November 4, 2013

Netflix's Ted Sarandos Says TV May Be the Future of Independent Production

netflix main iconLast week, Ted Sarandos, the Chief Content Officer of Netflix, ruffled a few feathers with NATO (um National Association of Theatre Owners, that is) when he gave a keynote address at the Film Independent Forum about how theater owners are strangling the lifeblood of the movies. On top of the pretty interesting points, he broke down just how filmmakers can join the Netflix revolution and make your own show into the next Orange is the New Black.

The main point Ted Sarandos makes in his keynote, and the basis on which Netflix operates, is this: give the audience what they want, and they will show up. Meaning? People want ways to watch what they like, when they want. Sarandos champions a break from old-fashioned release windows for both film and television, and explains how Netflix has been trying to change the model from the inside with their own content ever since they figured that out. Here is his entire keynote from Film Independent, question-and-answer included:

What's interesting about the controversy that Sarandos is pointing to in his address is that fact that TV and film (even indie film) models for distribution windows have been the same for over a decade. And, numerically speaking, they haven't been growing the same way as Netflix. (If anything, Sarandos believes this sort of rigid windowing has led to an increase in piracy.)

Netflix has forgone the strict windows -- where people can't see a movie for ages if they miss is in theaters or get a boxed set of their favorite TV show for a year plus. And to show for it, they have now grown to 40 million subscribers. That's something to think about.

Sarandos goes over a few of the new original Neflix shows that were started with the hope that control over their release would continue to allow them to change the model: House of Cards, Orange Is The New Black, and Arrested Development to name a few of the heavy hitters. And he says that, while it's still seen as somewhat risky business to produce a pilot, for Netflix, where audiences are hungry for new character-driven content, there's only a few things you'll need to develop:

Get us a good spec script, tell us how it will play out in the next three to five years, and ideally, attach some talent to it.

That sounds pretty doable. I mean, you may not be able to get Kevin Spacey, but with more A-list actors getting involved with the Netflix original content, it's not a dismal prospect either.

What do you think about old notions of release windows? Do you think Netflix is an evolved television, and would you start your own show?

Link: Are Theater Owners Going to 'Kill Movies'? Watch This Contentious Keynote Address From Netflix's Ted Sarandos -- Indiewire

Your Comment

35 Comments

30-40 years ago, a TV network's "Movie of the Week" was a huge deal. As the home video emerged, the "Movie of the week" - and some pretty decent miniseries - disappeared off the TV landscape. Both are about to make a comeback, albeit in a slightly different form.
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Netflix will squeeze the post-theatrical window even further but the key for them and Hulu, Yahoo, Amazon Prime, YouTube, Apple, Intel, Microsoft, etc. will be original programming that will blur the distinction between the releases.
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FWIW, I think the brick-and-mortar movie theaters are on their way to extinction unless they learn to multipurpose their infrastructure.

November 4, 2013 at 2:00PM, Edited September 4, 11:21AM

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DLD

I agree. Movie theatres haven't changed much in the last 30 years.
Pop, chips, popcorn and a big screen.

3D was a huge investment that I think is flopping due to poor implementation by directors and producers.

A home theatre for around $2000 can give you a cinamatic experience that blows away some movie theatres.

PLUS, I can drink beer at home. LOL.

November 4, 2013 at 2:32PM, Edited September 4, 11:21AM

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What if more movie theaters served beer? That would be nice, plus it would get rid of the teenagers. Someone please tell John Fithian.

November 4, 2013 at 9:41PM, Edited September 4, 11:21AM

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Oakley Anderson-Moore
Writer
Director/Shooter/Editor

They serve beer in European theaters.

November 4, 2013 at 11:20PM, Edited September 4, 11:21AM

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DLD

...and in nearly every theater in Portland, OR. ^_^

November 5, 2013 at 1:31AM, Edited September 4, 11:21AM

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trackofalljades

And in Eugene, OR! Local and delicious!

