Streaming giant Netflix anticipates content spending (of about $20 billion) will be up around 10% in 2026, accelerating from 8% increases over the last five years but below the 14% the company averaged over the past decade. Live, now a focus, will be about 5% of total.
The higher outlay comes even as generative AI lowers costs, allowing the streamer to make “higher quality output more quickly and efficiently,” said co-CEO Ted Sarandos in a video call after quarterly earnings Thursday. He said Gen AI workflows have been used in roughly 300 Netflix titles, concentrated in post-production.
“We’re leveraging Gen AI for really complicated shots and sequences… enhancing crowds, or historical battle scenes, those kind of things,” he added. “And keep in mind that that in many of the cases productions would have left out those key shots because they just wouldn’t have been able to afford them. So they’re saved by availability and access to these Gen AI tools.”
AI use cases “are scaling faster and faster,” he said. Documentary series The American Experiment features 17 minutes of AI-enhanced footage, which was “produced twice as fast and at half the cost of previous options.”
Cost savings will likely be reinvested in more content on the service, which fuels engagement and the “whole revenue, profit flywheel.”
The comments followed lackluster second quarter financials with execs on the defensive as analysts grilled the company on what Wall Street perceives as a bit of a slump.
Live was a big topic as the streamer continues to ramp up its slate. Sarandos lauded live programming for driving subscriber acquisitions, accelerating ad revenue, fueling conversation and helping launch new shows. It’s been expanding its live sports lineup. He also called out The Roast of Kevin Hart and the MLB Home Run Derby, which was followed by an exclusive Hot Ones special (via a partnership with Sean Evans) shot at a baseball stadium with guest Will Ferrell, whose new series The Hawk just debuted on Netflix.
It’s “a cool example of the intersection between our core series, our expansion to creator content … plus live sports,” Sarandos said.
He also touted new vertical video clips, podcasts and content deals with publishers including Condé Nast, Hearst and People that will bring more lifestyle programming, saying, “Over the last 15 years, the definition of TV has broadened and our definition has changed along with it.”