A top Netflix executive issued a warning to Hollywood Thursday that the variability of windows around the globe for blockbuster movies like “Hunger Games” is an open invitation to widespread copyright infringement online.
Chief content officer Ted Sarandos cited the Lionsgate theatrical hit because the streaming service has rights to in the pay-TV window for every region in which the company currently operates. “The U.S. will actually have the slowest access to the ‘Hunger Games’ in a subscription model online, which I think is incredibly dangerous for distributors in terms of having this global platform, and global knowledge of when things are available, and regionalized availability dates,” he said. “I think it will only encourage piracy in a way that is going to only grow.”
Sarandos noted that the pay-TV window for “Hunger” comes in at different intervals across an eight-month span. It begins in Latin America on Aug. 18, when “Hunger” is released day and date with VOD and DVD because of the region’s underdeveloped home-video market. Three months later, “Hunger” comes to Canada, followed a month after that in the United Kingdom and 90 days after that in the U.S.–the last market to see it.
“I do think the gap of time between DVD, VOD and pay TV is getting increasingly frustrating for consumers,” said Sarandos. “That’s why I will pay more to accelerate it like we did in Latin America. They were more receptive to the deal because their DVD market is almost nonexistent.”
Netflix gets “Hunger” through its deal with Epix, which recently reverted to a non-exclusive basis. That allowed Netflix rival Amazon Prime to get rights to Epix movies as well.
Sarandos played down the competitive threat of Amazon, which in recent months has been more aggressive about bidding for content, by drawing a comparison to the premium channel world. “Every time Showtime gets a big hit like ‘Homeland,’ no one predicts the end of HBO,” he said. “That’s the dynamic that I think could emerge here.”
But Sarandos also acknowledged that obtaining exclusivity for content has become increasingly important to Netflix in recent years as competition has flooded into the space. Exclusivity is one way he envisions of ensuring price parity with new market entrants.
“Because I imagine some of the studios and networks might be thrilled to have more buyers and competitiors in the market, they might do cheaper deals with these guys,” he said. ” I don’t want to have to think about that, so exclusive makes a lot more sense for us.”
Sarandos played down the loss of the Epix deal in this same vein, explaining he decided it was no longer worth paying for given content from the deal came late in the pay-TV window. “Which was a fine thing when there was no other way to have it but over time it proved it wasn’t differentiated enough,” he said.
He defended his decision to focus in recent years more on landing exclusive output deals with smaller film studios like Film District and Open Road because he envisioned an increasing frequency of theatrical hits with smaller budgets from non-majors, as was the case with Summit with the likes of “Twilight” and “The Hurt Locker.” Now he sees the same pattern playing out on the TV side given the influx of European production outfits now producing English-language programming.
Sarandos said binge-viewing is still big on Netflix, noting that the first episode of “Mad Men” is still the most-watched episode of the series on the service. “Usually you see rapid decline from their first season to their fifth,” he said.
In an occurrence Sarandos deemed “extreme behavior,” 50,000 viewers watched entire fourth season of “Breaking Bad” in 24 hours between its arrival on Netflix and the on-air start to the fifth season. That’s 13 one-hour episodes in one day.
Sarandos also touted great consumption for everything from FX’s “Sons of Anarchy” to kids network The Hub, and predicted Netflix would drive viewership to another AMC series, “The Walking Dead,” when it returns for a new season in October.
He cited AMC as a victim of the inability of networks to go direct-to-consumer like Netflix. “One of the worst things that happened to TV for consumers is that it’s become a complete B2B business. The channels are not in the business of keeping consumers happy as much as they are keeping operators happy. AMC is a great example of that. They have better and better shows, higher and higher ratings and they’re in carriage fights all the time to get more money.”