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Ted Sarandos on How Netflix Develops Original Content: ‘It’s 70-80% Art, and 20-30% Science’

Speaking at SeriesFest, Netflix's chief content officer offered thoughts on Disney+, what separates his company from Silicon Valley tech giants, and more.

Ted Sarandos and Adam Sandler'Murder Mystery' film premiere, Arrivals, Regency Village Theatre, Los Angeles, USA - 10 Jun 2019

Ted Sarandos and Adam Sandler at the “Murder Mystery” premiere

Michael Buckner/Variety/Shutterstock

Netflix has always been fighting for its fair shake in Hollywood, be it breaking in as an original content producer or being considered for major awards. But now it’s facing a fight for dominance in the very market it helped create. While the streaming giant has always gone head-to-head with the likes of Hulu and Amazon, more major corporations are about to get in the streaming entertainment game via their own subscription services — namely, Disney and Apple.

During a conversation at SeriesFest in Denver, CO, Saturday night, Chief Content Officer Ted Sarandos explained the methods that have helped build Netflix into the world’s leading streaming service — and could give them an edge against their competitors — what it’s not doing with subscribers’ data that other companies may be, and what’s “interesting” about the upcoming streaming wars.

First up, Sarandos discussed what goes into the decisions behind selecting original series to produce.

“Picking content and working with the creative community is a very human function,” Sarandos said, per Deadline’s report. “The data doesn’t help you on anything in that process. It does help you size the investment. … Sometimes we’re wrong on both ends of that, even with this great data. I really think it’s 70, 80 percent art and 20, 30 percent science.”

Though Netflix doesn’t typically report ratings, let alone internal research into how subscribers’ streaming habits inform what originals they develop, plenty have speculated that the service’s algorithm helps influence choices. Other reports have highlighted a divide within the company related to those who swear by the tech and those who rely on more traditional Hollywood metrics, which only fuels belief that data drives the company’s decisions.

Sarandos stressed how important industry relationships were throughout the hour-and-10-minute discussion, including how he chose to stay in Los Angeles instead of moving to Los Gatos after joining the company in 2000.

“Most of Hollywood was convinced that the tech guys would come down and clumsily write big checks and would be all gone pretty soon. [They were saying], ‘We’ll be here like we have been been the last 100 years doing this. We’ve seen this come and go, come and go,'” Sarandos said. “And then the tech guys were convinced that all the studio guys were stupid and they were doing everything wrong. It wasn’t a great culture to work together. But because I was [in LA] and started building out the team there … [it got traction because] it’s a relationship business.”

Sarandos also emphasized the difference between Netflix and other Silicon Valley companies, like Google and Facebook — both of which have experimented in original programming through YouTube and Facebook Watch, respectively.

“I know that I feel good that we’re not in any of those businesses that draw that kind of fire,” he said, regarding certain politicians and activists calling on those companies to break up. “Another great reason not to sell advertising. We don’t collect your data. I don’t know how old you are when you join Netflix. I don’t know if you’re black or white. We know your credit card, but that’s just for payment and all that stuff is anonymized.”

Sarandos said Netflix will not incorporate advertising into its service or go after distribution rights to live sporting events, which are two facets of revenue other streaming services will rely upon. When asked about how the incoming competition from Disney, Apple, WarnerMedia, and more will affect the market, Sarandos said there was room for expansion.

“The thing that’s interesting about all these upcoming services, as well as the services that are in the market today, is that mostly they have none of the same programming,” Sarandos said. “Nothing that’s on Disney+ is going to be on Netflix and nothing that’s on Netflix is going to be on the [Comcast and WarnerMedia services]. They’re going to be very unique.”

With that in mind, Sarandos said “it’s very likely” consumers will continue to subscribe to more streaming services rather than cut themselves off at two or three. Recent research has suggested the opposite — that people are fed up with a bloated streaming market — but if we know anything about Sarandos’ operating strategy, it’s that he’s not one to rely on research alone to fuel his decisions.

SeriesFest Season 5 will run from June 21 – 25 in Denver, CO.

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