Netflix has decided to fully embrace generative AI (artificial intelligence), even though the entertainment industry remains divided over the technology. In a recent letter to investors, the company described how it sees AI as a major opportunity for more efficient content creation. Generative AI will not form the core of its films and series, but is intended to serve as a tool that helps creators work faster and better. Netflix CEO Ted Sarandos emphasized during a conference call that AI gives creators better tools to improve the viewing experience, but cannot replace genuine storytelling talent. According to him, it takes a great artist to create something truly good.
The company has already applied AI in several projects. For example, in the Argentine series The Eternaut, it used generative AI for the first time in a final shot, creating a scene featuring a collapsing building. Another example is the film Happy Gilmore 2, where AI helped de-age the characters in the opening flashback scene. In the documentary Billionaires’ Bunker, AI was used in pre-production to visualize costumes and set design. Ted Sarandos said they are confident that AI will help both Netflix and its creative partners tell stories better, faster, and in new ways, but that they are not chasing novelty merely for novelty’s sake.
Netflix’s quarterly financial results show revenue growth of 17% year over year, reaching $11.5 billion (approximately CZK 269 billion). This growth exceeded expectations, although it fell short of the company’s forecasts. Netflix believes it is well positioned to take advantage of advances in AI, which it says will strengthen its market position.
A Divided Entertainment Industry and Concerns About AI
There is controversy surrounding generative AI in the entertainment industry because artists fear that tools trained on their work without consent could affect their jobs. Netflix is focusing more on special effects than on replacing actors, which could affect jobs in visual effects. OpenAI’s Sora 2 model recently caused a stir by allowing videos featuring certain actors and historical figures to be generated without restrictions. SAG-AFTRA and actor Bryan Cranston called on OpenAI to introduce stronger protections against deepfakes, such as a deepfake of Bryan Cranston.
When asked by an investor about Sora’s impact on Netflix, Ted Sarandos replied that it makes sense that content creators could be affected, but that he is less concerned about the film and television business. According to him, he is not worried that AI will replace creativity. However, critic Alan Sepinwall of What’s Alan Watching? warns that AI is unreliable as a search or recommendation tool and may suggest content that viewers will not enjoy. As a creative tool, he says, it lacks originality and gives viewers only a faded version of what they have already seen many times before.
Netflix is testing conversational search, which allows viewers to use natural language to browse its catalog of films and series. The company also plans to use AI in advertising for new formats.
Netflix’s Guidelines for Using Generative AI
Netflix has issued detailed guidelines for filmmakers, production partners, and vendors regarding the use of generative AI in content creation. Netflix sees these tools, which rapidly generate new media such as video, audio, text, or images, as valuable aids when used transparently and responsibly. Partners should share their planned use of AI with their Netflix contact, especially when using new tools with varying capabilities and risks.
Key principles include that outputs must not replicate copyrighted materials, tools must not store or train on production data, they should ideally be used in a secure environment, generated material must be temporary and not part of final deliverables, and AI must not be used to replace actors’ performances without consent. If all principles are met, it is sufficient to inform the Netflix contact; otherwise, written approval is required.
Sources: techcrunch.com and cnet.com
