Netflix dominated the television industry in 2018 as the streaming service grew to more than 137 million subscribers worldwide, snapped up TV’s biggest creators like Ryan Murphy and Kenya Barris and prompted big media companies like AT&T and Disney to prep their own OTT offerings.
It has even bigger plans for 2019, as chief content officer Ted Sarandos revealed at UBS’s 46th Annual Global Media and Communications Conference in New York today. Here are seven things we learned from Sarandos about Netflix’s strategy in the new year.
Netflix isn’t focusing on its new streaming competitors.
At this time next year, Netflix face off with a pair of high-profile new streaming competitors, as both Disney and AT&T have unveiled plans to launch their own direct-to-consumer offerings in the fourth quarter of 2019.
Sarandos said there’s room in the streaming space for new competition. “Some of them will be successful, and I don’t think that will be to the detriment of Netflix,” he said.
That’s because Netflix is focused more on consumers rather than competitors, and it has anticipated this industry shift into streaming for some time. “Our move into original programming was a bet that some of this stuff was going to happen,” he added.
As some third parties pull their content from Netflix to use on their own OTT platforms, the company has worked over the past seven years to make sure there is “a steady pipeline of great programming on Netflix, regardless of what happens in the rest of the world.”
Even more content is still to come …
Netflix spent more than $8 billion on original content this year, and Sarandos said he expects the company to shell out even more money going forward.
Unlike broadcast and cable networks that target specific demos, “we are programming to every taste,” Sarandos said. “We are making programming for all people.”
As Netflix looks at new content to greenlight, it’s keeping an eye on projects with global appeal, given that international represents 80 percent of the company’s subscriber growth.
… but probably not in live or sports programming
Sarandos reiterated that Netflix remains uninterested in expanding into live and sports programming, which runs counter to the company’s “core proposition” of on-demand content that is “reliving the consumer from the grid.”
“There’s enormous value in giving people the freedom to watch whatever they want, at their own pace,” he said.
Also, on-demand “adds almost no value to sports,” which is watched live, he added: “If it becomes the next best place to spend $10 billion, I would look at it.”
Audiences love holiday films and romantic comedies
Netflix has consistently refused to release ratings info and has decried measurement efforts from third parties like Nielsen, but Sarandos did share two pieces of data regarding viewership of Netflix’s original movies.
Its new holiday film, The Christmas Chronicles, had more than 20 million views in its first week, which Sarandos said represented the biggest first-week audience ever for a movie featuring Kurt Russell. (He did not elaborate on what Netflix considers a “view”—the number of people who started the film, how many completed it or whether it is an average-audience-per-minute metric a la Nielsen ratings.)
And last summer, 80 million people watched one or more of Netflix’s romantic comedies, like To All the Boys I’ve Loved Before. “Those kids are all movie stars now,” said Sarandos.
How it decides what shows to cancel
While Netflix used to almost reflexively renew its shows, the streaming service is now routinely canceling several series—even high-profile ones like Marvel’s Daredevil, which won’t be returning for a fourth season.
As the company decides which shows to renew, “it’s not purely audience, it’s quality of the audience as well,” said Sarandos, explaining that some series have smaller audience bases, but “there are some shows that people join Netflix just to watch. All of the subscription revenue from that member is attributed to that show.”
That was the case with Longmire, which Netflix picked up in 2014 after A&E canceled it. The show attracted an older audience, but it also drew many new subscribers who signed up specifically to watch that series. “It brought a lot of brand love to Netflix,” where it ran for three more seasons, said Sarandos.
Ultimately, it comes down to “are you spending it wisely for the member,” said Sarandos. “We need the shows that people watch. We need the shows that people love.”
Who’s worth $100 million?
Netflix has upended the industry over the past year by locking in top talent like Shonda Rhimes, Ryan Murphy and Kenya Barris to nine-figure exclusive deals.
When signing those megadeals, Netflix seeks out “people who have a brand and a voice,” said Sarandos, adding, “Ryan Murphy wants to win Emmys, and he wants you to watch his shows. And he doesn’t want to give up either of those things. We want to be in that business.”
Yes, he saw that SNL sketch about Netflix
Sarandos discussed the sketch in this weekend’s Saturday Night Live that spoofed his company, which the show claimed would be “making every show in the world” next year.
“Was that guy supposed to be me?” he asked of the Red Bull-drinking exec played by Mikey Day who throws stacks of cash at one person during a pitch meeting.
He joked of SNL’s Comedians in Cars Getting Coffee knockoff, Leslie Jones in a Van Getting Batteries, “I would definitely buy that show.”
Sarandos did seem to get in a dig at Saturday Night Live, pointing out that “South Park did that same sketch a couple of years ago” and joking that SNL needs to be “funnier and faster” than its comedy competitor.