Netflix: cable TV biz ‘out of whack’

The cable industry pay model is “out of whack” in the internet era, in which pricing should be proportionate to viewing, Netflix’s content chief Ted Sarandos has claimed.

Speaking at the FT Digital Media conference in London yesterday, Netflix’s chief content officer Sarandos said that it was “not economically feasible” in the streaming subscription business to carry content that people didn’t watch, forcing Netflix to be selective about the movies and programmes it carries.

“[The internet] really brings equilibrium to the business. It’s not we don’t want that other content, we just want the pricing to be proportionate to the viewing,” said Sarandos.

“As you know the cable TV industry is kind of out of wack. ESPN is by far the most expensive channel and it’s not the highest watched channel. USA [Network] is the highest watched channel and it’s nowhere near the most charged-for channel. That kind of equilibrium, I think, would actually make us a worse product over time, because we would have a lot of content that we pay for that nobody watches.”

Asked about the service’s catalogue, Sarandos added that “the idea of a everything-ever produced subscription would be cost prohibitive for most consumers,” but said its growing audience numbers proved that it was making sound content choices.

“It’s important I think for consumers, but more importantly for our producers and distributors to understand that we are programmer curating for Netflix, not a distributor,” he said.

In terms of Netflix’s original content strategy, Sarandos said the key was to find shows that “work globally,” but claimed that it didn’t have anything in the works for original programming market-by-market. Lilyhammer, which was a bilingual production, was a “perfect product” he argued, as it appealed to both English and Norwegian audiences – bridging different markets where Netflix is live.

“House of Cards, while it seems to be a very American show, is based on a well known UK property, David Fincher is very popular in Norway and Sweden because of The Girl with the Dragon Tattoo, and political corruption is nothing new to Latin America,” Sarandos added.