Netflix Embraces GenAI to Cut Costs and Enhance Content

On Thursday, Netflix, the pioneering streaming giant, announced significant advancements in incorporating artificial intelligence (AI) into its productions, as well as its advertising strategies. Co-CEOs Ted Sarandos and Greg Peters detailed these innovations during the company's post-results conference call, highlighting both the creative and financial benefits of integrating AI technologies. Ted Sarandos revealed that Netflix has achieved a notable milestone by using generative AI (GenAI) to produce final footage for the first time in one of its original shows, "El Atonata," an Argentine production. Specifically, AI was employed to create a visually complex scene of a building collapsing in Buenos Aires. According to Sarandos, this process was remarkably efficient, completing the sequence 10 times faster and at a significantly lower cost compared to traditional visual effects (VFX) tools. This development underscores the potential of AI to revolutionize the production workflow, making advanced VFX accessible to a broader range of productions, not just big-budget films. Sarandos emphasized that the company’s commitment to AI extends beyond cost savings. He stated, “We remain convinced that AI represents an incredible opportunity to help creators make films and series better, not just cheaper. There are AI-powered creator tools. So this is real people doing real work with better tools.” Netflix is already exploring various applications of AI in its creative processes, such as pre-visualization, shot planning, and enhancing the quality of VFX. This approach aligns with the industry's broader trend of leveraging technology to improve content creation, rather than merely reducing expenses. Greg Peters provided additional insights into Netflix's growing reliance on AI in other operational areas. The company has rolled out AI-powered search and personalization features, enhancing user experience by providing more relevant content recommendations. In the first half of 2025, Netflix reported strong financial performance, with revenue reaching $11.08 billion, up 16% from the previous year, and a profit of $3.13 billion. Users collectively watched over 95 billion hours of content, with non-English titles accounting for a third of all views. The most popular series during this period was the British drama "Adolescence," which garnered 145 million views, followed by hits like "Squid Game," "Ginny & Georgia," and "Ms. Rachel." Peters also indicated that Netflix plans to expand its advertising revenue streams, particularly through the introduction of interactive ads in the latter half of 2025. This move comes as Netflix seeks to capitalize on its ad-supported plan, which was launched in late 2022 and now boasts 94 million users. The company’s strategy involves blending ads seamlessly with its content, creating a more engaging and less intrusive experience for viewers. For instance, advertisers will be able to display their products against themed backgrounds from popular shows like "Stranger Things." Live programming is another area where Netflix aims to boost advertising revenue, with upcoming high-profile events such as NFL games on Christmas Day and a boxing match between Canelo Álvarez and Terence Crawford drawing substantial real-time audiences. Industry insiders have praised Netflix's proactive stance on AI integration and its advertising initiatives. The use of GenAI in production is seen as a game-changer, potentially lowering barriers for smaller production teams and enabling more innovative storytelling. However, some experts caution that AI’s role must be balanced carefully to ensure it complements human creativity rather than replaces it. Netflix's success in leveraging AI for content creation and personalization is expected to set a benchmark for other streaming platforms, driving further innovation and competition in the tech-driven entertainment landscape. Company profiles reveal that Netflix, founded in 1997, has consistently been at the forefront of technological and market innovations. From its early days as a DVD rental service to becoming a leading streaming platform, the company has adapted and evolved to meet changing consumer demands. Today, with over 232 million subscribers globally, Netflix continues to innovate by embracing AI and expanding its advertising capabilities, solidifying its position as a dominant player in the entertainment industry. In summary, Netflix's embrace of AI in its production and advertising operations marks a significant step forward in the tech-infused world of entertainment. By utilizing AI to enhance efficiency and creativity, the company is poised to deliver more compelling content while also boosting its financial performance through innovative ad strategies. This strategic move is likely to influence the broader streaming market, pushing competitors to adopt similar technologies to stay competitive.