Ted Sarandos: No Slowdown in Netflix’s Spending on Original Series

Ted Sarandos has no intention of putting the brakes on Netflix’s volume of original programming. The streaming giant’s chief content officer said Wednesday that the industry’s hand-wringing over the question of whether there’s too much TV reflects an outmoded mindset about the way people consume entertainment.

“There are too many mediocre, safe shows on linear television — I’m with you,” Sarandos said during his executive Q&A session as part of Netflix’s portion of the Television Critics Assn. summer press tour in Beverly Hills.

Sarandos was pressed on the question of whether Netflix’s originals are in danger of getting lost in the shuffle because it is turning out so much content at such a fast clip. But Netflix’s model is about making sure it has a broad range of content to appeal to various subsets of subscribers, not all of its subscribers flocking to a few shows.

“If you’re keeping the shows great and people are loving them, why make less?” Sarandos told reporters after his formal Q&A. “It seems like a real arbitrary thing that there should only be X number of shows on TV. When people talk about Peak TV, they talk about it in an old media lens [where] there’s three hours of primetime, there’s four broadcast networks, there’s X-number of cable channels. That’s not true any more. The viewer has total control as to when they want to watch shows and what they want to watch. It’s almost infinite in terms of the possibilities to have somebody really passionately connect [with a show],” he said.

Sarandos acknowledged that Netflix has its share of mediocrity. But the streaming giant has faith that its algorithm recommendation engines can get the right audiences to the right shows. He noted that the average Netflix user spends two hours a day watching the service. “No other channel on TV gets that much viewing,” he asserted.

Sarandos cited the spooky 1980s-set drama “Stranger Things” as a good example of a low-profile show that built up its own momentum into a social media sensation.

Netflix has come under scrutiny for its spending on content — the company’s ability to write huge checks for content is the envy of its rivals — but Sarandos said that kind of investment is vital to growing the service worldwide. Most recently, showbiz tongues are wagging over the estimated $120 million budget for Netflix’s new drama “The Get Down.”

“That’s the kind of thing we want to keep doing — to do that you have to take a lot of at bats. You have to take a lot of big swings,” he said. Moreover, Netflix isn’t just competing with other TV outlets for viewers’ time.

“These are big expensive endeavors, absolutely,” he said. “We’re not just competing with ‘Fresh Off the Boat,’ we’re competing with Pokemon Go, and ‘Star Wars’ movies and ‘Jurassic World.’ We’re competing for a lot of attention in a really noisy world. To do that you have to take a lot of big swings.”

Sarandos said Netflix’s total content budget will rise from $6 billion this year, although he declined to give a specific number.

He was also pressed on the fact that Netflix overall missed its global subscriber growth target as disclosed in its second quarter earnings last week. Sarandos chalked that up to the trickiness of forecasting early growth prospects in new territories, coupled with the service’s recent rate hike.

“We grew faster than anticipated in Q1 and slower than anticipated in Q2,” he said. Netflix’s aggressive global rollout that accelerated in January with its simultaneous launch in 130 countries has taught them that every country is different and requires a specific strategy. The general quality and availability of broadband service is naturally an important factor as well.

But some Netflix content has proven to travel extremely well, he said, citing “Orange Is the New Black,” “Narcos,” “Marvel’s Daredevil,” “Marvel’s Jessica Jones” and the comedy features that Adam Sandler is producing under his deal with Netflix.

Among other topics raised during the 45-minute Q&A:

  • Sarandos addressed the recent efforts by two outside measurement firms — Nielsen and Symphony — to estimate Netflix viewership stats. He noted the wide variance between the two companies as a sign that neither is terribly accurate. And once again he emphasized that ratings are meaningless to Netflix’s subscription-based bottom line.
    “The performance of any given title in any market any time really has no relevance to us,” he said. “We’ll do great as long as we continue to attract new subscribers… If we make programming they don’t love, they’ll leave and our revenue shrinks.”
  • Netflix wants to beef up its roster of family-friendly shows that will encourage multi-generational viewing. He cited “Fuller House” as an example and Norman Lear’s upcoming Latino spin on “One Day at a Time.” “We’re going to be looking for a lot more of that,” he said.
  • Sarandos expressed his support for the talk show “Chelsea,” which was renewed for another 90 episodes. Although the show has a low profile in pop culture compared other late-night talkers, Sarandos emphasized that host Chelsea Handler was not looking to compete in that arena. He said the show is finding its legs and the right mix of standup comedy, taped segments and “dinner party” episodes with an eclectic mix of guests.
  • The licensing deal that Netflix set with Univision in May that calls for Univision to air the first season of “Narcos” was designed to help raise Netflix’s profile in Spanish-dominant TV homes. He called it “a big unaddressed audience for us.”
  • With all the Marvel-branded series on Netflix, why didn’t Netflix nab “Agent Carter” when ABC axed the drama last spring? In part it was a business issue because of ABC’s existing output deals with foreign broadcasters. Netflix wouldn’t have been able to control the show globally, which made it a much less attractive proposition, Sarandos said.
  • As ever, there’s no getting out of a Netflix session without a question about the future of “Arrested Development.” Sarandos said producers are trying to sort out the availability of cast members with the hopes of getting new episodes out “as early as next year.”

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