But is there far more of what any particular person would want to watch being produced than they would want to watch? Does anyone in the mood to watch something ever accept a less-than-preferred substitute?

If so, there is meaningful room for improvement in selection. (Not that I think AI is anywhere close to making a dent in it directly, though AI aids may increase productivity of human creative talent.) E.g., Instead of writing scripts from scratch, think of an AI writing first draft scripts from treatments, after training on a corpus of treatments and completed scripts.