The meeting rooms in Netflix’s Los Angeles office are named after famous movies, and on the day Ted Sarandos meets the Financial Times, the location is The Godfather room.
Mr Sarandos is not nearly as intimidating as Marlon Brando’s mafia don. But in a town filled with film studios and producers that have been recipients of Netflix’s largesse, he is certainly respected.
With a DVD-by-mail and an online streaming service that has close to 25m subscribers, Netflix has upended the way Americans watch and consume film and television programming in their homes. As the company’s chief content officer, Mr Sarandos is responsible for striking the deals that make that content available.
Yet he has found himself curtailed by Hollywood “release windows” – the restrictive periods enforced by the studios to ensure movies generate the most revenue possible on the release in cinemas, on DVD and on television.
“The windows system in movies is pretty archaic in the internet age,” he says. “When we entered the market in 1999 every studio had a pay-TV deal and you could only get access to movies 10 years after their theatrical release.”
Yet with online streaming soaring in popularity and consumers now expecting to watch films when and however they want, those release windows are under pressure, he says.
In the last few years Netflix has struck deals with a range of producers and independent studios while its deal with the Epix pay TV channel gives it access to new films from Paramount, Lions Gate Entertainment and Metro-Goldwyn-Mayer.
Mr Sarandos points out that Netflix will be the first outlet to screen the films that won this year’s Oscars for best feature, documentary and animated feature. “Five years ago it was zero.”
He has a warning for those keen to protect Hollywood’s status quo. “The longer the studios hold on to windows, the more at risk they are of consumers developing new habits.” Not delaying the release of a film after its theatrical release “makes complete sense, given the efficiency of the marketing spend”, he adds.
This means taking advantage of the advertising blitz that surrounds the release of a high-profile movie, when studios spend tends of millions of dollars to ensure a film scores a big opening weekend at the box-office. “People would have better recall when it is released on DVD if they didn’t have to wait so long.”
Netflix has bumped heads along the way to its 25m subscribers, notably with Time Warner, which owns the HBO channel and the Warner Brothers film studio. Jeff Bewkes, Time Warner’s chief executive, has compared Netflix to the Albanian army. In December he told the FT, Netflix could “do certain things and not other things. It can fly, it’s not a submarine”.
Mr Sarandos says HBO and Netflix have different attractions. “I think we appeal to a larger group of people, whereas HBO programs for the coasts, for New York and Los Angeles … we’re much broader.”
He is enthusiastic about the UK, where Netflix users can share details of their viewing habits with friends on Facebook: such automated sharing is illegal in the US, a hangover from 1980s privacy legislation, although the company is supporting efforts to change the law.
The group recently moved into original programming, airing Lilyhammer, a gangster series set in Norway and starring The Sopranos’ Steven Van Zandt; by 2013 it hopes to have five original series on its service. Television is generating more views on Netflix – about 60 per cent of all views are for TV shows, rather than movies, says Mr Sarandos.
The company also has a small army of new competitors to contend with; in the last two years rival services from Amazon – which owns Lovefilm in the UK – and Hulu have begun vying with Netflix for content.
“We knew people would come after us,” he says. “But we’re spending billions of dollars on the content. If they want to compete against us, they will have to write cheques.”
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