Netflix chief content officer Ted Sarandos spent a good portion of his presentation Sunday at the Television Critics Association press tour refuting information about the viewership of the streaming service’s original series offered last week by NBC.
The ratings estimates that NBC presented Wednesday for select Netflix series “doesn’t reflect any sense of reality of anything that we keep track of,” Sarandos said. He called NBC’s 18-49 ratings for “Jessica Jones,” “Narcos” and “Masters of None” “remarkably inaccurate” and quipped: “I hope no one’s paying for it.”
Sarandos added that he was bemused as to “why NBC would use their lunch slot with you to talk about our ratings. Maybe because it’s more fun than talking about NBC ratings.”
Sarandos repeatedly emphasized during his Q&A that Netflix is increasingly international in its scope and cannot be evaluated in the context of traditional TV networks. Earlier this month, Netflix mounted a simultaneous launch in more than 100 territories, including Russia and India, bringing its reach to 190 countries.
The company’s on-demand platform and subscription-based business model means that it does not have to court advertisers and does not court a specific demographic — another reason why the 18-49 estimates offered by NBC are “insignificant” for a service with 43 million domestic subscribers and 70 million in total worldwide.
“We are running a global network, one that is not easily comparable, either in business or in cultural terms, to anything that’s come before,” Sarandos said.
To wit, Sarandos said he didn’t even know offhand how many of its members fall into the 18-49 demo. For Netflix, the “personalization” factor is the driving force, which means it needs a broad range of shows, from kids programs to edgy adult dramas, to ensure users keep paying $10 a month.
Once again, Sarandos said Netflix’s decision not to disclose viewership figures was driven by a desire to shield creators from the competitive pressure, especially because the nature of viewing on Netflix doesn’t lend itself to daily ratings reports. And like any network, Netflix has different levels of expectations for different shows.
“Once we give a number for a show, every show will be benchmarked off that show,” Sarandos said. “We may build a show for 30 million people and we may build a show for 2 million people. And we have shows that do that.”
He sees ratings as putting ” a lot of creative pressure on talent” that turns into a “weekly arms race.” In his view, traditional television’s focus on instant ratings data “has been remarkably negative in terms of its effect on shows.”
Sarandos also addressed the perception that “Beasts of No Nation,” Netflix’s first foray into the feature film business, was a failure because its box office take was miniscule.
“A movie with no box office is different than a show with no TV ratings. The window of time that a success or a failure of a film is perceived is in a very short, short window, sometimes as short as one week,” he said. “Beasts” was watched with “tremendous volume” on Netflix’s platform. “People (were) watching that movie around the world in its first week of release at levels that independent film has never seen before,” he said.
Sarandos said that the company would spend about $6 billion on content this year — encompassing original series and movies and acquisitions. The percentage of spending on originals is rising but the total dollars devoted to acquisitions is still rising too. Next year’s content tab will be higher although he would not elaborate.
The exec was pressed on the issue of when profitability concerns might put a curb on Netflix’s programming budget. Sarandos didn’t exactly answer that question but reiterated that spending levels had to be considered in a global context.
“The profitability of the company is mostly driven on our international expansion and pace, not on the content specifically,” he said. “People are finding value in how we are spending our content dollars by watching that content,” he said.
To that end, Netflix expands across the world and into local-language production, the company is looking at content development in a globally holistic fashion.
“We don’t think about it as domestic or international. We think of it all as different flavors of global television,” he said. “If they watched it today or three days from now or seven days from now, it doesn’t really matter, but if they are not watching, they will quit.”
Sarandos opened his presentation running through premiere dates for 11 new and returning series. There was no update on plans for Chelsea Handler’s late-night talk show. Netflix’s torrid pace of original series launches has been a big driver of the industry conversation about whether there is “too much TV,” as FX Networks CEO John Landgraf articulated last summer and again on Saturday.
“We don’t think there’s too much TV,” Sarandos said. “Someone else is going to have to slow down — we have big plans in 2016.” He stressed that Netflix was “doubling down” on programs aimed at kids and families, with 20 some new shows arriving this year.
Sarandos said he sees family-friendly programming as a wide-open market for Netflix given the relative lack of such programming on rival networks and the ability of G-rated fare to travel in many instances. “Fuller House,” Netflix’s revival of the 1990s ABC family comedy, is a good example of a show that he expects to draw a big crowd from subscribers around the world, he said.
“People grew up on this show in India, in Dubai, in Brazil, in France, in Germany and Korea. And they still love it,” he said. “The idea that they can experience ‘Fuller House’ at the exact same moment as everyone else in the world will be amazing for them.”
Among other topics Sarandos addressed:
- Netflix has the technological capacity to do live streaming but it still has no “immediate” plans to pursue live news and sports programming.
- He was pressed about a possible evolution of Netflix’s all-at-once release strategy for original series. Episodes for the first season of upcoming period drama “The Get Down” will be released in two batches. That was to accommodate the creative needs of creator/exec producer Baz Luhrmann, he said. “Baz Luhrmann productions take a long time,” he said. But he also allowed: “We will always play with the release models to try to accelerate how quickly we can deliver them and sometimes how to reduce the window of time between seasons,” he said.
- Netflix has singular motivation to keep its subscribers happy because of the nature of its digital tether to its customers. “You can cancel Netflix with one click. Try calling your cable company and getting rid of a channel you are not watching,” he said.
