Netflix used AI to produce documentary footage at half the cost, content spending hits $20B

Netflix's documentary *The American Experiment*, a five-episode series featuring actor Martin Sheen as the voice of George Washington and appearances by ex-vice presidents Kamala Harris and Mike Pence, included 17 minutes of AI-enhanced footage produced "twice as fast and at half the cost," according to Netflix co-CEO Ted Sarandos. This milestone reflects Netflix's broader pivot toward integrating generative AI into content creation, particularly post-production workflows.

During the second quarter, Netflix reported revenue of $12.6 billion（約2兆円）, up 13% year-over-year, and an operating margin of 33.4%. However, revenue growth decelerated from 16% in Q1 2026, prompting the stock to fall as much as 9% after hours despite earnings tracking expectations. The streamer narrowed its full-year revenue forecast to between $51 billion（約8.2兆円） and $51.4 billion（約8.2兆円） and reiterated a 31.5% operating margin target, implying operating income growth exceeding 20% for 2026.

On the content front, Netflix content spending has climbed substantially. Expenditure grew from $16.2 billion（約2.6兆円） in 2024 to $17.1 billion（約2.7兆円） in 2025, and could reach $20 billion（約3.2兆円） this year. Sarandos told shareholders that the company expects overall content spending to increase 10% this year, compared with an 8% average over the past five years. Live content now accounts for 5% of content spend. Sarandos argued that AI equips creative teams—chiefly during post-production—with tools to extract greater value from each programming dollar. "By equipping creatives with these tools, we believe they are going to enhance their abilities and we are going to have better and more impact for every dollar we spend on our programming," he said. "Content creation timelines can be shortened and quality can be enhanced."

So far this year, Netflix's creative partners have deployed generative AI workflows in 300 titles, predominantly in post-production. Post teams have used AI to enhance crowd scenes, world building, opening shots, and historical battle scenes. In some productions, Sarandos noted, sequences would have been scaled back without AI because teams could not have afforded them or met their timelines. He suggested cost savings would likely flow back into more content, fueling "that whole revenue-profit flywheel."

Netflix has backed this strategy with institutional investments. In March 2026, the company acquired InterPositive, actor Ben Affleck's film technology company, reportedly for up to $600 million（約960億円）. Results from that acquisition are still "early days," Sarandos said on the Thursday earnings call. The streamer also consolidated its virtual effects and production operations under the Eyeline studio banner in 2025.

Yet the AI push remains contentious within the creative community. The 2023 Hollywood labor strikes featured prominent demands for AI safeguards and worker protections. Filmmaker Guillermo del Toro, who adapted Mary Shelley's *Frankenstein* for Netflix, stated in October 2025 that he would "rather die" than use generative AI. Sarandos addressed this tension carefully, saying "AI will give creatives better tools to bring their visions to life" and stressing that "movies are being made by people who make movies."

Competition for viewer attention has intensified on multiple fronts. Netflix no longer competes only with traditional rivals like Disney and HBO; it contends with online gaming through Microsoft, Sony, and Nintendo, alongside TikTok, Facebook videos, YouTube Shorts, and mobile-first platforms. Bob Lang, founder of Explosive Options, observed in an emailed statement: "People can multitask—they can have Netflix playing in the background while scrolling on their phones—but the content has to be compelling enough to command their full attention. That's the real challenge."

In a separate move, Netflix made its largest quarterly stock buyback in history, repurchasing $4.7 billion（約7500億円） in stock this quarter. The company received a boost from a $2.8 billion（約4500億円） breakup fee collected from Paramount Skydance after its merger pact with Warner Bros. Discovery dissolved in February. Netflix also announced it would scale back its *What We Watched* engagement report from twice a year to annually starting in 2027.

Netflix is deploying generative AI as a direct response to slowing revenue growth and rising content costs. Revenue growth has decelerated from 16% in Q1 2026 to 13% this quarter, with a 12% projection for Q3, prompting the stock to fall as much as 9% after hours despite in-line earnings. Content spending has accelerated faster than Netflix's historical average—rising to potentially $20 billion（約3.2兆円） this year, a 10% increase versus an 8% average over five years—driven partly by a new push into live programming (5% of content spend this year). Sarandos positioned AI as a way to unlock both speed and cost efficiency without replacing creatives. The company has already institutionalized the approach across 300 titles in post-production and is consolidating its virtual effects and production infrastructure, including the March 2026 acquisition of actor Ben Affleck's InterPositive for reportedly up to $600 million（約960億円）.

The bet carries real tension. The 2023 Hollywood labor strikes centered partly on AI protections and worker displacement—filmmaker Guillermo del Toro said he would "rather die" than use generative AI when promoting his Netflix-produced *Frankenstein* adaptation in October 2025. Yet Sarandos framed the investment carefully, arguing that "AI will give creatives better tools to bring their visions to life" and that "movies are being made by people who make movies." The cost savings from AI workflows could become increasingly important as Netflix faces competition not just from traditional rivals like Disney and HBO, but from gaming platforms, TikTok, and short-form video on phones—all competing for the same attention and engagement.