Netflix’s Next Big Disruption: AI-Generated Movies Coming to Your Screen

Hollywood's nightmare—or salvation? Netflix is betting on AI to revolutionize content creation.

The streaming giant quietly greenlit its first fully AI-generated feature film last quarter—no writers' rooms, no A-list tantrums, just algorithms crunching audience data into 'art.'

Wall Street loves it (obviously). Production costs could plummet 60% while output triples. Forget 'quantity over quality'—this is 'algorithmic arbitrage' at scale.

Early test audiences couldn't distinguish AI scripts from human-written ones in blind tests. The twist? Neither could the studio execs.

One cynical take: Finally, a use case for blockchain—NFT royalties for the AI models' training data. Too bad those will go to corporate shareholders instead.

Sandros says AI tools help creators expand the possibilities of storytelling

Ted Sandros, Netflix’s co-CEO, said that the creators of the Eternauts show were thrilled by the results of the AI-generated effects. He added that the audience, which forms an essential part of the production, was also happy with the results.

The co-CEO of the TV show company believes that AI tools are helping creators open up the possibilities of storytelling on screen.  

“We remain convinced that AI represents an incredible opportunity to help creators make films and series better, not just cheaper. So, these are real people doing real work with better tools. Our creators are already seeing the benefits in production through previsualization, shot planning work, and visual effects.” 

–Ted Sandros, co-CEO of Netflix

In April, co-CEO Sandros discussed using generative AI on Rodrigo Prieto’s film, Pedro Paramo. He revealed that a lot of money was saved from producing the film using AI to generate de-aging effects compared to the financial implications of the Irishman film. He admitted in April that the entire budget of the Pedro Paramo film was close to the VFX cost on the Irishman film. 

Netflix co-CEO Greg Peters noted that they could use AI tools to improve customer experience by enabling customers to find content through natural language processing queries. 

Peters revealed that advertising is another area where generative AI could benefit brands and marketers by helping them create eye-catching content. He believes that AI tools would reduce the current challenges and gradually enable them to do more spots.

Netflix reports 16% revenue rise in Q2 earnings

Mr Sandros reported Q2 earnings, showing a 16% rise in revenue to $11 billion for the three months ending in June compared to last year. Netflix’s realized profits increased from $2.1 billion to $3.1 billion. Netflix attributed the results to the South Korean thriller Squid Game, which has attracted 122 million views, boosting the company’s revenue performance. 

AI use in the entertainment industry has sparked controversial stories online, including the Hollywood strike in 2023. The sector raised concerns over stealing other creators’ original works without consent and fears that AI would replace humans. During the strike, the Artists’ Union, including the Guild-American Federation of Television and Radio Artists Union, sought strict regulations on the use of AI. 

Tyler Perry stopped plans to expand his Atlanta studio last year, citing concerns over increased AI-generated videos, which he believed could affect jobs in the entertainment sector. OpenAI’s Sora had just been announced at the time, with greater potential to generate quality footage from simple text prompts. 

CraveFX, Singapore’s animation studio, co-founder Davier Yoon revealed that he was not surprised by Netflix’s use of AI. He said major studios are already incorporating AI tools in their films, adding that generative AI adds to the list of digital tools for visual effects artists. He believes it’s just a matter of time before AI allows smaller studios to achieve big-budget-looking visuals.

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