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Ted Sarandos' 'Go Big or Go Home' Gamble: An Analyst Takes Stock

Ted Sarandos, Netflix CCO
Miller Mobley
Ted Sarandos

Richard Greenfield writes that Netflix originals like "House of Cards" and "Orange Is the New Black" -- with their big-budget productions, A-list talent and binge-viewing potential -- are widening the rift between what customers want and what traditional TV provides.

 

A version of this story first appeared in the Jan. 3, 2014, issue of The Hollywood Reporter magazine.

Richard Greenfield, the BTIG media and tech analyst, describes Ted Sarandos' commitment to innovation: "He likely wouldn't move forward on a series that was not on board" with binge-viewing.

Spending millions of dollars an episode with renowned directors and famous actors to create a new television series isn't exactly breaking a rule. Unless, of course, the series is created for the Internet, never airing on traditional television.

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Historically, original programming on the Internet meant short-form YouTube content produced at a fraction of TV budgets and without "A-list" or even "B-list" talent. Enter Sarandos, who launched his "go big or go home" original programming strategy in 2013. Netflix spent millions of dollars an episode on multiple series, transforming the streaming service from a place where consumers went to catch up on prior-season shows and old movies to a destination for top-quality new shows. Spending big on production quality and talent enabled Netflix's original series to benefit from significant word-of-mouth "buzz" that does not normally occur for web series.

The biggest rule Sarandos and Netflix keep breaking is their decision to release all episodes of each series at once, enabling "binge" viewing, a very consumer-centric approach. Television series always have released new episodes on a weekly basis, with serialized dramas typically ending each week with a dramatic cliff-hanger to build anticipation between episodes.

While the broader TV industry says Sarandos' releasing strategy is a mistake, he feels so strongly about it, he likely wouldn't move forward on a series that was not on board. The industry's resistance is ironic given how much other TV studios are benefiting from Netflix subscribers binge-viewing previous seasons of their content. Unfortunately, industry business models built around linear airings (including repeat showings), ratings and advertising take precedence over how consumers would prefer to consume a given series.

Whether Hollywood agrees with Sarandos' releasing strategy, the combination of how much Netflix is willing to pay, the unusually high level of creative freedom and the notoriety talent can achieve from a Netflix series (Emmys, Golden Globes, etc.) has made it a top destination to pitch new television series. The key question going forward is, will anyone follow Netflix's rule-breaking?