• Netflix recently used generative AI in one of its productions for the first time.
• Co-CEO Ted Sarandos revealed that "The Eternaut" was the history-making show.
• Sarandos said the show used the technology to show the collapse of a building.

Netflix used generative AI to save money on a recent production — and the company's co-CEO said he was "thrilled" with the results.

Ted Sarandos revealed on Thursday that the streamer used the technology when making "The Eternaut," an Argentine production based on a popular sci-fi comic.

Sarandos said the show is the first Netflix title to use fully AI-generated shots in its final footage, with a sequence that shows the collapse of a building in Buenos Aires. Without AI, Sarandos said, such an effect would not have been cost-effective for a production the size of "The Eternaut."

"In fact, that VFX sequence was completed 10 times faster than it could have been completed with visual, traditional VFX tools and workflows," Sarandos told analysts during Netflix's quarterly earnings call.

Sarandos said everyone was "thrilled" with the final product.

"The creators were thrilled with the result. We were thrilled with the result," he said. "And more importantly, the audience was thrilled with the result. So, I think these tools are helping creators expand the possibilities of storytelling on screen, and that is endlessly exciting."

Netflix is no stranger to AI. Sarandos has previously spoken about the use of AI on Rodrigo Prieto's film "Pedro Paramo" and how much money was saved using AI for deaging effects as opposed to what it cost for Martin Scorsese's "The Irishman."

"In fact, the entire budget of the film was about the VFX cost on 'The Irishman,'" Sarandos said during Netflix's first quarter earnings call in April.

AI remains a thorny issue in society writ large and in Hollywood in particular. Demands over AI usage were at the center of the historic dual actors and writers' strikes that shut down production in 2023.

Fans expressed frustration at Disney in 2023 over Marvel Studios' choice to use AI for credit art in "Secret Invasion," a Disney+ series. Tyler Perry has said he has paused studio expansion plans because of the AI capabilities that are already available.

Visual effects is one area of Hollywood that could be drastically changed by AI, as audiences demand explosive climaxes and superhero features that strain production budgets.

As Netflix's news illustrates, it won't just be summer blockbusters that are changed.

• Donald Trump has complained about media companies making movies outside the US.
• Netflix just emphasized how much of its production happens in the US.
• Coincidence?

Donald Trump, who frequently complains about media companies, doesn't appear to be angry at Netflix at the moment.

Netflix would like to keep it that way.

Which may explain why the company spent a bit of time in its latest earnings report talking up its commitment to making its shows and movies in America.

In the streamer's second quarter earnings report, Netflix officials made a point of emphasizing how much money it has spent making content in the US — $125 billion between 2020 and 2024 — and how much more it plans to spend in the near future — including new production facilities in New Mexico and New Jersey.

Does that have anything to do with the confusing announcement Trump made in May, when he vowed to slap a "100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands?" A Netflix rep declined to comment.

But you can check out the language the company used in its shareholder letter for yourself:

As we grow globally, our most significant investment remains in the US, which accounts for the majority of our content spend, workforce and production infrastructure. From 2020-2024, we estimate that we contributed $125 billion to the US economy. Our expansion in Albuquerque, NM—adding four new soundstages to a 108-acre site—and our plan to invest roughly $1B to develop a state-of-the-art production facility (including 12 new soundstages) in Fort Monmouth, NJ, underscore our ongoing commitment to production in the US.

This isn't the first time Netflix has played up its interest in US production. That statement above includes a link to a report spelling out its investment in the US, which was published April 23 — less than a couple weeks before Trump came out with its Hollywood tariff plan.

And Netflix also discussed its US investments in its previous earnings report, which came out on April 17. But the language it used there was much lighter on superlatives, and much less America-centric. Compare and contrast:

While the majority of our content spend and production infrastructure investment is in the US, we now also spend billions of dollars per year making programming abroad. And instead of just licensing local titles, we're now making local shows and films in many countries, commissioned by our local executives, that keep our members happy. And our local slates are improving each year.

If Netflix is trying to please Trump or his circle via corporate messaging, they wouldn't be the first company to do so. In May, for instance, cable/broadband giant Charter went out of its way to describe its plan to acquire Cox as an explicitly pro-American move.

Netflix co-CEO Ted Sarandos, by the way, has said he had a "nice long dinner" with Trump in December at Trump's Mar-a-Lago estate, prior to Trump's second inauguration. "He said Melania and [son] Barron were big fans," Sarandos said.

• Netflix posted record-setting earnings and revenue for the second quarter on Thursday.
• The streamer also raised its revenue forecast for the year.
• Analysts are watching the platform's plans to scale through live sports and TV and grow its ads business.

Netflix posted record-setting revenue and earnings for the second quarter, and signaled there's more growth on the horizon.

The streaming giant's revenue rose 15.9% year over year to $11.08 billion, and earnings grew 47% to $7.19 per share. Analysts surveyed by Bloomberg expected quarterly revenue of $11.06 billion and earnings of $7.09 per share.

The company also raised its revenue forecast for 2025 to $44.8 billion to $45.2 billion, in part because of its momentum growing subscribers and its advertising business.

Netflix shares were relatively flat in after-hours trading following the earnings release on Thursday.

Wall Street has long crowned Netflix as the streaming king. The streamer's latest win comes on the heels of releases like "Squid Game," which released its third and final season in late June. Netflix said the season was its sixth biggest ever with 122 million views.

Netflix stopped reporting specific subscriber figures last quarter, which makes it difficult to gauge the platform's user growth.

But estimates from third-party data firm Antenna suggest Netflix's gross monthly subscriber additions in the US have fallen from their peak.

Analysts are focused on how the platform continues to scale through live sports and TV, as well as creator-driven partnerships.

So far, Netflix has announced a return of a Christmas Day NFL game, a September fight between Canelo Alvarez and Terence Crawford, and a forthcoming reboot of the late-80s hit "Star Search," among other live programming.

The live content serves dual purposes: helping Netflix continue to grow its subscription base and providing ample opportunities for its budding advertising business.

Netflix expects its advertising revenue to double this year, as executives previously outlined on the first-quarter earnings call. The company also plans to introduce interactive ads in the second half of 2025, co-CEO Greg Peters said on Thursday's earnings call.

Nearly half of new Netflix subscribers in the US chose the ad tier from January to May, according to Antenna data.

At $8 a month, Netflix's ad plan is starting to look like a bargain. It's the same as Paramount+'s ad tier and cheaper than comparable plans from Disney+, Hulu, and HBO Max. The ad version of Amazon Prime Video costs $15 a month. And Peacock is planning to raise the price of its ad plan to $11 a month, Vulture reported on Thursday.

"We also think that we are an incredible entertainment value — not only compared to traditional entertainment, but if you think about other streaming competitors," Peters said.

Netflix said it also wants to use artificial intelligence to help create ads, content, and content recommendations.

Co-CEO Ted Sarandos told analysts that "The Eternaut," an Argentine sci-fi show, has the first generative AI final footage to appear on screen in a Netflix show or movie. The series used generative AI for a sequence where a building collapsed in Buenos Aires.

"That VFX sequence was completed 10 times faster than it could have been completed with visual, traditional VFX tools and workflows," Sarandos said on the earnings call. "Also, the cost of it would just wouldn't have been feasible for a show in that budget."