2 months ago
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Timothy Green, The Motley Fool
Wed, July 22, 2026 astatine 7:07 AM CDT 4 min read
Streaming elephantine Netflix (NASDAQ: NFLX) failed to conscionable expectations with its second-quarter results and guidance past week, but the institution did people an important first. A series from Argentine subject fabrication bid and Netflix archetypal El Eternauta used generative AI for a gathering illness scene. This is the debut of last footage created with generative AI tools appearing successful a Netflix archetypal movie oregon series.
Netflix co-CEO Ted Sarandos noted successful the net telephone that it would person taken 10 times arsenic agelong to make the series utilizing accepted tools and workflows. He framed the AI tools arsenic a mode for creators to marque amended contented for little money.
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The imaginable of dramatically shorter accumulation times and little costs for Netflix's originals sounds large connected the surface, but an aged Warren Buffett punctuation throws immoderate acold h2o connected the thought that this volition springiness Netflix a durable outgo advantage.
Standing connected your tiptoes astatine a parade
In his 1985 missive to shareholders, Warren Buffett laid retired the trap that companies tin autumn into successful their quest to little costs. Buffett was talking astir textile mills, a commodity concern that is precise antithetic from streaming. But the acquisition inactive applies.
Buffett's Berkshire Hathaway tried for years to marque its textile concern work, turning to superior expenditures that promised to little adaptable costs. Buffett noted that each concern made consciousness successful a vacuum and was backed by dependable logic, but that they delivered nary benefits. What was the problem? Everyone other successful the textile concern followed suit. "Many of our competitors, some home and foreign, were stepping up to the aforesaid benignant of expenditures and, erstwhile capable companies did so, their reduced costs became the baseline for reduced prices industrywide," Buffett said.
Buffett likened the concern to everyone lasting connected their tiptoes astatine a parade. If everyone does it, nary 1 sees immoderate better, and everyone is simply a small much uncomfortable. Generative AI for contented instauration fits this mold. Netflix is seeing faster accumulation times and little costs, but truthful volition each its competitors. No 1 volition beryllium consenting to wage much for higher-quality contented due to the fact that the barroom for prime volition beryllium raised. And, possibly worse for Netflix, the obstruction to introduction into the contented instauration concern volition collapse.
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