Netflix Content Chief Discusses Global Ambitions, Plans to Double Spending on Originals

2:53 AM PST 09/13/2013 by Georg Szalai
Eric Charbonneau/Le Studio
Ted Sarandos

Ted Sarandos tells a U.K. TV conference that he expects spending on originals to double to 20 percent of his program budget, talks about "co-existence" with Hollywood and says he hopes to get BAFTA nominations for its shows.

CAMBRIDGE, England – Netflix chief content officer Ted Sarandos discussed his company's global ambitions, rising spending on original shows and relationships with Hollywood players here on Friday.

Sarandos also told the biennial Royal Television Society Cambridge Convention that Netflix's spending on original programming is currently less than 10 percent of the company's overall spending. He said he expects this to grow to 20 percent in the coming years.

The Netflix executive addressed recurring questions about whether Netflix originals should be considered TV programming or not. People think so, he said. "For them, it is flashing pictures on the screen, it's television," Sarandos said.

And he highlighted that Netflix earned 14 Emmy nominations, adding "we hope the BAFTAs will sooner or later" also recognize the firm's originals.

He didn't detail Netflix's U.K. subscriber numbers, saying the firm only discloses overall international versus domestic figures. But he said the company was "quite successful." The company hasn't disclosed how many U.K. subscribers it has since breaking the one million mark last year, but a recent analyst estimate put its reach at around 1.5 million users.

Asked about global ambitions, he said: "In the long-term, there is no reason to believe that Netflix won't be a global product in every country."

Sarandos also pitched Netflix's ability to make hits. "We have the tools and instruments for a global audience to find sometimes local shows," he said.

Do some folks sign up just temporarily to watch an original and then cancel service again? Sarandos said  that the firm's research found that maybe about 12,000 people did that with House of Cards, which he called "a very tiny number."

Netflix earlier in the week announced that U.K. cable giant Virgin Media, owned by John Malone's Liberty Global, would integrate its streaming subscription VOD service into its pay TV offerings in an industry first. The firm said the move will bring its service onto a major pay TV platform for the first time.

Virgin Media said its subscribers will be able to access a Netflix app via Virgin Media TiVo set-top boxes. The move could broaden Netflix's U.K. reach. Sarandos said the deal's main benefit is that it gets Netflix onto another platform, which allows to "put [all content] into one box."

Asked about Netflix's data-driven approach to estimating the audience for original programming it is considering, Sarandos said it helps the firm to "know how much we can invest." Asked if it drives the firm to focus on the lowest common denominator, he said that is not the case. Netflix simply can't "spend ourselves out of business," he said, but it can do shows that attract smaller groups of fans. "If its is a smaller audience, we limit the spending," he said.

He was also asked why Netflix doesn't disclose viewers or ratings. "We don't sell ads," he explained, adding there is no benefit for the company to disclose viewership levels, while content suppliers "may be harmed." If Netflix audiences are bigger than those of shows of content suppliers, people might fear Netflix was trying to drive others out of business, he explained. "These are my suppliers. I want their shows," Sarandos said.

Further discussing Netflix's relationship with big content players, such as the owners of Hulu, Sarandos said: "They are in the business of making and selling. We are in the business of buying. We can always be friends."

He said there was "absolutely co-existence," adding: "If we are expecting networks to disappear overnight, we're kidding ourselves."

Discussing competition with TV networks, he said Netflix has its niche. "We don't do sports, news, competition shows," he said. "We'll keep getting better at what we do." And TV will get better at creating events, whether it is sports, Broadchurch, Under the Dome, a popular telenovela in Latin America or Discovery live coverage of a tightrope walk.

Asked about his approach to originals, Sarandos said "it's a portfolio approach for sure." Does he need constant hits? "Every [show] doesn't have to be a home run, he said. "I can land some singles and doubles and still be fine."

Asked what makes Netflix stand out and makes it different from other content companies, Sarandos mentioned brand, content and functionality.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai

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