November 5, 2013 at 2:35AM, Edited September 4, 11:21AM

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V Renée
Nights & Weekends Editor
Writer/Director

The issue is paying $7.50 - $9 a bottle... I can buy a six-pack for the same price.

November 5, 2013 at 2:11PM, Edited September 4, 11:21AM

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Re: DLD "movie theaters are on their way to extinction" - Agreed. The moment big cinema starts allowing premium first-run movies to the home at reasonable prices will be the moment movie theaters die quickly. My guess would be in the near future that Hollywood will start experimenting with family of four pricing... maybe around $49-$59. If you can't wait for that to happen... then there is already a solution you can buy called Prima Cinema... a tiny bit expensive though http://www.forbes.com/sites/geoffreymorrison/2013/10/04/prima-cinema-bri...

November 6, 2013 at 7:00AM, Edited September 4, 11:21AM

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Razor

First run - or "near" first run - movies can be VOD on YouTube for ~ $15. IMO, $25 for a movie out, let's say, for a month would likely suffice. Theater owners would fight it tooth and nail. But, if the attendance falls off sharper than it does now, it'll open more screens to "other" films.
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Something else to think about - the studios share falls off drastically after 2-3 weeks. Big films may open at 85%-90% of the gross but then it goes down to 75-60-50% and then drops below that. Assuming studios can keep no less than 75% of the VOD money with no drop-off for several months, they can price the VOD very reasonably and still come out ahead of the theatrical distribution.
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PS. Theater would want a larger share of the opening weeks, obviously.

November 6, 2013 at 6:14PM, Edited September 4, 11:21AM

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DLD

I think we are easily going to see a decline in ticket sales for 2014. http://www.the-numbers.com/market/ It makes you realize that one area of loss could be a boon in another, like Home Theater Installation and Consultation.

November 7, 2013 at 7:24AM, Edited September 4, 11:21AM

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Razor

I like Netflix, but how are they making money on House of Cards? If it's just by driving more people to subscribe, then how does an indipendant make money from Netflix? Will Netfilx finance these films?

If not, Netflix does not pay enough to cover a production that includes A-list cast and crew. In my opinion, films available on Netflix hurts dvd sales, VOD, and possibly theatrical because if it's available at no extra charge, why would i pay for a dvd/VOD for the same content?

So Netflix is a great distribution point, but where is the money in it?

November 4, 2013 at 2:14PM, Edited September 4, 11:21AM

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Morgan Simpson

^ This. Very much this question.

November 4, 2013 at 2:18PM, Edited September 4, 11:21AM

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I agree with this as well.

As long as Netflix keeps it's funding model a huge secret (in fear of copy cats) no one wants to risk investing into a movie or series.

November 4, 2013 at 2:33PM, Edited September 4, 11:21AM

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IMO, the Netflix originals, as well as a few high profile buys like "Breaking Bad", served as advertising for the company. In marketing terms, it's called "brand awareness". Getting the Emmy wins just makes them look cool and, in comparison to HBO, relatively cheap.

November 4, 2013 at 5:38PM, Edited September 4, 11:21AM

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DLD

How do the Netflix original series help independent producers? Well I think the easy answer is that they bring in more viewers. More viewers can bring more clicks for independent films as well. More clicks = higher licensing fees (although at this point this info held tight by Netflix). It's kind of like if you think Spike Lee is good for other kickstarter projects...maybe?

What neflix could bring to independent producers are a steady flow of licensing fees. I mean if you can make an independent film for $50,000 & get it on neflix for 20-30 years that will be a good source of income. Only time will tell if this will be a profitable platform for filmmakers.

November 4, 2013 at 6:16PM, Edited September 4, 11:21AM

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BigAL

I agree that licensing fees can help recoup the budget, but it is not feasible to do certain types of projects for $50,000. I believe most films could be made for less money, but no matter how cheap cameras get it will always take at six figures to hire talented crew and notable cast.

I guess I am looking at how can indie films in the $250,000 - 5 million dollar range best use the new models of distribution. This is the question everyone is asking. I am open to Netflix to continue the HBO model of licensing some content and producing some content. However, this model ultimately is not an indie model so much as a studio model.

