Hi I’m Eric Conner senior instructor at New York Film Academy. And in this episode we bring you the man who greenlights and develops pretty much all your favorite Netflix shows chief content officer Ted Sarandos.

Most people have no idea what they want to watch when they come on and that’s why a lot of our competitors will say things like well your show will get lost on Netflix. The truth is things get found on netflix at remarkable levels.

Some of you listening to this have HBO. Others may have cut cable entirely. Maybe two of you have Starz but I’ll bet every one of you has Netflix. Or at least the mooch off your parents account. In a relatively brief 20 years. Netflix has grown from a DVD distribution website to one of the world’s biggest TV and movie studios. Under Ted Sarandos and CEO Reed Hastings the company not only changed television but the entire entertainment industry. The one time direct mail distributor now produces feature films. Emmy winning TV shows documentaries comedy specials and practically created binge watching. Thanks in no small part. To a man who didn’t even finish college.

I thought from a very young age that I would be a journalist I was going to. I always thought that was going to be what I did. I didn’t even graduate. I did two years of community college and I had this epiphany that it was not a very good writer and that wasn’t good. So I was probably not going to be a journalist. And I was working part time in these video stores while I was going to school. What was cool about it was the video stores most young people don’t even know what a video store is probably. It’s like being a blacksmith. It’s a job that doesn’t exist anymore but the video stores are empty all day and so all day just watch movies. So I watched every movie we had in the store over and over again. And so it was like a crash course at a film school in one. And it was a thing that kind of got me grounded in the artistic sensibility of film and then the running the business was running a business so it gave me the kind of the business background as well. I went from that distribution I worked for the company that sold the videos to the video stores. Did that for a few years and then I met Reed in 1999 who came up with the idea for Netflix and the rest is history. So Reed was a brilliant software engineer he could write code and he had the idea to do this and knew how to make it work from the system standpoint from building a website that worked and all those kind of things. But really the film business was not his world. He didn’t have relationships with the studios and at the time I had been in this pocket of time when I was running the video stores and working in distribution that the heads of home video had become very important to the studios they were driving all the profits and these were the same people who were selling me movies out of books. You know at one point so I had the relationships where the studios at the time and knew how it worked. When I joined Netflix we were buying all the DVDs back in the early days of Netflix. We used to just mail DVDs around the country and back in those days we’d buy the movies at Best Buy and Wal-Mart and Costco. So basically in that first year that I joined Netflix it was getting direct relationships with the studios and eventually developing revenue share programs and all those kind of things. The beauty of the old DVD business was you didn’t have to have a deal you just had to go buy the disk. And we had everything ever made on DVD including all the HBO movie. So it was a hundred thousand movies on DVD or something.

For years Netflix delivered content on DVDs and Blu rays. But Mr Sarandos and Mr. Hastings foresaw that the future of home distribution was streaming so before the DVD and Blu ray market came to a dead end. They deftly switched lanes.

You know it’s funny meeting Reed in 1999. When the Internet was super expensive and very slow. That first time we met. The conversation was about how Netflix was going to be. Deliver digital content to homes. So he had a very clear vision for this in 1999. And that we never intended. We knew in 2000 DVD was not going to be the permanent format. That something else was going to replace DVD so we knew our business was going to be obsoleted. So by doing that you never really got that attached to that format. So it’s very unusual in business to move from one generation to the next like Greyhound buses you know Greyhound never had an airline Amtrak never got you know got into the plane business. And it’s very unusual to know that to get displaced by the next thing. And we did that we avoided it by knowing that there was going and admitting that there was going to be a next thing. So when we started we said Look the cost of postage because we were mailing DVDs is going up a little bit every year. And the cost of streaming video or downloading video is plummeting and right at that cross point that’s when we start streaming because if we start investing too early no one can watch the programming because it’s too expensive to download and if we do it too late. Someone’s going to beat us to it. So we were actually watching the trajectory of those two things to figure out when to get in. But we had no affinity I think for the disc really was finished it was for the content for the TV shows in the movies that people were watching on it.

After making their name as a leader in distribution Netflix set their sights on creating their own content. Their first original series House of Cards was viewed by most as a massive gamble but according to Ted Sarandos enlisting the show’s talented creators was the safest bet he could hope for.

