Netflix Embraces Generative AI to Cut Production Costs

Netflix has used generative AI for the first time in an original series, marking a turning point in visual effects production. The streaming platform applied this technology in the Argentine sci-fi show The Eternaut, significantly reducing costs and speeding up the process. This move signals a broader shift in the entertainment industry as studios turn to AI tools to enhance storytelling on tighter budgets.

Faster and Cheaper Production

Co-CEO Ted Sarandos revealed that generative AI helped complete a complex visual sequence in The Eternaut—a building collapse in Buenos Aires—ten times faster than traditional effects would have allowed. Without AI, the cost of the scene would have exceeded the show’s budget. Thanks to this technology, the production team delivered high-quality results within financial constraints.

Sarandos called it “the very first generative AI final footage to appear on screen in a Netflix original series or film,” and noted the creators were “thrilled with the result.”

Strong Financial Performance

Netflix announced strong second-quarter results alongside the AI revelation. Revenue surged by 16%, reaching $11 billion for the three months ending in June. Profits jumped from $2.1 billion to $3.1 billion year-on-year.

Part of the company’s success stemmed from the final season of Squid Game, which drew 122 million views globally. This performance exceeded expectations and reinforced Netflix’s position as a global streaming leader.

Smaller Budgets, Bigger Visuals

Generative AI allows productions with limited budgets to feature advanced effects previously reserved for high-cost projects. Sarandos emphasized that the technology levels the playing field. Smaller teams can now deliver visually rich content without needing massive financial backing.

This democratization of visual effects could transform the creative process, enabling diverse storytellers to compete with large-scale studios.

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Industry Controversy and Pushback

Despite the potential, generative AI remains a controversial topic in the entertainment world. Concerns over copyright infringement, ethical usage, and job loss continue to spark debate. Critics argue that AI-generated content often borrows from existing work without proper attribution.

These fears were central during the 2023 Hollywood strike. The Screen Actors Guild–American Federation of Television and Radio Artists (SAG-AFTRA) demanded stronger rules on AI usage. They warned that unchecked AI development could threaten jobs and artistic integrity.

A Pause on Studio Expansion

Prominent filmmaker Tyler Perry echoed those concerns in 2024 when he suspended an $800 million expansion of his Atlanta studio. He cited worries about the rapid rise of AI-generated video and its potential impact on industry employment.

Perry’s decision came at a time when tools like OpenAI’s Sora were making headlines. These platforms amazed the public with their ability to produce realistic videos from text prompts. But they also triggered alarm over the pace of technological change and its consequences for creative jobs.

Creative Tools, Not Replacements

Despite the anxiety, many visual effects professionals view AI as a supplement, not a replacement. Davier Yoon, co-founder of the Singapore-based animation firm CraveFX, said Netflix’s use of generative AI was expected. According to Yoon, AI expands the toolkit available to artists, enabling new forms of creative expression.

“Generative AI is just one more tool,” he said. “It lets smaller studios create visuals that look like they came from big-budget productions.”

Yoon also emphasized that artists remain central to the creative process. “Ultimately, it is the artist who decides what is in the final image, not AI.”

Future of Content Creation

Netflix’s step into generative AI may set a trend for other studios looking to streamline costs while maintaining high production quality. As the industry adapts, a hybrid approach—combining human creativity with AI efficiency—may become the standard.

While questions about ethics and labor remain, the technology continues to evolve. Its integration into mainstream content like The Eternaut suggests that generative AI is no longer a futuristic concept—it’s a present-day production tool reshaping how stories are told on screen.