M&E Connections

Netflix Exec: Audience is Getting Both ‘Younger and Older’

We’re witnessing a rapidly-changing landscape for TV and other video content, and Netflix is trying to figure it all out, just as traditional media companies including Disney are, according to Ted Sarandos, Netflix chief content officer.

“It’ll be an interesting couple of years right now while everyone figures out the landscape,” he said Dec. 4 at the UBS Global Media and Communications Conference in New York. “We are definitely in [a] taking-shape mode.

What Disney, in particular, going direct to consumers with digital video content means “I don’t really know totally, and I’m not positive that they do either,” he told attendees, referring to the Disney-branded streaming service planned for early 2019. Disney plans to charge “substantially below” what Netflix charges each month for that service, Disney CEO Robert Iger recently said.

In launching the Disney-branded service, Disney will end its distribution deal with Netflix for the subscription streaming of new Disney and Pixar releases starting with the studio’s slate of titles that will be released theatrically in 2019, including “Toy Story 4,” a live action version of “The Lion King” and its “Frozen” sequel, Iger told analysts in August. Iger then disclosed in September that the service will also include Marvel and “Star Wars” movies.

In response, Netflix issued a statement saying that, as with Disney films, U.S. Netflix members “will have access to Marvel and “Star Wars” films on the service through the end of 2019 and 2020 in many cases.” It added: “This includes all new films shown theatrically through the end of 2018. We continue to do business with the Walt Disney Company on many fronts, including our ongoing relationship with Marvel TV.”

Sarandos told the UBS conference that Disney has a long history of going direct to consumers and selling their product to third parties, pointing out: “Disney has always been very good at figuring out the magic formula for that.” Disney owns several “killer brands” including Marvel, Pixar and “Star Wars,” he said, adding the company has always been good at being a “destination company” — getting consumers so excited about their brands that they go to their theme parks, for instance.

Netflix’s audience, meanwhile, is “becoming both younger and older, so we’re investing in more and more original kids programming” of its own, he also said, adding: “We have 60 original kids’ series on Netflix that we’re producing in-house and commissioning with some of the top producers in television. We’re expanding our investment in animated features. So, we have two in the pipeline right now and I think the capacity to do as many as four or five a year.” Netflix is also “doing 30 anime originals on Netflix out of Japan,” and “20 of them will be released in 2018,” he said. Netflix has also added shows to its slate including “Grace and Frankie” that appeal to older viewers, he noted.

Netflix is “growing our original global scripted series initiative and we’ll have 60 original series this year from our global teams,” he also told the conference. As the company continues to grow its subscriber base outside the U.S., it’s currently producing local language original content that has been released in six countries, he said. “That’s going to be growing very dramatically next year” and it will deliver 30 local language scripted series globally, he said, adding the company also plans to release 80 original films next year.

About 33% of Netflix viewing is of movies, Sarandos also said, adding that some people argue that Netflix movies aren’t true movies if they’re not being distributed theatrically. But, for most movies, theatrical releasing is “a really lousy business,” with most films — especially those that aren’t major event films — losing money “at a very rapid pace,” he said.

Sarandos also disclosed at the conference that Netflix will produce a sixth season of its show “House of Cards” — a short eight-episode season in 2018 to provide closure to the story and without series star Kevin Spacey. Netflix had stated earlier that it would no longer be producing the show after published reports surfaced in which Spacey was accused of sexual abuse.

Netflix is also experimenting with alternative ways to monetize its original content, Sarandos said. As an example, he said, there are “opportunities around licensing and merchandising; we dabbled a little bit in it this year” with the show “Stranger Things.” He added: “There’s some opportunity down the road” for more licensing and merchandising, “but relative to the big prize, it’s pretty small.”