Netflix recently dropped a fascinating hint about its use of AI that feels like the start of something much bigger. This isn’t just about speeding up coding or automating subtitles—Netflix co-CEO Ted Sarandos revealed that AI was used in post-production for a visual effects scene in an Argentine show called El Eternauta. The scene involved a collapsing building, which was completed 10 times faster and cheaper thanks to AI tools.
Now, here’s the kicker: according to Sarandos, this wasn’t about skimping on quality or saving money on a big-budget show. This was a scene that wouldn’t have existed otherwise, simply because the traditional VFX costs would have been prohibitive for a market as small as Argentina’s. AI wasn’t a shortcut; it was an enabler. It gave producers the opportunity to create a spectacle they simply couldn’t afford before, elevating the production value and expanding the storytelling canvas.
“AI represents an incredible opportunity to help creators make films and series better, not just cheaper,” Sarandos emphasized, highlighting the rise of AI-powered tools in previsualization, shot planning, and visual effects. This democratization of high-end VFX opens doors for smaller markets and creators worldwide, something that until now was mostly the privilege of blockbuster productions.
AI powered tools allowed Netflix to create visual effects scenes 10 times faster and cheaper, enabling creative possibilities previously out of budget reach.
Co-CEO Greg Peters added another layer to this, mentioning Netflix’s pilot programs using generative AI to enhance personalization in search and ads. They’ve even hinted at rolling out AI-powered interactive ads later this year. This test balloon on a niche show feels very strategic: it showcases AI’s potential as an opportunity technology — not just a cost-cutting tool — while gauging audience and industry reactions simultaneously.
And react they did. The news blew up the media landscape, with major outlets like The New York Times, BBC, and The Guardian all covering this seemingly small but hugely impactful step. It’s surprising it took this long for AI to enter on-screen production visibly, but it’s safe to say it’s only the beginning.
However, this optimism is tempered by the complex web of AI regulation, especially in Europe. As revealed, European regulations like the AI Act and the associated code of practice are creating a chilling effect on AI adoption by big tech. Meta has publicly refused to sign onto the EU’s voluntary AI code, citing legal uncertainties and concerns about overreach that could stifle innovation.
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This regulatory friction sets the stage for what some see as a looming US-EU standoff over AI governance. With the US White House signaling strong protection for American companies against EU fines, the global landscape for AI development and deployment is becoming fragmented. Meanwhile, compliance complexity may delay or deter companies from fully engaging with the European market.
Meanwhile, in the US, regulation is sharpening in other ways. The Department of Justice’s antitrust inquiry into Service Now’s acquisition of Move Works highlights an emerging concern about market concentration below the hyperscaler level. This scrutiny could reshape how AI startups and platform integrations evolve, particularly those focused on agentic AI products—software that uses AI to perform more autonomous tasks.
On the startup front, a tale of two trajectories is unfolding. While some AI powerhouses like Anyphere (behind Cursor) are quickly scaling and poaching top talent, others like Koala—despite promising beginnings and strong backing—are shutting down. This contrast reveals a maturing AI startup ecosystem where rapid growth and strategic pivots will define who thrives.
Clearly, the AI landscape in 2024-2025 will be shaped by creative uses of technology like Netflix’s true production breakthrough, the evolving global regulatory patchwork, and the competitive, sometimes brutal startup ecosystem tightening around funding and innovation pace.
Key takeaways from Netflix’s AI journey and the broader AI scene
- AI is enabling creators to do things they couldn’t afford before—not just making existing processes cheaper, but expanding what’s possible on screen.
- The regulatory patchwork, especially in Europe, is creating fragmentation, with some giants like Meta walking away and others like OpenAI opting for nominal compliance.
- Antitrust concerns are emerging beyond hyperscalers, signaling that innovation and acquisitions below the top tier will face new scrutiny.
- The AI startup ecosystem is bifurcating, with some rapidly scaling players consuming talent from smaller or struggling startups.
- Strategic AI deployment in new areas (like Netflix’s interactive ads) signals imminent, more widespread AI integration in media and entertainment.
All in all, what struck me most is that AI’s real power may lie less in automation or cost savings, and more in democratizing creative possibilities—giving storytellers and creators tools they never had before. The ripple effects from this could redefine entertainment and advertising, spur regulatory debates, and reshape the startup landscape.
We’re in the early chapters of AI’s impact on media and beyond, and that test scene in a smaller market Argentine show feels like a promising harbinger of bigger things coming.
