Netflix chief content officer Ted Sarandos on Thursday fired back at critics who say his company pushes down the value of content, arguing that it pays market value for movies and TV shows and benefits broadband providers and cable content companies.
Speaking at the Film Finance Forum West, presented by Winston Baker in association with Variety, Sarandos made the case that streaming and DVD deals provide cable content companies with another revenue option by tapping into Netflix’s 20 million North American subscribers.
“I think what really erodes the value of content is when the existinginfrastructure that pays for content continues to pay less and less,” he said. “At the end of the day, the only thing about value and perception is what are people paying?”
Netflix’s recent high-profile deal with Relativity is worth an estimated $100 million-plus. Sarandos argued that the company pays “market dollars” for content, which includes its deals with Starz and Epix, both in the hundreds of millions.
Sarandos estimates that about 70% of consumers use the streaming service regularly, while Netflix ships 45,000 DVDs daily. And while cable providers such as Time Warner Cable or Cablevision might complain that those deals cut into their TV business, Sarandos made the point that Netflix consumers still need the broadband access those companies provide. “And broadband is phenomenally profitable for cable companies,” he said.
There are still holdouts. While Netflix has deals with the four major nets as well as many cable providers, it has yet to land a deal with HBO.
“If we offer the right amount of money, they’re eventually going to have to say yes,” he said, adding that cable content companies have the challenge of both pleasing profit participants and competing in the content-providing marketplace.
Sarandos also addressed the company’s plans for global expansion. While Netflix is still keeping specific territories under wraps, he said that the Internet would be a key ingredient in coordinating international efforts.