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From Business Model Disrupter To TV-Content Empire Builder

Netflix’s Ted Sarandos helped change how—and what—viewers watch 1/19/2015 8:00 AM Eastern

In 2013, Netflix shook up the television industry by winning the first-ever primetime Emmy Award for an Internet- based original series when House of Cards took home a statuette for best director. The streaming-video service followed up on that feat a year later by winning seven Emmys, led by three wins for sophomore comedy series Orange Is the New Black.

 

But shocking the television industry isn’t new for Netflix chief content officer Ted Sarandos. The industry veteran has been flipping the traditional television model on its head since he joined Netflix in 2000, where he built a reputation as an industry innovator. It has now earned him a Brandon Tartikoff Legacy Award.

 

Prior to Sarandos’ arrival at Netflix— he was an executive for video distributor ETD and at Video City/West Coast Video—the company was known mainly for its subscription service that let users order DVDs of movies and TV shows online for delivery via mail.

 

Sarandos, 50, changed all that. He oversaw the company’s transition to primarily a streaming-video service, offering movies and episodes of classic television shows to consumers via the Web.

 

But Netflix didn’t just substantially expand its subscriber base by getting consumers hooked on streaming theatrical movies months after they appeared in the theaters. Sarandos knew that in order to drive the business, he’d have to offer consumers content they wanted to see—original scripted dramas and comedies—and provide those shows on the viewers’ terms. That meant offering every episode of a series all at once, so consumers can watch when they want and how they want.

 

 “What you’ll find is that while most people don’t sit down and watch 13- hour binges of television, they do watch is more than one [episode],” Sarandos said of Netflix viewers during a presentation at the recent Television Critics Association tour in Pasadena, Calif.

 

That idea was near blasphemy to those television executives who, for decades, have insisted on spoon-feeding consumers new episodes of series on a week-to-week basis.

 

“The networks, even after the magical act of creating a great show, they have to find the right night for it,” Sarandos said in 2013 during a Next TV interview with Broadcasting & Cable.

 

The transition helped to transform Netflix from a company with 6.7 million subscribers in 2007, when mailorder DVDs still dominated its business model, according to the Los Angeles Times, to more than 53 million global households today.

 

Netflix’s first foray into the scripted business was with 2012’s Lilyhammer, starring The Sopranos’ Steven Van Zandt. The Norwegian import comedy didn’t generate a great deal of buzz, but introduced consumers to the concept of “binge” viewing new, original shows delivered a full season at a time.

 

With the 2013 launch of the political drama House of Cards—starring Kevin Spacey and based on a BBC series of the same name—Sarandos found the big hit that Netflix needed to play on the varsity field with the big cable and broadcast networks.

 

Another series that arguably has delivered as big a cultural punch as House of Cards is the dramedy Orange Is the New Black. The multiethnic cast has drawn raves from critics and given Sarandos another feather in his now impressive original programming cap.

 

While Netflix has yet to release viewership numbers for either series, Sarandos said during Netflix’s TCA session that the buzz on both shows bodes well for its viewership success. “You don’t have shows that penetrate the culture at the level these shows have without having a lot of people watch them.”

 

 The key to Netflix’s success is knowing what its consumers want, Sarandos says.

 

Sarandos hopes to expand his magic touch and disruptive actions into the film industry. He raised eyebrows when he signed theatrical funnyman Adam Sandler to an exclusive four-film deal which would give Netflix first window to the Sandler films before they migrate to theaters.

 

He’s also negotiated a deal to premiere the sequel to Crouching Tiger, Hidden Dragon on Netflix this August at the same time The Weinstein Co.-produced film will hit IMAX theaters.

 

For Sarandos, Netflix’s ascension to the upper echelon of the content development and distribution food chain will persist as the OTT service continues to help change the way people watch programming.

 

“I think we’ve had more influence on the general business of television than I would have thought we could have when we first started streaming, let alone original programing, just two-and- a-half years ago.”

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