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 toward the front. In its quarterly results published on Tuesday afternoon, Netflix wrote letter to investors that it is “very well positioned to effectively leverage ongoing advances in AI.”

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 creative content more efficient.

“It takes a great artist to create something great,” Netflix CEO Ted Sarandos said during the earnings call on Tuesday. “AI can give creatives 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 for the first time in the final footage of the Argentine show ‘The Eternaut’ to create a scene of a collapsing building. Since then, the filmmakers behind “Happy Gilmore 2” used generative AI to make characters look younger in the film’s opening scene, while the producers of “Billionaires’ Bunker” used the technology as a pre-production tool to suggest wardrobe and set design.

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

AI is a controversial topic in the entertainment industry, as artists worry that LLM-powered tools that use their work as training data without consensus have the potential to negatively impact their jobs.

Using Netflix as a benchmark, it seems like studios are more likely to use generative AI for special effects than to replace actors’ roles – even if an AI actor recently caused a stir among Hollywood actors, despite not having any gigs booked yet (as far as we know). However, this behind-the-scenes AI use still has the potential to impact visual effects jobs.

These debates escalated recently when ChatGPT maker OpenAI unveiled its Sora 2 audio and video generation model, which was released without guardrails that prevent users from generating videos of some actors and historical figures. Just this week, Hollywood trade association SAG-AFTRA and actor Bryan Cranston urged OpenAI to establish stronger guardrails against deepfaking actors like Cranston himself.

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

“We are not concerned that AI will replace creativity,” he said.

Netflix’s quarterly revenue grew 17% year over year to $11.5 billion, although this fell short of the company’s forecast.