It sent shock waves through the industry because it broke all the rules to give somebody 26 episodes without a pilot and creative freedom to boot.

Not just somebody. David David Fincher. He’s exacting. I love more than anything somebody who knows what they want and knows what is important and what isn’t and I would say that David never had a a wasted conversation or a wasted argument about anything and during this production and the trick of that thing was when we got the pitch for House of Cards we had three really beautifully written scripts from Beau Willimon who was nominated for an Oscar that year. David Fincher was going to direct first time directing television and Kevin Spacey to star and Robin Wright to star. I mean it’s felt like a no brainer if you’re going to do this you did this one and I was very familiar with the British version having seen the DVD version of it many times. It’s a great series. So it had this great source material a great adaptation great director a great star great scripts. The thing was we’ve never done this before. So when they said do you want to come and hear the pitch. I said no I want to come and pitch David as to why he should do it. In other words I’m saying yes right now but there’s a million reasons he should never do it here we’ve never launched an original anything all of our shows on Netflix of the time were licensed from other networks and reruns. And I saw we got the meeting to go in on Monday morning sat with David and I just said the answer is yes and we’ll give you two seasons with no pilot and no notes. So what you technically could give us 26 hours of your home movies but you have to put your name on it and the bet was that someone who really cared about their brand would really make it great if you gave them the freedom to do that. And that’s what we did.

Hundreds of original properties later. Mr. Sarandos Still chooses his shows the same way looking for the right mix of talent and material. So when the director of Billy Elliot and the writer of Frost/Nixon pitched the Crown Netflix leapt at the opportunity.

Yeah I think the crown came to us Peter Morgan and Stephen Daldry came in for a pitch about a show about the life of the Queen and it would take six seasons of television to do it and that we would and we committed to do the first two out of the gate again other people had been interested but no one was committed enough to give them both seasons. And Peter writes every word of the show and it’s just it’s a I think it’s a remarkable bit of television.

While most studios comb the Creative Universe for intellectual property. Netflix is just as comfortable buying a completely original vision.

There’s 11 or 12 conference rooms that are down here on the first floor. Every day dozens and dozens of pitch meetings take place which are people either with a script or an idea or a bible for a show. Typically for us because we don’t do pilots we look for a show to be very well developed in a pilot script preferably in a Bible. Some attached talent directing talent writing talent acting talent and then it’s evaluated for our teams in a fairly traditional way. Is this a world that people want to spend a lot of time in or are these people that people want to spend a lot of time with. Is it a vision that could be executed and typically that comes from. Have you done it before. Can you can it be repeated. I don’t think it’s important at all. It’s just it is one of those things where a lot of things come from books and remakes and sequels but the things I’ve been most proud of are things like Okja or bright that are completely original worlds and are not based on a book or a spinoff or a remake of anything.

Netflix isn’t afraid of working with newer talent. If they were the world would have been deprived of shows like stranger things and we would have never experienced Eleven’s love of Eggos or the terror of the Demogorgon. Man that would have been a tragedy.

It helps if they’ve done something before right so you could look to something and I don’t mean have had a TV series that’s a very high bar but something like the Duffer brothers when they created stranger things they had made a very low budget film at Warner Brothers that had never been released. So when they gave us this pitch my team was really blown away by the concept. And it was pretty ambitious what they were proposing and the big challenge was well can these young guys who have basically done a couple of episodes of wayward pines you know run a show it’s like being a showrunner is like being a CEO. You know it’s a big first job. So we loved the concept. We loved their take on it. We had some questions as to whether or not we thought they could execute so we got a hold of that movie that they made for Warner Brothers and everyone loved it and loved what they did on very low budget and it was enough.

Mr. Sarandos understands that their audience of over 100 million has a taste much more varied than his own. He also appreciates how deeply we connect to our favorite shows.

The thing I remember is that we don’t program for my taste. We have to program for everybody. So.

And what is your taste.

