The market for creative work has undergone huge changes in the last few years, and nowhere is that more apparent than television. I had the chance to sit down with Ted Sarandos, Chief Content Officer at Netflix and the guy who greenlights all your favorite shows. This interview came on the heels of Netflix’s announcement that it would acquire 300 hours of original programming from DreamWorks Animation, the largest TV order in history.
ME: I’ve heard you say that Netflix really isn't trying to define itself through any one show. I wonder, is there a common thread, creatively, to what you put money behind? Is it just stuff Sarandos thinks is cool?
TS: I think that what the Netflix original shows, adult and children, have in common is that it's content that would be difficult to get made elsewhere. At the level of quality that goes into it, the economic model, if you had to support it with advertising, I don’t think it would get made. It would be too high risk. Three hundred hours of animation from DreamWorks is a massive commitment. It’s probably larger than any other network's total programming budget, and we were able to do that, which enables them to build out the infrastructure that enables them to produce quality at near-theatrical levels every single episode.
ME: One thing I heard repeatedly at DreamWorks, and this is something repeated by people who have done original series for you, is that it’s not at all like making a show at a network. What do you think they mean when they say that?
TS: I think the role of the network executive in creation really varies by corporate culture depending on what network you’re talking about. I believe that for my business people, the art of what we’re doing is to pick the great storytellers and the worlds to explore and then to get out of their way. In other words, I’m not interested in what my executives think the color of the mushroom should be. I want that to reflect the creator’s taste because that’s what we bought into.
What you end up with if you don’t give them a lot of creative freedom is you end up with this Frankenstein of a product that no one’s accountable for. For me, I want to say let’s pick the right people to do the work, and DreamWorks is a great example of that, and explore the worlds that they want to explore. You only want to get involved when it’s catastrophic, and fortunately, none of these have been catastrophic.
ME: So you’re investing tons of money in shows, and you’re giving creators a lot of freedom. Explain how you can do that when every other network seems to leave a trail of embittered writers and producers.
TS: It’s our scale. We’re aggregating huge audiences for all this content. With the things on Netflix, it’s like a hyper-network. I mean, we have a hundred shows that get more than two million people watching them on Netflix and 30 that get more than five million, so it really is not just a creative flowering, but we’re bringing a scale to tons of shows that no one’s seen before.
ME: And make the leap for me between scale and creativity.
TS: Well, that scale will then seed the things you saw when you toured DreamWorks, which is, you know, we can invest in a show at a different level than everybody else. It drives a ton of innovation but also it enables them to build infrastructure to make better and better shows, so it’s kind of a nice self-fulfilling prophecy of quality.
ME: So you pick the creators, you give them tons of runway, and then you don’t expect something that’s packaged for a specific demo?
TS: Right. I mean I always go back to the old story about Duke Ellington when his label dropped him and said your albums aren’t selling so we’re not going to continue your contract, and he says, it’s your job to sell my albums. I make them. I think it’s the same thing.
What ended up happening is that the scale itself much better lent itself to being able to create scale. You need the big order up front to make great shows that attract huge audiences. It’s the way that House of Cards is a better show because we ordered 26 hours of it than it would have been if we had ordered three and said we’ll see how you do. They wouldn't have invested in the sets at the level that they did on House of Cards or been able to bring in the best people to create the images around it or the best writers in the world to write those scripts. The size and scale of the investment actually afforded the size and scale of the output.
ME: Obviously the key functional difference between Netflix and linear television is that there are no time slots, there’s no Saturday morning versus Thursday night. How does that change the business of investing in creativity?
TS: I think the demographic buckets aren’t that important for us. There’s a newness or preciousness to primetime hours that need to be measured, because everything that’s not working in primetime is a massive opportunity concept. There is no such thing as primetime on Netflix. If I buy a show and we own it for 10 years it’s no more or less valuable if you watch it 10 years from now or the moment it goes live. You’re barely more likely to discover it the day we go live than you are 10 years later. We’ll have more viewing of House of Cards season one when we’re getting ready to launch a new season. People who have never discovered the show are no less valuable to us because they're about to enjoy 13 hours that turns into 26 hours that turns into 39 hours of viewing.
To me the reason why Seinfeld was almost a miracle was that back then if you didn’t work in the first three or four weeks, you were out. Seinfeld wasn’t a hit for a few seasons. It’s not just Seinfeld. If you ask James Brooks about Mary Tyler Moore, it was sometime in the third season where he thought, okay, now we’ve got a show. Today, you know, there are shows that are literally getting cancelled in their second week during the primetime lineup.
ME: So how do you know you’re investing in the right shows?
TS: Net subscriber growth. If we’re investing in content and people love the content, they're retaining and they're joining, and when that stops then we’re spending the money wrong.
ME: So you’re not scrutinizing each show’s performance the way a network scrutinizes ratings?
TS: No, because it's very hard, especially on a new show. When you have so much to watch on Netflix it’s very unlikely that some new show you never heard of is going to get you so excited you’re going to join, so I wouldn't have joined for the other thousands and thousands of things to watch, but I will join for this. There are some rare exceptions for us. Orange is the New Black and House of Card did have a chartable effect on subscriber growth, but season ones are very difficult to move the needle.
Mostly it’s the accumulative impact of having all the new stuff to watch that gets people excited, so I don’t think you can narrow it to one thing. We have so many plates spinning all the time. We’re launching a very aggressive list of 320 hours of series this year of kids, of scripted series, documentaries, standup comedy. It’s important that people will find differentiated value in Netflix for that subscription price. The mandate is to make as much good stuff as we can.