Netflix's Ted Sarandos Talks 'Narcos,' Competitors and AT&T's Time Warner Deal

Ted Sarandos - Getty - H 2016
Getty Images

Ted Sarandos - Getty - H 2016

Major industry news broke during Saturday morning's session of USC's annual institute on entertainment law and business: AT&T was in the process of sealing the deal on its $80 billion purchase of Time Warner.

But during the lunch keynote Q&A, Netflix chief content officer Ted Sarandos wasn't interested in speculating on what the deal means for his business.

"It’s a tough hypothetical," said Sarandos. "I’m sure it’s going to have a lot of DOJ [Department of Justice] scrutiny. How it impacts anybody will depend on how it emerges, if it emerges."

Noted entertainment attorney Bruce Ramer then shifted to a topic Sarandos is more comfortable with — Netflix's hugely successful business and the changing landscape of content viewing. As the OTT provider market becomes more crowded, Ramer asked if the streaming giant is worried about the new competition. In short: It isn't.

"It’s an incredibly fluid universe that we live in," said Sarandos. While competitors like Hulu offer niche programming that some consumers will seek out, Netflix wants "to be that service that is a must-have for everyone in the household."

Ramer asked Sarandos how his company responded to customers who were up in arms after a $2 price hike earlier this year. The exec said some people did unsubscribe as a result, but that Netflix puts a premium on making sure it is providing a good value even when its prices increase. (Don't worry, no future price hikes are currently in the works, he added.)

"Netflix is a one-click-cancel business," said Sarandos. "If everyone had that kind of accountability to their consumers, content would be better."

Ramer then asked the exec what he thinks about Amazon Prime's model, noting that access to the content comes with a yearly subscription that includes free shipping.

"I think maybe they’re betting that video is a better way to sell Prime than other things," Sarandos said. "It’s such a foreign concept to us because we’re so hyper-focused. We do nothing but sell the Netflix subscription. If we were shipping diapers, I don’t know that we’d have been as successful."

Asked Ramer: "Are you telling us Netflix will be a one-product company forever?"

"This is all we do," replied Sarandos.

Shifting to Netflix originals, Ramer asked if the season-two finale of Narcos indicated the series would return. Sarandos said emphatically yes, and anyone who thought it wouldn't probably doesn't realize what the show is actually about.

“The misconception is that Narcos is about Pablo Escobar,” said Sarandos. Narcos is the history of cocaine. History will lay out where it will go from here.”

With the streamer's recent investment in Bright, the exec also discussed the importance of making tentpole, film-caliber content available to a worldwide audience when it's demanded. “We’re not anti-theater in any way," he said. "We’re just super pro-movie.” That gap of time between desire and access, he said, is when piracy happens.

Ramer asked if Netflix wants people to continue seeing films in theaters or if the streamer would prefer audiences watch from home, and Sarandos responded with a colorful analogy.

"Beer is day-and-date," he said. "You can drink a beer at home, or you can go to a bar. People do both."