Netflix used generative artificial intelligence (AI) to create visual effects in an Argentine series, the first instance of GenAI footage appearing in one of its original productions, co-CEO Ted Sarandos said during the streaming service's earnings call on July 17.
Sarandos cited the project, a science-fiction series The Eternaut (El Eternauta), as an example of how GenAI tools can empower creators and expand their creative possibilities. This, however, comes at a time when the rapidly evolving technology is causing unease across the industry.
"We remain convinced that AI represents an incredible opportunity to help creators make films and series better, not just cheaper... Our creators are already seeing the benefits in production through pre-visualisation, shot planning work and visual effects," Sarandos said.
In The Eternaut, creators wanted to show a building collapse in Buenos Aires but the scene would have been too costly to produce within the show’s budget, he said. The project's creative team partnered with Eyeline, a production innovation group within Netflix's Scanline VFX studio, to make the scene using AI-powered tools.
"That VFX sequence was completed 10x faster than it could have been completed with traditional VFX tools and workflows," he said. The result thrilled the creators, the Netflix team and the audience. "I think these tools are helping creators expand the possibilities of storytelling on screen, and that is endlessly exciting," Sarandos said.
In April, Sarandos had said creators are also using AI tools for set references, pre-vis (pre-visualisation), VFX sequence prep, and shot planning.
“Traditionally, only big budget projects would have access to things like advanced visual effects such as de-aging. Today, you can use these AI-powered tools to enable smaller budget projects to have access to big VFX on screen,” he said at the time.
Improving member experience
Netflix is also utilising generative AI capabilities to improve the member experience.
"We've been in the personalisation and recommendation business for two decades, but yet we see a tremendous room and opportunity to make it even better by leveraging some of the more newer generative techniques," co-CEO Greg Peters said during the call.
The streaming giant is rolling out a conversational GenAI-powered search experience that allows users to discover shows and movies using natural language. It has partnered with ChatGPT-maker OpenAI for the initiative.
“We see all the work we do there as a force multiplier for the large content investment we're making,” Peters said. “If we do a better job, every dollar we spend delivers more value to our members by connecting them with the titles they’ll truly love.”
Another key area is advertising. The company is working on generative AI-powered ads that could let brands place their products directly into the style and setting of shows, with plans to roll it out later this year.
"It’s a high hurdle to create a brand-forward spot within the creative universe of one of the titles we’re currently carrying," Peters said. "But it’s very compelling for both viewers and brands, and we believe these generative techniques can lower that hurdle over time, allowing us to do it in more and more spots."
The move comes as Netflix looks to double its advertising revenue this year. In a letter to shareholders, the company said one of the focus areas of 2025 is strengthening its capabilities for advertisers.
The streaming platform has completed the rollout of the Netflix Ads Suite, its in-house first-party ad tech platform, across all of its 12 ad-supported markets. Early results are “in line with our expectations”, the company said.
"We believe our ad tech platform is foundational to our long-term ads strategy and, over time, will enable us to offer better measurement, enhanced targeting, innovative ad formats and expanded programmatic capabilities," it added.
In May, Netflix said its ad-supported tier has more than 94 million monthly active users, up from 70 million in November 2024. This tier is not available in India at present.
Netflix stopped reporting quarterly paid membership additions and its total subscriber base from earlier this year. The service crossed the 300 million subscriber milestone in Q4 2024, with a total base of 301.6 million subscribers.
For the second quarter of 2025, revenue grew 16 percent year-on-year (YoY) to $11.1 billion, driven by an expanded member base, higher subscription pricing, and increased ad revenue. Operating income totaled $3.8 billion, up 45 percent YoY.
Netflix also increased its full-year revenue guidance to $44.8 million-$45.2 billion for 2025, up from the prior guidance of $43.5 million-$44.5 billion, primarily due to the forex impact from the weakening dollar relative to most other currencies.
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