Back in 2023, while the rest of us were busy blowing $40 on popcorn and jumping between Oppenheimer and Barbie (aka the viral fever dream known as “Barbenheimer”), Hollywood was setting itself on fire with a script no one wanted to greenlight. The writers were striking. Then the actors joined in. (Stranger Things literally had to halt writing because there was… no one left to write it. Late-night shows started airing reruns from 2010, and red carpets looked like ghost towns. The only people not striking were the executives… and they were too busy looking for ways to replace everyone with software.

Sure, the strike was about pay. It always is. When Tom Cruise clears $100M for Mission: Death Jump 12 and the writer of the explosion scene is deciding between gas money or dinner, something’s gotta give. But the real fear (the one that sent writers into existential crisis) was AI. Studios were quietly experimenting with the ultimate cost-cutting dream: let AI write a rough draft of a script (“Boy meets girl meets robot apocalypse”), then pay a human writer peanuts to clean it up. Boom… 90% of the creative work deleted, with 10% of the cost. Who needs “soul” when you have clean spreadsheets?

The Writers Guild of America wasn’t having it. They demanded (and eventually got) limits on how AI could be used. AI couldn’t write or rewrite anything. It couldn’t be used as source material. And if a writer wanted to use it, that had to be their choice, not some studio exec trying to increase margins before earnings season. Well, now it’s 2025 and shocker… AI is still sliding in through the side door.

Netflix is already using generative video tools from a startup called Runway AI. Disney says it’s just “testing” the tech, which is Hollywood code for “we’ve definitely already used it but legal told us to shut up.” Lionsgate and AMC? They’re in. And Runway itself? It’s raised $545 million and is now valued at over $3 billion. But here’s why this story is way more important for Wall Street than hollywood. Take a moment to think like an analyst at JPMorgan. Netflix spent over $17 billion on content last year. A significant chunk of that (upwards of 20%) went toward visual effects, animation, and post-production. That’s at least $3.4 billion.

Now, Netflix co-CEO Ted Sarandos says using Runway’s tools on one VFX-heavy scene in The Eternaut made the process 10x faster and cheaper than traditional methods. Even if AI only ends up cutting 30% of their post-production budget (and not the full 90%), that’s still over $1 billion in annual savings… just from one part of the pipeline.

What happens when Wall Street hears the words “$1 billion in cost savings”? The same thing that happens when you tell a golf addict a new $600 driver could add 10 yards to their drive? They don’t ask questions, they just get out the credit card and swing.

For instance, (checks notes) Netflix currently trades at a 44x earnings multiple. Add $1 billion in operating income from AI savings? That could theoretically justify a $25 billion bump in market cap. To put that in perspective, that’s more than Spotify is worth. (And Spotify has to deal with both Joe Rogan and the music industry.) Or one-third of Disney’s streaming losses (funny but almost true).

And we’re not even counting the speed advantage. If Netflix can get content out faster and cheaper than the competition, they’re not just saving money… they’re accelerating dominance. Think: beating Disney to market with big-budget shows while spending half as much. (It’s like showing up to a gunfight with a drone strike.)

Of course, there’s risk. The content still has to be good. No one’s subscribing to watch The Crown reimagined by Siri. And there’s always the looming PR nightmare… no one wants to be the studio that fired its animators and replaced them with software that thinks hands have six fingers. Not a good look when you claim you value your employees and human creativity over profits.

But as we all know, Wall Street doesn’t care about feelings. It cares about margins, output, and who’s got the sharpest knife in the streaming knife fight. If AI tools like Runway can keep shaving production costs without tanking quality to the point where subscribers start fleeing for YouTube rabbit holes, forget about Netflix and the other early adopters surviving the streaming war… they’ll bury the rest of the field and keep the stock price climbing while doing it.

Sure, writers are still skeptical… and fair enough. Most AI dialogue still reads like a rejected Craigslist personal ad written by a toaster. But investors are looking at something entirely different. To them, AI isn’t some passing gimmick… it’s a scalable margin expansion tool hiding in plain sight.

So yeah, creatives may roll their eyes. But on the earnings call? That AI line item might just be the thing that keeps the “beat and raise” story alive for another few quarters.

At the time of publishing this article, Stocks.News holds positions in Netflix, Spotify, and Disney as mentioned in the article.