It has dawned on Hollywood that Netflix is determined to own the world. Netflix is no longer seen as a source of licensing revenue. It has 104 million subscribers worldwide and 193 other markets globally. It is a direct and fierce competition to Hollywood. Its wallet is open for content and talent. Netflix is determined to dominate the world and Ted Sarandos how he wants to do it.

This is how Netflix is intending to continue to beat Hollywood at its own game.

  • Overspending
  • Netflix’s budget to produce must-watch original content this year is $6 billion. They are making offers to talent that no traditional studio can afford. Sarandos says the reason behind this extravagance is to make them comfortable and to come out whole. He also added you win every time as long as you lean into the customer.
  • When Robert Iger, the CEO of Disney made an announcement to withdraw the content of the studio from Netflix, Ted Sarandos just shrugged at the move. Next day, he proved to the world that he was a step ahead by luring Shonda Rhimes, ABC’s crown jewel for an exclusive deal that gave her the freedom to make the content of any length without the arduous creative and schedule limits asked by ad-driven networks.
  • Zero investment in the status quo
  • When Sarandos was the acting vice president for Video City/West Coast Video in 1999, Reed Hastings, CEO of Netflix asked to meet him. Sarandos at that time had made revolutionary revenue-sharing deals with Sony and Warner Bros. Both the executive and the new boss were both willing to challenge the status quo. Sarandos added if you are only doing things because it is how you do them, it is not good enough.
  • Netflix was a DVD-by-mail business at the time. It had not more than 100,000 subscribers. Both Sarandos and Hastings agreed that they had to focus on how to match audiences to movies and it worked. The theaters can distinguish their experience with the consumers in ways they can’t compete with. And he wished they would. Going to a movie should give you the feeling of being like in a Disneyland.
  • But theater attendance has flatlined, even as exhibitors improve and decrease the number of theater seats box office numbers were down by 4.8% in August 2017. Studios are trapped in a self-defeating twirl. Sarandos stated when things don’t work; people get more risk-averse. It only worsens the case.
  • The old guard is a talent farm
  • Netflix hired Scott Stuber, former Universal co-president and studio producer to run its movie division. Scott knows all the agents and managers in Hollywood and has strong talent connections.
  • Till date, Scott’s movie output is a mainstream product like “Battleship,” “Ted,” “Safe House,” and “Role Models.” Sarandos cited Scott will now have a bigger canvas. He has mingled the production units of Netflix’s mainstream and indie to brush rising talent. They’re aligned to find fresh projects to work on with each other.
  • Netflix learned a lesson from how well Adam Sandler did whenever his film was made accessible worldwide. It is one reason why Sarandos made a deal with him. Netflix built a model of success by crunching the figures for Sandler’s revenue streams. It then offered him a guaranteed figure to acquire all rights.
  • Audiences went crazy when Sandler was brought to Comic-Con Experience in Brazil by Netflix to promote “Ridiculous 6.” Sarandos said it is global relevance. People wish their work to be apparent in the culture and want to get noticed and appreciated. They have the ability to do that like nobody else.
  • Director Angelina Jolie also approached Netflix to pitch “First They Killed My Father,” an arthouse Cambodian-language drama. It is now heading for fall film festivals. Angelina had a particular view of the story she had and it is very traditional. It is just as resource-intense to create a small film as a big film, where too little infrastructure is available as in Cambodia said Sarandos. With all local talent, it would have been hard to create anywhere. Nevertheless, it all pays off on the screen.

Viewers will just have to wait to watch the long-term outcome of Netflix’s move. But the confidence on Netflix is growing daily given the rising consumer appeal for their content. It currently looks like Netflix will eventually outrival Hollywood.