> I suspect the future of video compression will also include frame generation

That's how most video codecs work already. They try to "guess" what the next frame will be, based on past (for P-frames) and future (for B-frames) frames. The difference is that the codec encodes some metadata to help with the process and also the difference between the predicted frame and the real frame.

As for using AI techniques to improve prediction, it is not a new thing at all. Many algorithms optimized for compression ratio use neural nets, but these tend to be too computationally expensive for general use. In fact the Hutter prize considers text compression as an AI/AGI problem.