Netflix's Sarandos: Stream On

Q&A With Netflix's Chief Content Office

By Todd Spangler -- Multichannel News, 8/23/2010 12:01:00 AM

As cable has lost video subscribers, Netflix has been racking them up: It had 15 million subscribers at the end of June — up 42% from a year earlier. And earlier this month, the video-rental company signed a billion-dollar output deal to stream movies from Epix, 90 days after their pay TV premiere.
But according to Netflix chief content officer Ted Sarandos, the service ultimately is a complement to cable, not a killer: “Our product is like a motorcycle. Cable TV is like a car. If you price one cheap enough you can have both.” Sarandos recently spoke with Multichannel News technology editor Todd Spangler. Here are edited excerpts:

MCN: Cable, satellite and telco operators are building out “TV Everywhere” services to stream content on the Web and to mobile devices. Don’t these increasingly compete with the Netflix core offering?

Ted Sarandos: It’s a dramatically different product. TV Everywhere is about what’s on TV right now. This is basically a snapshot of the linear grid. We’re much more about a broader archive of content where it lives constantly after its air date.

The world is increasingly going on-demand, but for us, we are going to focus on the things we do well — rich content offering and a killer user interface. That will give us a lot of running room to build a great product.

MCN: Do you see the traditional movie channels — HBO, Showtime, Starz — as your primary competitors?


We have more than 100,000 movies on DVD. I don’t believe anyone joined the service, or decided to cancel, because of 10 or 12 of those.

MCN: Is Netflix looking at producing original content?

TS: I’d say, not now. There’s such an amazing abundance of content that is undistributed. For us to enter the production fray is unnecessary at this point. We’re differentiating ourselves by our broad library and our personalization.

MCN: Are you pursuing deals with cable operators or other TV distributors to offer Netflix as a component of their services?

TS: We’re moving very rapidly across all the different delivery models into the home. We have more than 100 different devices that deliver Netflix to the television. The set-top box is one way to get there, but in the stack in the home are all these different devices.

I think that what will evolve over time will be that Netflix will evolve as the killer reason people buy broadband. That’s great news for cable operators, because cable is the best way to get high-speed Internet into your home. However, that may coincide with people having less desire to buy video products [from cable providers].

MCN: So do you see Netflix eventually eating into cable video subscriptions?

TS: Ultimately the consumer doesn’t have to choose. Netflix is a very comfortable add-on to cable.

Our product is like a motorcycle. Cable TV is like a car. If you price one cheap enough you can have both. What we don’t offer that cable does offer is live sports, news and 500 linear channels.