Ted Sarandos – Netflix’s King of Content
One of Hollywood’s biggest players isn’t a household name like Steven Spielberg or Harvey Weinstein, but a former video store clerk who knows what people like to watch. That man is Ted Sarandos, chief content officer for Netflix’s expanding empire, and he won’t hesitate to go after any movie or TV series in a quest to push to the top.
Cable and satellite providers are reeling from the advent of high-speed Internet. Rivals stream content, but few have the Netflix’s reach into homes like Netflix — and that’s all because of Sarandos and his wheeling and dealing. He greenlit the push to original content and now snaps up everything he can get his hands on.
Few executives can match his dedication — he brings a devout fan’s love of entertainment to his job. But he isn’t satisfied with re-runs and so-called “cult classics.” If you cut the cable cord and change how you watch television, he believes the replacement must be as good, if not better.
From Video Store Clerk to Leader
Sarandos doesn’t come to Hollywood with money, but as a man with a true love of movies. Raised in Arizona with three older sisters and a younger brother, both his parents were high school dropouts. His father became an electrician, and his overwhelmed mother was a housewife who left the television on all day.
“With five kids in the house, it was pretty chaotic, so I took comfort from what I watched on TV,” he told the New York Times. “The structure of TV was the structure of my life. I scheduled myself around when shows were on, because I didn’t have any other kind of scheduling.”
Shortly after enrolling at a community college, he found a job as a clerk at Arizona Video Cassettes West, one of the first rental stores in the state. Before long, he ran all eight branches of the chain. He jokes he was the “original algorithm” because he advised customers what to watch next, much like what Netflix does with views today. Eventually, he jumped to become president of product and merchandising for Video City, another large chain, before Netflix founder Reed Hastings poached him into the company.
A New Kind of Video Store
Hastings started Netflix in 1997, after he paid $40 in overdue fines. He launched the Netflix site in 1998, but followed the traditional pay-per-movie rental model. When Sarandos came aboard in 2000, they shifted to a flat-fee, unlimited structure. Five years later, the company was shipping out a million DVDs each day from its 35,000 title warehouse. Then in 2007, Netflix introduced its video-on-demand service, reflecting a change in consumer viewing habits. Streaming was the future, and the company began to bulk up on online content.
Last year, however, Hastings introduced yet another twist: he split up DVD and streaming services, charging customers nearly twice as much to rent through the mail. They were furious about the revamped pricing, so it relented and switched back to its earlier model with slightly higher prices, luring customers back. But Netflix faces increased competition in streaming. To stay competitive, Sarandos made a critical choice — to move into original content.
Transition to Original Programming
Sarandos decided Netflix should include its own programs. It wants to be the HBO of streaming — and for that, it needs its high-quality, and expensive, original shows. He first secured the rights and commissioned episodes to Fox cult favorite, “Arrested Development.” But his big move was the original series “House of Cards.” The political drama that paired director The Social Network director David Fincher with Kevin Spacey proved to be a real coup, kicking off its plan to capitalize on franchises.
In the few weeks since its release, it’s already Netflix’ most-watched title, and while Sarandos wouldn’t share ratings — because it’s an “apples-to-oranges comparison” to television, he said Netflix is thrilled with its $100 million two-season investment. The show is paying off not only in advertising, but also increased subscribers and credibility among Hollywood.
You can expect more original shows, like “Hemlock Grove,” produced by Eli Roth and “Orange Is the New Black,” a comedy set in a women’s prison, created by Jenji Kohan, who developed Showtime’s series “Weeds.” Unlike traditional networks, Netflix releases all the episodes of a series at once, so you can binge-watch everything on an idle Saturday, and not wait a week for the next installment. Sarandos also discovered that when you have an all-you-can-eat buffet, you enjoy your favorites more.
He also focuses on the youth audience. Earlier this month, Netflix inked a deal with DreamWorks Animation to create its first children’s series. “Turbo: FAST” follows the adventures of a snail who gains speedy powers after an accident. Netflix plans to release all 26 episodes in December, after DreamWorks releases a “Turbo” film in July.
“Netflix boasts one of the largest and fastest-growing audiences in kids’ television,” said Jeffrey Katzenberg, DreamWorks Animation’s CEO. “They pioneered a new model for TV dramas with ‘House of Cards’, and now together, we’re doing the same thing with kids’ programming.”
Making New Deals
Original content is turning Netflix into a Hollywood rival, and Sarandos has to delicately navigate Tinseltown politics. He’ll need to convince studio big-wigs to trust that Netflix as the ideal partner help transition them to the digital age — no small feat amid Internet piracy.
He’s had setbacks and faced hostility, but he’s also marked a few victories in recent months. Last year, Netflix signed a “game-changing” deal, Sarandos said, making it the exclusive distributor for Disney films, including Pixar and Marvel, and classics like “Dumbo” and “Pocahontas,” in the pay TV window.
And he’s looking for more deals with studies, including Warner Bros., to keep the content flowing. Warner’s film rights deal with HBO — also part of the Time Warner umbrella — expires in 2014, and Sarandos said he hopes to outbid for it. But just for good measure, HBO didn’t like animated content, so he snapped up titles like “The Lorax” and “Para Norman” too. The real goal, though, is to show studios proof that “there are other ways” to do business.
What the Future Holds
Sarandos has a hard road ahead. He needs to convince Hollywood that Netflix isn’t the enemy, and it won’t run them into bankruptcy. Instead, he insists content deals are beneficial for both parties. House of Cards is a sign people are hungry for original shows, but even Sarandos admits, you still join Netflix to watch your favorite movies and television shows — and it doesn’t have enough to challenge the more-powerful networks, like HBO.
In addition, producing original shows is incredibly expensive, so if Netflix can’t bank off the success, it’ll need traditional content to keep viewers around. After all, if there’s nothing to watch, you’ll go elsewhere, even if they don’t have Kevin Spacey as a congressman.
