YouTube makes creating AI videos easier as platform closes in on $40B in ad revenue
YouTube is rolling out new generative AI features for Shorts as it closes in on a massive $40 billion in annual ad revenue, but not everyone is happy about it.
On July 23, the platform revealed that it’s introducing tools designed to make AI content creation “easier and more fun” for creators. These include a “Photo to Video” generator, new visual effects, and a streamlined GenAI hub dubbed the “AI Playground.”
“Transform your ideas into reality with Photo to video, new generative effects, & a simplified way to access all of our GenAI creation features,” YouTube said in a post linking to its announcement blog.
The move arrives as YouTube faces growing frustration from both creators and viewers over the rise of low-effort, AI-generated content flooding the platform.
“Oh goodie, just what we need, more AI content! No we don’t!” one user posted.
“Some of us can spend quite a while making a video. Those using AI spend a very short amount of time on theirs. Which one will the bots deem inauthentic?” another added.
Ironically, the update comes just weeks after YouTube tightened its monetization guidelines to crack down on “inauthentic” videos.
YouTube nears $40B in annual ad revenue
Despite the backlash, the platform’s financial performance continues to surge, which could explain the embrace of AI.
According to Alphabet’s Q2 2025 earnings report, YouTube generated $9.8 billion in ad revenue last quarter, up from $8.93B in Q1 and marking a 13% year-over-year increase. The platform is on pace to exceed $40 billion in ad revenue this year, fueled by election ads, brand spend, and a major push in performance marketing.
Unsplash.com: Rachit TankYouTube Shorts are also playing a key role. CEO Sundar Pichai confirmed during the call that Shorts now earn as much revenue per watch hour as traditional in-stream ads, and even exceed them in some regions.
Meanwhile, YouTube continues to battle adblockers, even impacting users who don’t have one installed. And Premium Lite subscribers still see ads when watching Shorts, another move that’s drawn criticism.
Earlier in July, a report revealed YouTube is earning billions from pirated uploads of shows like Squid Game, further complicating its stance on AI-generated and unauthorized content.
With the platform riding high on ad dollars and pushing deeper into GenAI creation, the gap between creator values and YouTube’s growth strategy may only continue to widen.
