As the entertainment industry figures out when and how to use generative AI in film production, Netflix is leaning in. In its quarterly earnings report released Tuesday afternoon, Netflix wrote in its letter to investors that it is “very well positioned to effectively capitalize on ongoing advances in AI.”
Netflix has no plans to use generative artificial intelligence as the backbone of its content, but believes the technology has potential as a tool to make advertising more effective.
“It takes a great artist to make something great,” Netflix CEO Ted Sarandos said on Tuesday’s earnings call. “AI can give advertisers better tools to improve their overall TV/movie experience for our members, but it doesn’t automatically make you a great storyteller if you’re not.”
Earlier this year, Netflix said it used generative artificial intelligence in final footage for the first time in the Argentine show “The Eternaut” to create a scene in which a building collapsed. 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 imagine wardrobe and set design.
“We are confident that AI will help us and help our creative partners tell stories better, faster and in new ways,” said Sarandos. “We’re all in on it, but we’re not chasing novelty for novelty’s sake here.”
AI has been a contentious topic in the entertainment industry as artists worry that LLM-powered tools that used their work as training data without consent have the potential to negatively impact their jobs.
With Netflix as the bellwether, it seems that the studios are more inclined to use generative AI for special effects rather than replacing the role of actors – even though an AI actor recently caused an uproar among Hollywood actors, despite the fact that they have not yet booked any gigs (that we know of). However, these behind-the-scenes AI uses still have the potential to impact visual effects jobs.
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These debates recently escalated when ChatGPT maker OpenAI unveiled its Sora 2 audio and video generation model, which was released without a firewall that prevents users from generating videos of some actors and historical figures. This week, the Hollywood trade organization SAG-AFTRA and actor Bryan Cranston called on OpenAI to establish stronger safeguards against deepfaking actors like Cranston himself.
When an investor asked Sarandos about the impact of Sora on Netflix, he said it’s “starting to make sense” that content creators could be affected, but he’s less concerned about the film and TV industry — 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 this fell short of the company’s forecast.