So, is there a way to stay independent, produce in the budget range I stated before, and make money back?

November 4, 2013 at 7:30PM, Edited September 4, 11:21AM

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Morgan C.

Yeah I was thinking more in terms of a doc budget but $50,000 for a narrative film with talent is probably impossible. Make a documentary?

November 4, 2013 at 7:55PM, Edited September 4, 11:21AM

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BigAL

Not sure what their licensing fees are per project - as they say in show business, everything is negotiable - but, in order to get the "House of Cards", Netflix paid slightly above the market for a major network or about $5M per 1-hr episode. AMC/Sony paid in the neighborhood of $3M for "Breaking Bad", which is more in line with the new network drama budgets, but the exact breakdown is impossible to find (it also would influence the beneficiaries of the international TV, DVD and streaming sales - the less a network pays upfront, the more equity the producer will usually retain).
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PS. "Breaking Bad's" entire 5-year episode collection is coming out on Blu-Ray at the end of the month for a tad over $200 retail. I wonder if BB's presence on Netflix will help or hurt their sales number.

November 4, 2013 at 8:29PM, Edited September 4, 11:21AM

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DLD

Refreshing to hear someone with the means to do so, speak about getting quality content to the masses. My hero.

November 4, 2013 at 2:51PM, Edited September 4, 11:21AM

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I don't get this part: "Netflix has forgone the strict windows — where people can’t see a movie for ages if they miss is in theaters".

When I subscribed to Netflix the movies were all out of date to hell or haven't even been a theatrical release so I cancelled. Have things changed in the last 6 or 7 months so that you can actually watch movies that are newer than 2 years old?

November 4, 2013 at 3:57PM, Edited September 4, 11:21AM

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Kraig

*theatres

November 4, 2013 at 3:58PM, Edited September 4, 11:21AM

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Kraig

If you watch the video, you'll see that he's talking about bringing back Red Envelope (or something to that effect) and actually producing Netflix-made movies. Those movies would, in theory, be released with little to no window separating a theatrical run and streaming availability.

The obstacle to a shortened Netflix window isn't Netflix, and never has been...it's content producers. Netflix is proposing to close that loophole by producing more content itself.

November 5, 2013 at 1:34AM, Edited September 4, 11:21AM

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trackofalljades

How much is the standard licensing fee for an independent film on Netflix? $3,000? $5,000? I don't see any actual figures posted anywhere.
But 40 million subscribers...

November 4, 2013 at 5:12PM, Edited September 4, 11:21AM

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Taylor

Netflix doesn't release these numbers. They are very secretive over their licensing fees. Each movie is different, but what I have heard is that is somewhat of merit based pay. Each cycle has different licensing fees depending on how many views your film gets each period. Plus they only accept films through aggregators, so it is very difficult for the actual filmmaker to find out. Kind of just take what you can get at this point, but is guaranteed that the film will get viewed.

November 4, 2013 at 5:53PM, Edited September 4, 11:21AM

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BigAL

What happened to the days when the trending advice was for filmmakers to make what they wanted to see/watch. Now it seems as if everyone's trying to make content based on numbers and facts again.

November 4, 2013 at 5:36PM, Edited September 4, 11:21AM

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yup.

November 5, 2013 at 3:01PM, Edited September 4, 11:21AM

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What Netflix is doing is great for really just two parties: consumers and Netflix... and generally bad for pretty much the rest of the" filmed entertainment" industry.

I guess if you're a media company with a huge media library that's sitting around generating little revenue, it's a good deal to work with their flat rate "tv style" licensing for streaming (which explains why there's a lot of crummy stuff on there) but it can be a raw deal for small film producers, in which case a VOD vendor like Vimeo might be a better choice.

