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Netflix's Sarandos: Stream On

8/23/2010 1:01 PM Eastern

As cable has
lost video subscribers,
Netflix
has been racking
them up: It
had 15 million
subscribers
at the end of
June — up 42%
from a year
earlier. And earlier this month, the
video-rental company signed a billion-dollar output deal to stream
movies from Epix, 90 days after
their pay TV premiere.
But according to Netflix
chief content officer Ted Sarandos,
the service ultimately is a complement
to cable, not a killer: “Our
product is like a motorcycle. Cable
TV is like a car. If you price one
cheap enough you can have both.”
Sarandos recently spoke with
Multichannel News technology editor
Todd Spangler. Here are edited
excerpts:

MCN: Cable, satellite and telco operators
are building out “TV Everywhere”
services to stream content
on the Web and to mobile devices.
Don’t these increasingly compete
with the Netflix core offering?

Ted Sarandos: It’s a dramatically different
product. TV Everywhere is about what’s on TV
right now. This is basically a snapshot of the
linear grid. We’re much more about a broader
archive of content where it lives constantly after
its air date.

The world is increasingly going on-demand,
but for us, we are going to focus on the things we
do well — rich content offering and a killer user
interface. That will give us a lot of running room
to build a great product.

MCN: Do you see the traditional movie channels
— HBO, Showtime, Starz — as your primary
competitors?


Netflix chief content officer Ted SarandosTS: We’d much rather work with the premium
channels, but we’ll compete in the open market
[for content rights]. For us, we haven’t put a
premium on exclusivity. Exclusive sports, for
example, have not been good for consumers,
because it’s raised the price of cable packages.

We have more than 100,000 movies on DVD.
I don’t believe anyone joined the service, or decided
to cancel, because of 10 or 12 of those.

MCN: Is Netflix looking at producing original
content?

TS: I’d say, not now. There’s such an amazing
abundance of content that is undistributed. For
us to enter the production fray is unnecessary
at this point. We’re differentiating ourselves by
our broad library and our personalization.

MCN: Are you pursuing deals with cable operators
or other TV distributors to offer Netflix as a
component of their services?

TS: We’re moving very rapidly across all the different
delivery models into the home. We have
more than 100 different devices that deliver
Netflix to the television. The set-top box is one
way to get there, but in the stack in the home are
all these different devices.

I think that what will evolve over time will be
that Netflix will evolve as the killer reason people
buy broadband. That’s great news for cable
operators, because cable is the best way to get
high-speed Internet into your home. However,
that may coincide with people having less desire
to buy video products [from cable providers].

MCN: So do you see Netflix eventually eating
into cable video subscriptions?

TS: Ultimately the consumer doesn’t have to
choose. Netflix is a very comfortable add-on to
cable.

Our product is like a motorcycle. Cable TV is
like a car. If you price one cheap enough you can
have both. What we don’t offer that cable does
offer is live sports, news and 500 linear channels.

September