My taste is all over the board. I like I personally like grounded drama and comedy more than sci fi or. Fantasy. I just have never been a big fan of sci fi and fantasy. Every once in a while I stumble into something I really love. But for the most part you know really grounded drama human stories you know. So what I’m looking for like I said is that. That worldbuilding. Right that I can’t wait to see these people again. I’m 54 years old so I I grew up at a time when television was kind of the center of my world. There were only three networks and three hours of prime time. And you knew what night things were on and you knew what networks they were on and you knew the characters you knew their first and their last names you where they worked. Right. I mean the shows that you grew up on I always tell people about you know all in the family you know they lived on Houser’s street. Knew his wife’s first and last name I knew his cousin Maude. You know so you really were invested in these people on television. And I think what’s happening now is that content is a little bit commoditized in a way that it’s everywhere. It’s like my kids are 21 and 23. They have no idea what night anything’s on any network or how to find anything. It’s a different relationship. So I’m looking for that thing that will. Pull you back and make you say I’m going to spend 13 almost uninterrupted hours with these people.

The unique way Netflix conducts business with Shonda Rhimes Adam Sandler and others. Actually parallels the unusual way audiences watch their shows. So instead of spreading out their salaries over years they pay them in full right up front.

Well mostly there is no back end where we would rather the shows that are on Netflix and the films that are on Netflix be only on Netflix as a reason why people subscribe so we think there’s more value in exclusivity than there is in the aftermarket for the product. So we buy it we figure out with the talent you know what their share of a back end would have been and guarantee it and pay it upfront back end deals meaning that they would get a percentage of the DVD sales. We don’t sell DVDs so there’s no yeah but we yes we do awards bonuses and I’m like yeah it’s meant to be competitive with how it would have gone through any other channel but since we’re not selling DVDs or we’re not in theaters we’re not selling syndication that whatever their share would have been in success. We agree to that number up front.

Though Mr. Sarandos used to oversee pretty much every creative and business decision he now empowers his associates to greenlight the next must see movie or show.

Well on the artistic side the only way that we could do. What we do at the volume that we’re doing it. You know we produce original films television shows you know scripted series documentaries documentary shorts kids shows feature films unscripted television. So we’re producing across every discipline of content creation and I have an amazing team that I trust and I empower so the two people who work for me have absolute Greenlight power meaning they can buy any project in the room. And they don’t have to wait for me. They don’t need my approval and there’s no way that if I created a bottleneck of decision making that we could keep up with that. Secondly I wouldn’t want the programming at Netflix to reflect my taste. I want it to reflect the vast majority of other people’s taste. So you know cause we’re programming for the world. So what I really you know there are shows that I fall in love with that I champion. There are some that I say you know give them a second listen. I think you might have missed something but for the most part it’s an amazing team we’ve built and there are shows today on Netflix that I don’t see until I watch it on Netflix with you. And that’s a good place to be in terms of being able to let things go so that you can move fast. To me I think it’s about necessity. So like when we said that we were not going to give David Fincher notes it was perfect. I had nobody to give him notes I had no staff and I think right now if I had to watch everything that was on Netflix there’s not there’s literally not enough hours in the day anymore to watch every episode or every cut or to read every draft. Now in the early days were doing. First year we did House of Cards Orange Is The New Black Arrested Development and a show called Hemlock Grove and Lilyhammer. And watched every cut read every draft went to every production meeting visited every set and you know obvious you can’t do that today.

Netflix has also resuscitated a number of beloved properties from other networks. Mystery Science Theater full house and even the movie wet hot american summer all returned to the screen thanks to Mr. Sarandos and company. But perhaps most deservedly the legendary Bluth family from Arrested Development got a long overdue reunion.

I don’t have time for your magic tricks.

Illusions dad You don’t have time for my illusions.

What is wrong with you.

These are my awards mother. From Army.

There are dozens of us. Dozens.

I’m a monster.

Why does everybody think that I’m scared of girls.

Because you’re a chicken you’re a chicken.

Michael and women.

That’s what I was just telling him.

Has anyone in this family ever even seen a chicken.

