Fifth Estater

Netflix Content Chief Plays 'Cards' in Bid to Broaden Reach

Sarandos leads charge into originals, gives series ample time to lure viewers 1/28/2013 12:01:00 AM Eastern

Ted Sarandos

Title:

Chief content officer, Netflix

Education:

Glendale Community College, Glendale, Ariz.

Employment Highlights:

VP, sales and operations, ETD, 1991-98

VP, product and merchandising, Video City, 1998-2000

Current position since 2000

Personal:

Born July 30, 1964; married to Nicole Avant; children Sarah, 18, and Tony, 16

“This is going to be a big year for us,” Robin Wright’s character
said to Kevin Spacey’s in the trailer for the series House of
Cards
, which premieres on Netflix Feb. 1.

Ted Sarandos, Netflix chief content officer,
certainly hopes so. In 2013, Netflix will make
a big leap into original programming: Besides
House of Cards, it has the horror series Hemlock
Grove
; the Ricky Gervais vehicle, Derek; 14 new
episodes of Arrested Development; and Orange Is
the New Black
, from Weeds creator Jenji Kohan.

“I knew going in I wanted to do it in a big
way, meaning if it didn’t work, I wanted to
know it was because it didn’t work, not because
we didn’t step up enough or try hard enough,”
said Sarandos, 48.

Since Sarandos joined Netflix nearly 13 years
ago, the company has evolved its business model
from DVD-rental-by-mail to streaming video and
is now fully in the television licensing business.
The company is actively bidding for syndication
rights (such as its recent deal with Warner Bros.)
and " rst pay-TV windows, like grabbing Walt
Disney Co. titles from Starz starting in 2016.

Sarandos has a history of learning on his feet.
He was studying journalism at a community
college in Arizona and working part-time at a
video store when the owner asked if he would
stay and run the nine-store chain instead of
transferring to a university.

“Running these stores was like an MBA
course,” said Sarandos, who never " nished college.
“I had complete operational control over
the chain of stores—marketing, programming,
hiring, firing, negotiating leases.”

From there he headed sales and operations
for ETD, a third-party home video distributor,
and then ran West Coast Video for two years,
where he did the first DVD revenue-sharing
deal in the industry. That got the attention of
Netflix CEO Reed Hastings.

The most fundamental change at Netflix during
Sarandos’ tenure has been its transition from
distributor to programmer. With more competitors
(Hulu, Amazon, Redbox) looking to license
content, as well as the rise of TV Everywhere and
the DVR, exclusivity, including original programming,
has grown more important.

Television, though, has a high failure rate.
And original content is something that has
challenged Netflix before. Sarandos spearheaded
an early division called Red Envelope,
which produced independent films along with
partners. The unit shuttered in 2008 because
Netflix said it was daunting to back original
fare in competition against studio suppliers.

The new push into originals has the benefit of more data and financial muscle behind
it. For House of Cards, financed by Media
Rights Capital (which is still counting the
profits from the Seth Macfarlane surprise hit
Ted), Netflix looked at how many of its subscribers
were fans of Kevin Spacey, of series
executive producer David Fincher’s films, of
political thrillers or had watched BBC’s original
House of Cards on DVD.

“Then all of a sudden you’ve got all these audience
pools and you can look where they overlap.
And then you have millions of people who,
if the show is good, they’re going to be perfectly
targeted to love the show,” Sarandos said.

That specificity also applies to the marketing.
Subscribers who are predisposed to like the series
will see a lot of promos on Netflix, while others
won’t see much at all. Fincher even cut thematic
trailers so that if you’re watching Thelma & Louise
on Netflix, you’ll get a House of Cards promo
centered on its female leads; if you’re watching
Margin Call, you’ll see one with Spacey.

That Netflix had not marketed an original
show before actually turned out to be a positive
for its creative partner. “They said, ‘We don’t
know how to do this. Let’s put a great team
together, let’s all sit in a room together and best
idea wins.’ Which I think is really refreshing,”
said Asif Satchu, cofounder of Media Rights
Capital. “They said, ‘We don’t have to do it the
traditional way, let’s try something different,’
but they had data supporting it.”

In another change from linear television, the
episodes will be released all at once, allowing a
different kind of storytelling that doesn’t focus
on recaps. Unlike last year’s Lilyhammer, acquired
from Norwegian TV, House of Cards will
be the first series truly made for Netflix.

Sarandos sold that concept to Arrested
Development
creator Mitch Hurwitz on the fact
that much of the comedy’s audience discovered
the show after it was off the air by binging on
episodes on Netflix, making the new episodes
ideally suited for such a rollout.

“It’s not how we came up watching TV; it’s not
how I looked forward to seeing The Sopranos,”
Hurwitz said at Netflix’s first Television Critics
Association press tour appearance this month.
“But you’ve got to follow the audience. You’ve
got to stay fresh. You’ve got to keep challenging
yourself. So, I mean, we’re just embracing it.”

While TV executives like FX’s John Landgraf
have repeatedly called for on-demand services
to release their viewing figures if they truly
want to compete with networks, Sarandos said
doing so would “create a race with no winners.”

“I have no relationships with cable operators,
no advertising,” he said. “There’s no financial
benefit if you watch House of Cards on Feb. 1,
2013, or Feb. 1, 2014. What I want to do over
a very long time is build the perfect, huge audience
for House of Cards.”

Not that Sarandos won’t look at the numbers.
“I’m sure I’ll obsess on them,” he said.
But since Netflix has already made a two-season
commitment to House of Cards, he has the
luxury of a much longer window to determine
success that is not solely focused on ratings.

“When people ask me if you’re going to be
really successful at this thing, at what you’re
doing, how will you know?” Sarandos said.
“I look at what Norman Lear did.…He took
a medium and really jammed the culture and
the technology, just smashed them together and
really had an influence on the world.”

He acknowledged the lofty goal with a laugh
and added, “Not setting the bar too high!”

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Ted Sarandos

Title:

Chief content officer, Netflix

Education:

Glendale Community College, Glendale, Ariz.

Employment Highlights:

VP, sales and operations, ETD, 1991-98

VP, product and merchandising, Video City, 1998-2000

Current position since 2000

Personal:

Born July 30, 1964; married to Nicole Avant; children Sarah, 18, and Tony, 16

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