Netflix goes ‘all in’ on generative AI as entertainment industry remains divided

As the entertainment industry ponders when and how to use generative AI in filmmaking, Netflix is ​​leaning in. In its quarterly earnings report released Tuesday afternoon, Netflix wrote in its letter to investors that it is “extremely well positioned to effectively benefit from continued advances in artificial intelligence.”

Netflix doesn’t plan to use generative AI as the backbone of its content but believes the technology has potential as a tool to make creatives more efficient.

“It takes a great artist to make something great,” Netflix CEO Ted Sarandos said on Tuesday’s earnings call. “AI can give creators better tools to improve their overall TV/film experience for our members, but it doesn’t automatically make you a great storyteller if you’re not one.”

Earlier this year, Netflix said it used generative AI in the final shots for the first time in Argentinian show “The Eternaut” to create a scene of a building collapsing. Since then, the makers of “Happy Gilmore 2” have used artificial intelligence to make characters look younger in the film’s opening scene, while the producers of “Billionaires’ Bunker” have used the technology as a pre-production tool to visualize wardrobe and set design.

“We are confident that AI will help us and our creative partners tell stories better, faster, and in new ways,” Sarandos said. “We’re all in it, but we’re not chasing novelty for the sake of novelty here.”

AI has been a controversial topic in the entertainment industry, with artists concerned that LLM-powered tools that non-consensually use their work as training data have the potential to negatively impact their careers.

With Netflix as the leader, studios seem more likely to use generative AI for special effects than to replace role actors — even if one AI actor recently caused a stir among Hollywood actors, despite no gigs being booked yet (that we know of). However, behind-the-scenes uses of AI still have the potential to impact visual effects jobs.

These discussions escalated recently when OpenAI, the maker of ChatGPT, unveiled its audio and video generation model Sora 2, which was released without guardrails preventing users from creating videos of certain historical actors and figures. Just this week, Hollywood trade organization SAG-AFTRA and actor Bryan Cranston urged OpenAI to create stronger guardrails against fake actors like Cranston himself.

When an investor asked Sarandos about Sora’s impact on Netflix, he said it “starts to make sense” that content creators would be affected, but he’s less concerned about the film and TV business — or so he tells investors.

“We’re not worried about AI replacing creativity,” he said.

Netflix’s quarterly revenue grew 17% year-over-year to $11.5 billion, although that’s below the company’s expectations.