The rapid advancement of artificial intelligence (AI) and its potential to revolutionize the entertainment industry has prompted Netflix to issue a cautionary warning against the technology. In its latest annual report submitted to the U.S. Securities and Exchange Commission (SEC), the streaming giant highlighted generative AI as a newfound risk factor that could disrupt its competitive landscape.
Netflix’s move to acknowledge generative AI in its risk factors underscores the escalating concern within the industry about the transformative power of this technology. With companies mandated to disclose risk factors under SEC regulations, Netflix emphasized the potential threat posed by competitors leveraging AI advancements to gain an edge in content creation and delivery.
In a section dedicated to video competition within the report, Netflix stated, “New technological developments, including the development and use of generative artificial intelligence, are rapidly evolving. If our competitors gain an advantage by using such technologies, our ability to compete effectively and our results of operations could be adversely impacted.”
The company also highlighted the uncertainty surrounding intellectual property protection for AI-generated content, signaling potential legal challenges and copyright issues arising from the proliferation of AI-driven creative outputs.
While Netflix retained most of its existing risk factors from previous years in the 2023 report, it notably omitted a segment concerning the risks associated with the COVID-19 pandemic. This exclusion reflects a shift in focus as the industry grapples with emerging challenges beyond the pandemic’s immediate impact.
The intersection of AI and Hollywood has not been without controversy. In 2023, Hollywood unions, including the Writers Guild of America (WGA) and the Screen Actors Guild‐American Federation of Television and Radio Artists (SAG-AFTRA), initiated strikes in response to studios incorporating AI into production processes. Union members expressed apprehensions about AI’s potential to undermine traditional employment opportunities and affect livelihoods within the industry.
Netflix found itself embroiled in controversy during the writers’ strike when a job listing for a product manager position in its machine-learning group drew criticism. Despite the role’s focus on AI development for content personalization and payment systems optimization, rather than generative AI projects directly related to content creation, striking union members protested against the perceived implications for the industry’s workforce dynamics.
As Hollywood grapples with the disruptive potential of AI, Netflix’s cautious stance underscores the need for industry stakeholders to navigate the evolving technological landscape while addressing concerns surrounding workforce dynamics, intellectual property rights, and creative autonomy.