November 4, 2013 at 5:38PM, Edited September 4, 11:21AM

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Nobody

John Fithian and NATO are incensed, but all Sarandos is doing is daring NATO to compete by innovating, like everyone else. I can order dinner from restaurants to be delivered to my house every day. But do I still go out to restaurants? Yes. Because the service is better, the atmosphere is more stimulating, the food is hotter/fresher, the experience is premiere. NATO can cry that doing away with theatrical windows would kill movies, but that's only assuming the cinema stays exactly as it is now...crappy and unimaginative, and notably how it has been since the age of the dinosaurs, when many other industries have since reinvented themselves many times over. Theatres can fight modernity or they can focus on improving the tragically lousy in-theatre movie experience and innovate. It doesn’t seem that hard to me to offer something that Netflix could never rival through access alone. See my open letter to Fithian on this subject here: http://bit.ly/1aw5p5z

November 4, 2013 at 7:47PM, Edited September 4, 11:21AM

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Anne DeAcetis

Love the idea of the annual subscriptions and boxes like at the opera.

November 5, 2013 at 7:14AM, Edited September 4, 11:21AM

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I pray theatres don't go away entirely just yet. As someone who has high sensibility for the tech side of things as it relates to film, I don't know what can replicate a proper intent-oriented Dolby atmos sound mix and shot-for-imax resolution at home, yet. But it's wishful thinking cos the average consumer doesn't know/care about all that. They have flat screen hdtv and buy dvds, sometimes bootleg. For them, there's more to a movie than the film, there's celebrity culture/fan-dom, watching the latest release-war with friends, YouTube and reality tv taking over the fake-reality that is most movies(have u guys noticed the breathy method of delivery of most actors, that's in vogue) and the get what I want now-mentality

November 4, 2013 at 11:29PM, Edited September 4, 11:21AM

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thadon calico

Well you and the speaker in the video agree, then...he's not proposing anything bad happen to movie theaters at all. Dozens of misleading headlines across the Internet about this video are, but he's not.

November 5, 2013 at 1:35AM, Edited September 4, 11:21AM

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trackofalljades

When the wife and I go to the movies it's like a date for us. We will stop and have dinner out then the movie theater. We use to rent DVD's but stop that about 8 years ago because the story line would look good, but start watching them and turn the off after 15 minutes in to them. I don't know if it our age 58 years old we like a movie with a good story.

November 5, 2013 at 8:30AM, Edited September 4, 11:21AM

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Michael Bishop

This is from Yahoo Finance. Amazon will invest $1B in the original programming and Netflix, according to them, is investing $2.5B (not sure over what time frame). Plus, there are other players.
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http://finance.yahoo.com/blogs/breakout/amazon-bet-1-billion-cut-cord-wh...

November 5, 2013 at 7:10PM, Edited September 4, 11:21AM

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DLD

November 6, 2013 at 11:44PM, Edited September 4, 11:21AM

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TV the future of Indy? Erm, it already is. Has been for a while. Features between 10-40m US are shunned by the studios, anything less is now only viable for SEIS/EIS or independently financed, and it makes more business sense to have a high production value, returning series with a long-tail than a feature with not much box office clout and little in the way of repeat sales worldwide. The current fund I'm working with ATM looks at 2nd tier, star driven projects for both theatrical and TV in the 10-40m bracket, with a 10 year roll facilitating up to £200m in production financing. No first or second timers, though. At all.

I think what Netflix have done is not about Indy vs Studios, but have changed the way people access their content - i.e. eat all you want, when you want, instead of the old spoon fed hold and release, rinse and repeat models.

Interesting Ted says;

"Get us a good spec script, tell us how it will play out in the next three to five years, and ideally, attach some talent to it"

In July this year I managed to track down the email address of what I was told by a member of Netflix staff was the submission contact for scripts/pitches to Netflix, only to get the reply:

"We appreciate your interest in and inquiry about Netflix's original programming. Unfortunately, we don't accept or review unsolicited material or ideas. For that reason, we won't consider any creative materials or ideas we receive that were not specifically requested by Netflix, including yours, and will instead destroy them."

So, how does Ted expect us to send him these "good spec scripts" of we're back to the old "no unsolicited materials or ideas"?

Answers on a postcard...

M

November 11, 2013 at 1:27PM, Edited September 4, 11:21AM

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Mike