Netflix’s Ted Sarandos Talks Ratings, Paying Film Talent And HBO’s Emmy Haul

In a video conference call to discuss Netflix’s decidedly mixed second-quarter results, Chief Content Officer Ted Sarandos hit on several hot topics, including viewership data, film talent deals and HBO’s record-setting Emmy haul.

Appearing alongside CEO Reed Hastings other members of the streaming giant’s management team, closed the 40-minute call with a conspicuous shout-out to HBO.

Netflix wanted to be sure to “congratulate HBO on an incredible, record-breaking year in the Emmy nominations,” Sarandos said, a day after HBO racked up 137 total nods, to Netflix’s 117. “They continue to be the gold standard that we chase, and we’re really thrilled for them.”

Sarandos said viewership data, which Netflix has begun dispensing a bit more regularly (though on its own and not via third-party measurement firms on a global basis), would become more common over time. “We’ll be increasingly transparent with producers,” Sarandos told moderator Michael Morris, an analyst with Guggenheim Securities. “It’s important for us to help condition the market to understand what the viewing data is so it’s not being compared apples to oranges against things that are not similar. If we started publishing tomorrow, we’d be the only streaming service doing it.”

Related Story

'She's Gotta Have It' To End With Season 2 On Netflix

Upcoming releases like The Irishman and 6 Under Ground were cited as proof of Netflix’s continuing push into feature films. The theatrical window, interestingly, was not mentioned during the call. But Sarandos was asked about how talent is compensated given the stark differences between traditional movie studio economics and the Netflix model.

“It’s a very new model, particularly for box office-hungry talent who might be looking to make their next film at Netflix,” Sarandos said. “We have to figure out how, in success, they would be compensated. … Ultimately, we want the economics to be pretty neutral. Or similar to how it would be if they had a hit film in theaters. And that’s what we negotiate.”

Given the disappointing subscriber tally, which fell dramatically short of forecasts, Hastings was asked about the miss and also about what it means for his overall outlook on the company’s path.

He said the miss was regrettable but simply a result of the cyclical nature of the business and the difficulty of forecasting. “There was no one thing” to explain the deficit, he said. “It’s easy to overinterpret the quarter. …. For the most part, we are executing.”

In terms of future benchmarks, Hastings said one he has noted is YouTube. While the video giant is free, as opposed to subscription-based, its reach of about seven times the viewing time of Netflix is a target Hastings conceded thinking about. He also mentioned trying to gain a place in the roughly 700 million pay-TV households outside of China, the biggest country where Netflix does not currently operate. (Netflix’s subscriber tally stands at 151.6 million wordwide.)

“The internet is capable of some very large customer bases,” he said. “We take it year by year. …. What we want to do is grow the net adds every year and the future takes care of itself.”

Asked by Morris if he finds the concept of “streaming wars” — fomented by Wall Street and the press — to be a valid one, Hastings said he does, insofar as it helps popularize the idea of streaming.

“I’d wager that most Netflix employees are HBO subscribers,” he noted, as an example of the ominivorous appetites for TV all around the landscape. “We love the content they do,” he said with a smile and a shake of his head, an interesting bookend to the Sarandos shout-out.

As to the larger derby, while he repeated the company line that it’s not a zero-sum game, Hastings called it “a great competition that helps grow the industry,” He went on, “The advantage of having something catchy like ‘streaming wars’ is that it draws more attention and because of that consumers shift more quickly from linear TV to streaming TV.”