Ted Sarandos: The Year of NetflixChief content officer’s all-star skills in acquiring digital content rights have helped transform the streaming video business 8/22/2011 12:01:00 AM Eastern
Naming Ted Sarandos and Netflix to the 2011 Digital All-Stars list was an easy decision given the company’s success in
revolutionizing the streaming video business,
to the point where B&C put the company on
our cover asking top execs if it was a friend or foe (the
verdict is still out). But remaining the unchallenged
leader in subscription streaming video will be harder
as Netflix faces consumer discontent over recent price
hikes and a growing list of competitors who are determined
to poach subscribers, content rights and buzz.
Netflix tackles those challenges from an enviable
position of having 25.6 million global subscribers that
churned out $1.5 billion in revenue in the first half of
2011, up from about $1 billion last year, and content
deals with most major suppliers of movies and TV
programming, thanks in part to Sarandos. He joined
the company in 2000 and has led the content acquisition
efforts that have been so crucial to its growth.
That success has prompted Amazon, Google, Wal-Mart, Dish Network
(which acquired the Blockbuster assets out of bankruptcy) and Apple to
expand their streaming services, raising worries that their growing libraries
of content would slow Netflix’s sub growth and potentially touch off costly
bidding wars for content that could reduce Netflix’s enviable margins.
An even more serious competitive threat comes from cable, telco and satellite
providers that are inking TV Everywhere deals with programmers for
digital rights. Pay TV rival HBO has launched the highly regarded HBO Go
app for its subscribers. Comcast has
built up an online site used by more than 8 million
subs that by year-end will have some 200,000 pieces
of content—including new episodes of broadcast
TV series that are not available on Netflix, which generally
does not have next-day access to current fare.
Netflix has responded to those threats by doubling
down its bets on streaming video. Sarandos has signi
! cantly increased spending for digital rights, cutting
deals with Disney/ABC, Viacom, CBS, Twentieth
Century Fox, Miramax and NBCUniversal in the last
nine months alone. And top management has revised
pricing to separate DVD and streaming video plans.
While the pricing scheme provoked outrage
from consumers and could slow subscriber growth
this year, it will also allow Netflix to pump even
more money into digital content rights.
Sarandos has already invested in Netflix’s first original series and has
said he will be bidding against HBO when a package of Warner Bros.
movies comes up for renewal. “We’re writing large checks,” Sarandos
noted earlier this year at NAPTE. That may be good news for both
content owners and Netflix as it battles growing competition.