Arrested Development. I think is you know when something fails and people try to make you feel good and they go it’s ahead of its time and it’s usually a lie. But in Arrested Development’s case it was 100 percent true. What I mean by that is the year that it got cancelled was the first year we started streaming on Netflix and because it had only made it through a couple of years of seasons it didn’t have enough seasons to go into syndication. So Fox licensed it to us. Otherwise they probably wouldn’t have if it had been in syndication and because it was on Netflix this whole new generation of people started watching it and the show. The problem with the show in terms of mass appeal is that and I say problem it’s a very wonderful problem to have but it’s so dense with jokes and storyline and character that for a 30 minute sitcom with commercials they were moving so fast. And sometimes what Mitch Hurwitz the creator would do is he’d set up a joke in episode 2 and the punchline would be in episode 7. And in network television when you’re watching a week in a week in a week you lose the audience half the audience didn’t hear the setup. So with Netflix you watch the whole thing and it’s a piece of art like you’d never seen before. And the fan base actually got bigger and more passionate for that show five years later when we started doing originals. So I had seen that behavior on Netflix had my own kids like have you seen the show called Arrested Development like it’s like it’s a brand new thing. And so I met Ron Howard at a party and just told him about how I think the show could come back and it could come back on Netflix and he introduced me to Mitch Hurwitz and we had a conference call in a room and Mitch actually put a baseball cap on his on the speakerphone because Ron wasn’t there. So you know it felt like Ron was in the room. But then we said yes and we made the plan in the room.

The extended plant and payoff of Arrested Development was perfectly suited for Netflix. Though their method of releasing an entire season all at once was initially less of an aesthetic choice and more of a practical one.

So prior to house of cards we got everything all at once because we were a year behind. So the season would run they would deliver us all the episodes we’d put them all up. So everything we had was all at once. So when it came down to this we thought. Well we didn’t really even think about how we’re going to be releasing it till a few months before and somebody said to me like well how are we going to do this. We could do one a week we can do four a month and we can do all the different things. And I thought well everything else on Netflix we have thousands of things to watch on Netflix. We’re going have one thing that you watch once a week. It just didn’t seem like it made any sense. So it really wasn’t a big strategy to change television it was a practical decision and it turned out to be the thing that differentiated us from everybody else. I think people started bingeing television shows on Netflix and DVD days because you can get the DVD in the mail there’d be four episodes on the desk. And what we noticed was that those disk would get turned faster than a movie because people would like burn through a season of a show and you know there are two or three discs they’d have out. And that’s how I watched The Sopranos in the box sets. And I remember getting to that last disc and feeling I got to wait another year. So it was the same thing.

Despite the proliferation of digital streaming there remains one element from the analog days of home video that is alive and well. Browsing used to be we would walk up and down the aisles of blockbuster all night.

Blockbuster Video. Wow what a difference.

Trying To find one title. Everyone agreed on. And now we can scroll through seemingly endless pages of choices. To find that one perfect title.

The truth is things get found on Netflix at remarkable levels. About a third of the most popular shows on television are on Netflix. Because this happens so there’s a movie kissing booth.

For me there was nothing more important than following the rules But in life. You can either follow the rules. Or follow your heart.

I presented to 500 agents over two days from four different agencies you know five 500 entertainment professionals and less than a dozen of them had ever heard of the movie and yet it was one of the most popular movies in the world at that time meaning that more people watched kissing booth on Netflix than saw Solo in the movie theater. You know what I mean. So you look at that and say but that audience all new solo because it’s a star wars movie. But there’s a whole culture of people who are talking about and seeing and watching and tweeting and telling their friends about movies that grow to these enormous audiences and it’s shocking for people that it’s happening you say so well. There’s a movie that tens of millions of people found on netflix in a sea of other great things to watch. But these are you know studios don’t make romantic comedies anymore. They find them very hard to sell. Just go with it the Adam Sandler and we’re shooting another one right now with Jennifer Aniston and Adam Sandler right now called Murder Mystery shooting in Montreal and then Italy next week. And I don’t know why that something. I think what happens is buyers have a conventional wisdom about something and just decide it’s true. And then it becomes true. So like romantic comedies don’t work they don’t travel well that’s not true. But somebody said that so they stopped making romantic comedies. Adam Sandler is a great example of that where they’d say oh Adam Sandler movies don’t travel so they don’t open them. Therefore he becomes domestic. And we have a big global audience where when Adam a couple of years ago Adam went on vacation to Italy and I said you’re have a terrible time in Capri. It’s a tiny little place and you’re going to get mobbed for selfies all day. And he said no my movies never play in Italy. People don’t even know me there. And what happens since last time he was in Italy is his movies came on Netflix and he was enormously he got mobbed. He had a horrible time. So that’s what’s different. I think a great example of the bias of buyers influencing what people get to watch. Last year at Sundance there were two movies about rappers Patti Cake$ which was the biggest buy at Sundance that year.

