Netflix ramps up content spending as AI cuts production costs

Netflix has used generative AI workflows in roughly 300 titles as the streaming giant increases content spending while using artificial intelligence to produce higher-quality output faster and more efficiently, co-CEO Ted Sarandos said.

AI use expands across Netflix productions

Speaking after Netflix's second-quarter earnings, Sarandos said the company expects content spending to increase by about 10% in 2026, accelerating from annual growth of roughly 8% over the past five years, though still below the 14% average recorded over the previous decade. He added that live programming will account for around 5% of Netflix's total content budget.

The higher spending comes even as generative AI continues to reduce production costs. According to Sarandos, AI workflows have now been used in roughly 300 Netflix titles, primarily in post-production.

"We're leveraging Gen AI for really complicated shots and sequences," he said, citing examples such as enhancing crowd scenes and recreating historical battles.

Sarandos added that many productions would previously have been forced to cut such scenes because they were too expensive to film.

"In many of the cases productions would have left out those key shots because they just wouldn't have been able to afford them," he said. "So they're saved by availability and access to these Gen AI tools."

He also said AI applications across the company "are scaling faster and faster."

As an example, Sarandos pointed to the documentary series The American Experiment, which includes 17 minutes of AI-enhanced footage that was produced twice as fast and at half the cost of previous methods.

He said the savings generated through AI would likely be reinvested into producing more content, helping increase viewer engagement while supporting Netflix's long-term revenue and profit growth.

Live programming remains a priority

Sarandos' comments came after Netflix reported lacklustre second-quarter financial results, with executives facing tough questions from analysts over what some on Wall Street viewed as slowing momentum.

He said live programming continues to drive subscriber acquisitions, accelerate advertising revenue, generate conversation around the platform and help launch new shows as Netflix expands its live entertainment strategy.

Among the recent live offerings he highlighted were The Roast of Kevin Hart and the MLB Home Run Derby, followed by an exclusive Hot Ones special, produced through Netflix's partnership with Sean Evans, and filmed at a baseball stadium with guest Will Ferrell, whose new series The Hawk recently debuted on the service.

Sarandos described the programming as "a cool example of the intersection" between Netflix's original series, creator-led content and live sports.

Netflix broadens its definition of TV

The executive also pointed to Netflix's growing investment in vertical video clips, podcasts and content partnerships with publishers including Condé Nast, Hearst and People, which will bring more lifestyle programming to the platform.

"Over the last 15 years, the definition of TV has broadened and our definition has changed along with it," Sarandos said.