Netflix’s approach to integrating artificial intelligence (AI) into entertainment was discussed by co-CEO Ted Sarandos, highlighting the company’s strategy in a recent earnings call. In response to a question from Morgan Stanley analyst Ben Swinburne regarding Netflix’s AI strategy, Sarandos shared insights into the company’s stance on leveraging AI.
Sarandos referenced the views of prominent director James Cameron, who suggested that generative AI could significantly reduce film production costs. Contrary to focusing solely on cost reduction, Sarandos emphasized the potential of AI to improve film quality. He stated that making movies 10% better is a bigger opportunity than reducing their production cost by 50%. Traditionally, big-budget projects had exclusive access to advanced visual effects (VFX) such as de-aging technology. Now, AI-powered tools can provide these effects to smaller budget projects, leveling the playing field in terms of on-screen visuals.
As an example, Sarandos cited Martin Scorsese’s 2019 film “The Irishman,” which used costly technology for de-aging actors. Five years later, Rodrigo Prieto, the cinematographer for “The Irishman,” directed “Pedro Páramo,” based on the classic Juan Rulfo novel. This film spans several decades, requiring characters to appear at different ages. Generative AI enabled Prieto to use de-aging effects for much less than it cost for “The Irishman,” with the film’s entire budget approximating the VFX costs of the earlier production.
According to Sarandos, generative AI allowed this project to move forward, which might have been financially unfeasible otherwise. This strategy illustrates Netflix’s plan to use AI to empower creative ideas previously considered unattainable without AI support.
AI involvement in filmmaking has a historical precedent, as Sarandos noted. The Academy of Motion Picture Arts and Sciences recently updated its Academy Awards rules, stating that the use of AI tools will neither enhance nor diminish a film’s nomination chances, focusing on human creativity rather than methods employed. This reflects a trend seen decades ago with Peter Jackson’s “The Lord of the Rings” trilogy and other productions like “The Walking Dead,” where automated animation has been effectively utilized.
Netflix, alongside the Academy, is positioning generative AI as a standard filmmaking tool, rather than a replacement for human creativity. The long-term effects of this AI implementation align with Sarandos’ vision of enhancing content quality without undermining creative integrity. While some critics might fear a surge in low-quality productions, Netflix aims to cater to high-end content creation, consistent with its brand identity as a company focused on quality over cost-cutting.
The overall direction underscores Netflix’s commitment to maintaining production quality, in line with the company’s ethos similar to brands like Starbucks or HBO, rather than a broader, less specialized approach akin to 7-Eleven or Dish.
