With more and more companies experimenting with generative AI, Netflix seems more than willing to hop on board out of a stated belief that it will help creators “tell better stories.” But audiences, the company says, won’t know the difference.
Today, during an earnings call, its co-CEOs gave lengthy responses to a question about the potential for generative AI to impact content creation, with Ted Sarandos in particular remarking that audiences “don’t much care” about either budgets for film and TV, or even the technology used to make them.
Sarandos also said that generative AI was “a great way for creators to tell better stories,” and compared its introduction into production to the transition of animation from hand-drawn to CG. “Animation didn’t get cheaper, it got better in the move from hand-drawn to CG animation, and more people work in animation today than ever in history,” he said. “So I’m pretty sure there’s a better business and a bigger business in making content 10% better than there is in making it 50% cheaper.”
We’ve included the full question and responses below for context:
Q: Elizabeth Stone [Netflix CTO] recently appeared on a podcast where she said that Netflix is exploring how to integrate generative AI into the platform to improve the member experience. Do you think that technology could have more of a potential impact on the content creation or discovery side? How do you think about the relative impact on engagement from improving discovery versus content?
Greg Peters, co-CEO: We’ve been using similar technologies, AI and ML [Machine Learning] for many years to improve the discovery experience and drive more engagement through those improvements. We think that generative AI has tremendous potential to improve our Recommendations and Discovery systems even further. We want to make it easier for people to find an amazing story that’s just perfect for them in that moment. But I think that it’s also worth noting that the key to our success stacks, it’s quality at all levels. It’s great movies, it’s great TV shows, it’s great games, it’s great live events, and a great and constantly improving recommendation system that helps unlock all of that value for all of those stories.
Ted Sarandos, co-CEO: Yeah it begs the question about the impact on creative with AI going forward, which is hard to predict obviously. But I would say this. I think that AI is going to generate a great set of creator tools, a great way for creators to tell better stories. And one thing that’s sure if you look back over 100 years of entertainment, you can see how great technology and great entertainment work hand in hand to make great big businesses.
You can look no further than animation. Animation didn’t get cheaper, it got better in the move from hand-drawn to CG animation, and more people work in animation today than ever in history. So I’m pretty sure there’s a better business and a bigger business in making content 10% better than there is in making it 50% cheaper. I think that shows and movies win with the audience when they connect. It’s in the beauty of the writing, it’s in the chemistry of the actors, it’s in the surprise in the plot twists, all those things. And I’m not saying audiences don’t notice all these other things, but I think they largely care mostly about connecting with the storytelling. I’d say they probably don’t care much about budgets, and arguably not even about the technology to deliver it. My point is they’re looking to connect, so we have to focus on the quality of the storytelling. There’s a lot of filmmakers, a lot of producers experimenting with AI today, they’re super excited about how useful a tool it can be. And we’ve gotta see how that develops before we can make any meaningful predictions of what it means for anybody, but our goal remains unchanged, which is telling great stories.
Sarandos’ and Peters’ comments come at a critical time for discussion around the use of generative AI in production. Just last year, companies including Netflix Japan came under fire for use of generative AI to replace animators. In our reporting, many animators shared with IGN their fears of generative AI making their jobs obsolete, or of their work being used without permission to train AI models that would then generate lookalikes for major studios. While those we spoke to acknowledged there were likely ways to use AI and AI tools to support human labor without replacing it, the risks for most outweighed the benefits.
Netflix posted Q2 earnings today with a year-over-year gain of 8 million subscribers and net revenue up 17%. In its report, the company additionally offered an explanation for why it refuses to bundle its service with other streaming services – it simply doesn’t need to.
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to rvalentine@ign.com.