Introducing miss Patricia Dombrowski aka Patti Cake$ aka Killa P.

And Roxanne Roxanne which was an amazing movie about Roxanne Shanté one of the early New York rappers.

Do you know how old she is she’s 16.

Do you want your daughter to be happy or something you want her to be miserable just like you.

You a naster mother.

And I will tell you the frenzy around Patti Cake$ that everyone has was going to go buy it. And they said we’re going to buy one rap movie the rap movie with the white girl in it. Not the real rap movie and that movie went unsold until Netflix came in and picked up Roxanne Roxanne and almost ten million people have watchd Roxanne Roxanne on Netflix. It’s a great success story and Patti Cake$ came out and did less than a million dollars in the box office.

Netflix may have brought movies and shows of all shapes and sizes to a massive audience. But even Ted Sarandos the company’s chief content officer was unable to save one of his personal favorites.

If you want to give an insight into my taste there’s a show that did. Unfortunately we only did two seasons and it didn’t do that well. But Lady Dynamite I think is one of the better comedies on television that we did. We just finished the it finished it’s second season last year. Maria Bamford it’s just a really fun. Quirky envelope pushing comedy that I’m just really proud of.

I’m a 45 year old woman who’s clearly sun damaged. My skin is getting softer yet my bones are jutting out so I’m half soft half sharp. And I have a show. What a great late in life opportunity.

That’s closest to my taste. I think I mean it’s a hard thing because they feel a bit like your children you can’t pick a favorite kid. And I think sometimes the experiences are not as good as the projects and the other way around where it’s a really grueling shoot as you know. And then suddenly turns out to be amazing. So that’s the harder one to pick. I think I really liked the discoveries you know like things like end of the f**king world this year that no one saw coming and they changed everything. I think in terms of you’ve got a cast that was barely known. You’ve got a first time writer first time showrunner and had no reverence for the format at all. One of the episodes is only 17 minutes long and just like you watch the whole season in three hours and 20 minutes or something like that and it’s just I thought they did a remarkable job like reinventing the form and that’s what I look for and that’s where you get really excited about when people are willing to do it.

One of Netflix’s greatest contributions is bringing the Documentary a sometimes underserved genre to a larger audience than ever before.

I think the market’s never been better. I mean prior to Netflix I mean the whole business was based on. Could you sell movie tickets in arthouse theaters and DVDs. I think one of the reasons that Netflix became so popular on DVD was that underserved audiences Foreign Language Film documentary film had no place to see these movies. It’s the only category of the Oscars that all five nominees would never be available to most people. And so if you had Netflix you could get all of them you see them and it built and built and built so we had we always had a differentially big foreign film and documentary fanbase. So we actually our first part of it before we started doing original shows. We had a label called Red Envelope entertainment where we were producing and acquiring documentaries like The Oscar winner. Born into Brothels and that was like it predated our original content initiative by several years. But we weren’t quite big enough to support it yet so we were ahead of our time too. But now we are fully financing and producing we have 65 original doc features we’re releasing this year. And we have a documentary series like Wild Wild Country and evil genius and doc shorts. We’ve been nominated for three Oscars for our doc shorts and won last year. So I would say this. When I said what’s the market like. It’s not a great way to make money. There’s not a lot of money in it you have to be you have to get ready for that. But it’s a great way to showcase your work. It’s a great way to tell really powerful and meaningful stories and it’s a great way to work on your craft.

Under Ted Sarandos the Netflix audience continues to expand and diversify as the network’s content becomes increasingly global friendly.

We try to make things you know and make them all global. We just launched a show in India called Sacred Games. You can watch it here and we use the technology to overcome the language barrier dubbing and subtitling. And we’re trying to get really great at dubbing into English which is really there’s no real call there hadn’t been really much call for it prior to you know what we’re doing. You know movies that wouldn’t play here you know they were dubbing Godzilla movies but not arthouse movies from Japan. Same thing with kind of Hong Kong cinema. The dubbing into English was really bad so it never really became much more than a little niche. So we are putting a lot of energy into dubbing our content better and better for the world including the English market. So we produce a show in Denmark called the rain. The actors in Denmark all spoke perfect English too so it was local language but they also dubbed themselves into English and then we used voice actors for all the other territories. So we try to make everything available subtitled and in most territories both subtitled and dubbed and now picking those projects I have teams all over the world. We have an office in Mumbai in Singapore in Tokyo that are watching the content from around the world and doing what we’re doing here but all over the world. So they’re inbounding shows hearing pitches reading scripts and producing global shows but from everywhere in the world.

