Netflix formally stated its intent to extensively leverage generative artificial intelligence (AI), as detailed in its quarterly earnings report released on Tuesday afternoon. The streaming giant conveyed in its letter to investors that it is "very well positioned to effectively leverage ongoing advances in AI."
The company does not plan for generative AI to form the backbone of its content creation but views the technology as a tool to enhance the efficiency of creative processes. Netflix CEO Ted Sarandos remarked during Tuesday's earnings call, "It takes a great artist to make something great. AI can give creatives better tools to enhance their overall TV/movie experience for our members, but it doesn’t automatically make you a great storyteller if you’re not."
Netflix has already implemented generative AI in various productions. Earlier this year, the technology was utilized in final footage for the Argentine series "The Eternaut" to generate a scene depicting a building collapse. Subsequently, filmmakers for "Happy Gilmore 2" employed generative AI to de-age characters in the opening sequence, while producers of "Billionaires’ Bunker" used it during pre-production to visualize wardrobe and set designs.
Sarandos reaffirmed the company's commitment, stating, "We’re confident that AI is going to help us and help our creative partners tell stories better, faster, and in new ways. We’re all in on that, but we’re not chasing novelty for novelty’s sake here."
The integration of AI remains a contentious topic within the entertainment industry. Artists and unions have expressed concerns that large language model (LLM)-powered tools, particularly those trained on existing creative works without explicit consent, could negatively impact employment and creative rights. Recent developments, such as the release of OpenAI's Sora 2 video generation model, have intensified these debates, leading Hollywood trade organizations like SAG-AFTRA and actors such as Bryan Cranston to urge OpenAI to implement stronger guardrails against deepfaking actors.
When questioned about Sora's potential impact on Netflix, Sarandos acknowledged that it "starts to make sense" that content creators could be affected in certain areas. However, he expressed less concern regarding the core movie and television production business, stating, "We’re not worried about AI replacing creativity."
Concurrently, Netflix reported a 17% year-over-year growth in its quarterly revenue, reaching $11.5 billion. This figure, however, fell below the company’s internal forecast.
