The streaming giant Netflix is set to use Generative AI (GenAI) for content recommendation, letting users search for the desired content in natural language, without requiring the need for exact titles and content’s associated names, as revealed in the Q3 2025 quarterly letter to shareholders. Additionally, the streaming giant also plans to use AI and ML for creating new ad formats and for better ad placements, meaning that the AI will be leveraged to find the slots for ads while watching the content on Netflix in low-tier subscription plans.
“We’re leveraging GenAI to further enhance the member experience by improving the quality of our recommendations and content discovery features. One example is our beta testing of a conversational search experience that allows members to use natural language to explore the catalogue and discover the perfect title for that moment,” read their quarterly letter to the shareholders.
How Netflix is Using AI?
The streaming company also revealed that they are using generative AI to automatically translate and adapt promotional materials, like posters, trailers, and marketing content, into different languages so that the movies, shows, or other titles are accessible to audiences around the world, helping those titles “travel” more easily to international markets.
However, Netflix Co-CEO Theodore Sarandos acknowledged that it makes sense to think that it is possible to replace the original user-generated content with GenAI content. Nonetheless, he said, concluding that the AI can serve the artists as tools, and said they are not worried about AI replacing creativity.
Netflix’s guiding principles for disclosure of generative AI in content production require filmmakers, production partners, and vendors to disclose any planned AI use to their Netflix contact and follow specific rules. They must ensure AI outputs do not copy or infringe on copyrighted material, that tools do not train on production data, and that they use enterprise-secured AI tools whenever possible. They must also exclude generative AI materials from final deliverables and obtain consent before using AI to replace performances or union-covered work.
Dodging the impact of GenAI tools like Sora on the OTT platform, Gregory K. Peters, Co-CEO, President & Director, said, “We think we can often develop using building blocks from others. So think about this as foundational models that we get open source or commercially to make cutting-edge tools and cutting-edge experiences.”
How Netflix is Using AI in Ads?
It also plans to use AI to test the “new ad formats to generate the most relevant ad creative and placements.”
“With these [AI-led] advancements, we’ll be able to test, iterate, and innovate on dozens of ad formats by 2026,” read their statement.
This update regarding the AI-driven ad placements follows their previous announcement regarding the same. Earlier in May this year, MediaNama reported Netflix’s plans to launch AI-driven advertisements that “marry advertisers’ ads with the shows”, introducing product placement–style formats starting in 2026. Additionally, Netflix had earlier expanded its Ads Suite to 12 countries, including the US, UK, and Canada, in November 2022. However, despite the popular trend of ad-driven adoption of revenue models – even for low-tier paid premium plans–the ad-supported plan for Netflix is yet to roll out in India.
Despite these ad-related initiatives, Netflix maintains that advertising is not its primary revenue model, with most of its income still coming from subscriptions, according to Chief Financial Officer Spencer Neumann’s statement during the previous earnings call in July 2024. He also affirmed that it is unlikely that ads will become the company’s main source of revenue.
Referring to the ad platform, Gregory K Peters, Co-CEO, President & Director, said, “Advertisers are excited about our growing scale. We’ve got a highly attentive and engaged audience. The rollout of our ad tech stack means we’ve got more formats. We’ve got more measurements. We’ve got more ways to buy. And of course, our slate [upcoming movies and series] is a critical and important source of competitive differentiation.”
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Netflix is also focusing on expanding its advertising business by making it easier to ad through interacting with ad-buying platforms and advertisers, like Amazon DSP and AJA in Japan, and introducing interactive ad formats. Peters also said that AI-ML-based ad targeting will continue, only to get enhanced by 2027.
Financial Metrics
According to Netflix’s Q3 2025 shareholder letter, the company reported continued steady regional revenue growth across all major markets. For reference, in the UCAN (United States and Canada) region, the streaming giant recorded $5.07 million in revenue, marking a 17% year-over-year (YoY) increase.
Similarly, the EMEA (Europe, Middle East, and Africa) region posted $3.70 million in revenue, maintaining the same 18% YoY growth compared to the previous quarter. The LATAM (Latin America) region, revenue rose to $1.37 million, representing 10% YoY growth.
Meanwhile, the APAC (Asia-Pacific) region generated $1.37 million in revenue, up 21% YoY, indicating a slight 3% YoY dip compared to the previous quarter.
Theodore A. Sarandos, Co-CEO, President & Director of Netflix, says the company still has significant room to grow, as it represents only about 7% of addressable global entertainment spending and only 10% of TV viewing time in its largest market (the country is not specified). “So enormous room for profitable growth in the core business,” affirmed Sarandos.
Alongside online games, beyond movies and series, speaking of the offline expansion, Sarandos also announced the license-based partnership with Mattel and Hasbro to produce K-pop-related toys.
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