‘Merry the Christmas Witch’ Director Claims AI Turned a Blockbuster-Sized Budget Into a Shoestring Production

Few debates in Hollywood right now are as heated as the role of artificial intelligence in filmmaking. Studios, unions and independent creators are all weighing what the technology can do, and what it should. A new holiday fantasy is now offering one of the clearest case studies yet, at least in terms of dollars.

‘Merry the Christmas Witch‘ is based on a 2012 children’s book by Bobbi Hess. The story follows Merry, the first witch born on Christmas Day, who must defeat a coven of evil witches that has kidnapped Santa Claus in a bid to destroy Christmas. The film’s first poster shows a young girl in a black-and-red dress riding a candy-cane broom across a giant red moon, with a gothic castle looming below.

In an exclusive with Variety, director Tom Walsh said he originally estimated the movie would cost $80 million to make. Using AI, he says he produced the two-hour film for $1.5 million. Variety described the project as perhaps serving as a test case for the types of films that AI can help create.

Walsh worked with the AI studio Phatty Acid, which helped on the film. The team used tools including ElevenLabs’ voice generator and the video generators Seedance and Nanobanana to bring the characters and world to life. The film used AI-generated voices for its characters, according to reports.

About 50 people worked on the project over a 10-month production, which has been described as a hybrid AI production. That’s a far smaller operation than a traditional fantasy film with this kind of visual scope would demand. It also shows that AI-assisted production still relies on a significant human team.

Walsh has said the industry’s doors are not very open to new kinds of ideas and stories, which makes things tough for independent filmmakers. That’s where AI came in, he explained. In his view, the technology opened a path for a project that likely would never have been financed in the traditional way.

He has also suggested the approach could set a new standard for projects traditionally constrained by large budgets. That’s a bold claim, and it will almost certainly be debated. For supporters of the technology, it’s evidence of democratization, while critics worry about what it means for crews and artists.

Hess, the book’s author, is a 70-year-old New Orleans-based technical writer, and she has embraced the adaptation. She told Variety that AI enhanced the whole idea, noting that she created the character Merry and that Walsh’s imagination and ability to create creatures brought it together. She called the adaptation a perfect marriage of subject and technology.

That endorsement matters because it shows the original creator supports the approach. It also frames the film as a collaboration between a human story and new tools. How audiences respond to that blend remains to be seen.

‘Merry the Christmas Witch’ arrives as AI-driven features multiply. A film called ‘Hell Grind’ premiered at Cannes in May as a feature created entirely on the Higgsfield AI platform, and reports said it cost about $500,000, with $400,000 going to AI compute. Earlier, ‘DreadClub: Vampire’s Verdict’ was made in 2024 for just $405.

Variety also reported that Antonio Banderas will star in an AI-powered feature called ‘Cortes’ from Utopai Studios. Each of these projects pushes the boundaries in a different way. Together, they suggest that the technology is moving quickly from experiment to industry reality.

For now, ‘Merry the Christmas Witch’ does not have a release date or an official distributor. That leaves open questions about how it will reach audiences and how they will receive it. Holiday films often rely on strong seasonal marketing, so timing could matter.

The film’s budget claim will also draw scrutiny. Comparing a $1.5 million production to an $80 million estimate is a striking contrast, but it doesn’t say anything about the quality of the final product. Viewers will ultimately judge the film on its story and visuals.

Whatever its reception, the project is likely to become a reference point in ongoing arguments about technology and creativity. It captures both the promise and the anxiety that surround AI in entertainment. And it arrives just in time for the holiday season.

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