Ted Sarandos wants to make one thing clear: Netflix’s embrace of AI isn’t about replacing creatives—it’s about empowering them. But that doesn’t mean it’s not also about cutting costs.

“We remain convinced that AI represents an incredible opportunity to help creators make films and series better, not just cheaper,” the Netflix co-CEO told analysts on the company’s second-quarter earnings call this week.

It’s a carefully crafted line—one that positions Netflix’s growing investment in generative AI as both artist-friendly and economically pragmatic. The subtext? AI may not be replacing jobs (yet), but it is definitely replacing expenses.

Sarandos highlighted The Eternaut, a new Argentine sci-fi series, as a prime example. The six-part adaptation of the beloved comic marks the streamer’s first original production to include final, on-screen footage generated by artificial intelligence. In one standout sequence, a building collapse in Buenos Aires was created using AI-powered visual effects—cutting down production time by 90% and slashing associated costs.

“That VFX sequence was completed ten times faster than it could have been completed with traditional VFX tools and workflows,” Sarandos said. “Also, the cost of it just wouldn’t have been feasible for a show in that budget.”

The project was completed entirely with an Argentine cast and crew and used virtual production to enhance scale without inflating the bottom line. For Netflix, which is under constant pressure to feed a global audience with increasingly localized content, it’s a proof of concept—and a potential new playbook.

“Using these tools, the creators were thrilled with the result. We were thrilled with the result. And more importantly, the audience was thrilled with the result,” Sarandos added.

While many studios are cautiously testing AI, often in the face of union resistance and fan backlash, Netflix appears to be charging ahead—albeit with some diplomatic finesse. Sarandos repeatedly emphasized that AI isn’t replacing humans but helping them “do real work with better tools.”

He cited applications across pre-visualization, shot planning, and VFX, noting that generative AI is already helping productions “expand the possibilities of storytelling on screen.” But the economic subtext was unmistakable: for a company that posted $3.13 billion in profit this quarter, keeping production costs down while increasing visual ambition is the kind of efficiency Wall Street loves.

Notably, Sarandos also referenced past experiments with AI de-aging tools on projects like Pedro Páramo, which reportedly cost a fraction of what Martin Scorsese’s The Irishman spent on similar effects. The message: the technology is here, and it works.

Still, the timing is delicate. AI remains a flashpoint across the industry, following 2023’s historic writers and actors strikes, which hinged in part on concerns over AI’s role in the creative process. Disney caught heat for using AI-generated art in Secret Invasion, and Tyler Perry recently paused studio expansion plans over uncertainty around the tech’s long-term impact.

But Sarandos is betting that Netflix’s audience—and investors—are ready to embrace the change, especially when the results are visually impressive and budget-smart.

In The Eternaut, the future arrived on screen with a collapsing building. In the real world, it may be collapsing the old economics of content production.