filmmakers: node graphs, 10+ subscriptions, no story view

[00:51:00] Building MovieFlow/FilmSpark: story-first, timeline-based AI production for long-form and vertical shows

[00:53:00] The Neighborhood Podcast: a 90-second vertical murder mystery as proof-of-concept for AI-native series

When humans can generate shots, scenes, and even entire episodes in minutes, the bottleneck shifts from production to vision. Mike argues that the winning AI tools will be the ones that let directors see their whole story, maintain continuity, and iterate fast—without ever feeling like they left the edit bay for a dev console. His vertical drama collaboration with Charlie, The Neighborhood Podcast, is an early look at what happens when narrative craft meets AI-native pipelines instead of fighting them.

This episode is brought to you by Zapar creators of Mattercraft—the leading visual development environment for building immersive 3D web experiences. Build smarter at mattercraft.io.

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