The only place where Mr. Sarandos expressed any doubt about expanding the Netflix Empire is the movie theater.

What I think is that the world is moving very quickly. And the generations behind me who are raised on the Internet have an expectation of kind of what they want where they want how they want. And the notion of being in a movie theater seat at 8 o’clock. Makes almost no sense to a guy like you and your lifestyle. My guess is that the viewing experience at home has gotten remarkably good both in the fidelity and the comforts of home and all those things and the experience in the Multiplex has gotten pretty lousy. Smaller screens people on phones sticky floors rigid Showtimes commercials and by the way I love movies. I love going to the movies but I like to go to the iPics here. I’d like to go to a clean theater I like to go to the Arclight but most people in the world have no access to the Arclight. So we’re not trying to hurt or save the theater business. We’re trying to serve film lovers. And for the most part there could be nothing more aggravating than this film that you hear about all over the world. Everyone is talking about and you have no ability to see it for six seven eight months until after it came out and by then another 400 movies have coming out because you forgot. So it’s just this super inefficient distribution model and increasingly it’s not a great experience for people. I say that broadly because I get to go to the Arclight but like I said for most people who have got a tiny little theater in their town or or worse a multiplex with fifteens tiny screens it’s not really that much different than watching at home anymore. I think the desire to have that big theatrical thing is generational meaning people who grew up on desiring to make a movie for a big screen. That’s how they perceived it in their head. So if they ever get to realize that it feels like a lost experience but the truth is when you see a movie at a premiere or you see it at a festival it happened you saw it on a big screen with an audience. But the rest of the world is going to experience it much different. So we’re not trying to push our movies out to broad theatrical. I’m not trying to keep them off of screens. I would love the theaters to book our movies but I want to do it day and date so meaning that I don’t want to hold back a Netflix movie from 130 million people so that a couple of hundred people can watch it in Chicago. So no that’s not the drive the drive is to work with really great filmmakers tell really great stories serve film lovers and the theater is something that is I hope it lasts forever. And I hope people keep supporting it. But in general I don’t. It’s a very differentiated experience. I think.

When asked about how to start a career in entertainment Mr. Sarandos advised our students to go after every opportunity instead of just following a dream.

When you out of school I mean you didn’t finish it. Did you have a plan at that time.

No I wasn’t sure what I would do that time. I wanted to be a journalist going. I thought I think one of the worst pieces of advice that young people always get is to follow your passion. Because I think it’s really what you want to do is figure out what you’re really good at and you’ll be really passionate about things that you’re good at. I would love to be a professional golfer. That’s never going to happen. So I can keep following that passion. But it’s going to come at the expense of a lot of everything else. So I think the best thing to do. I think in your 20s and early 30s is to really try as many things as you can and figure out what you’re really good at and even if you’re not passionate about it I bet you will be if you’re great at it.

Golfer or not Ted Sarandos has been a trailblazer in the entertainment industry. He’s one of the few producers who has worked across all genres of film and television and succeeded at all of it. We want to thank him not only for speaking to our students but also for bringing them to the amazing Netflix campus for the Q&A. And of course thanks to all of you for listening. This episode was based on the Q&A moderated and produced by Tova Laiter to watch the full interview or to see our other Q&A’s. Check out our youtube channel at YouTube.com/NewYorkFilmAcademy. This episode was written by me Eric Conner. Edited and mixed by Kristian Hayden our creative director is David Andrew Nelson who also produced this episode with Kristian Hayden and myself. Executive produced by Tova Laiter. Jean Sherlock and Dan Mackler. Special thanks to Netflix Sajja Johnson Melissa Enright our media content and events departments as well as the staff and crew who made this all possible. To learn more about our programs check us out at NYFA.edu. Be sure to subscribe on Apple podcasts or wherever you listen. See you next time.

Please note the term Netflix and chill was not used in this episode despite my repeated attempts. We hope you enjoyed the episode. And thank you for listening.