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Netflix’s Ted Sarandos Reiterates Spending Big on Content ($17 Billion) Drives Viewer Engagement

In the third quarter Netflix righted its subscriber vessel and generated some of its biggest viewership for original content. Both realities appeared to give co-CEO/chief content officer Ted Sarandos a momentum he hasn’t experienced all year.

Speaking on the Oct. 18 fiscal webcast, Sarandos mentioned the quarter’s honor roll of movies and limited series, including “Stranger Things” season four, The Gray Man, Seabees, Purple Hearts, “Dahmer — Monster: The Jeffrey Dahmer Story” and “The Watcher,” that dominated streamers’ attention.

Indeed, “Stranger Things” season four and “Dahmer” totaled more than 2.1 billion hours of collective streaming in their first 28 days of release to remain No. 1 and No. 2 on Netflix’s all-time most-viewed English language series.

Of course, that content costs money. Lots of money. Netflix is spending $17 billion on original programming in 2022, with designs to up that spending that almost rivals the combined fiscal output of its competitors.

“Look, big shows that folks engage with and talk about drives a lot of [subscriber] growth,” Sarandos said. “I do think people come to value that. And for us, our goal is we’ve got to get them to come to expect it.”

The executive said that Netflix is getting better at “smoothing” out distribution and release dates for original content that he contends keeps subscribers engaged (or coming back).

“Remember … we’ve only been at it for 10 years,” Sarandos said.

The former home video store manager said the practice of synchronized releases of local content for global audiences is playing out with “Sintonia” in Brazil, “The Empress” in Germany, “High Water” in Poland, and “Narco-Saints” in Korea.

“And probably, none was a better example of this than ‘Extraordinary Attorney Woo,’ with 400 million hours of watching around the world,” Sarandos said. “Just a real phenomenon that we can take a show that other folks would view as being extraordinarily Korean and make it work around the world.”

Hitting an apparent nerve, Sarandos returned to the fact that what Netflix is achieving in content output after a decade beginning with no IP or library, now gets more viewing, more revenue and more profit than the streamer’s competitors who have been at it for more than 100 years.

“So, for me, that’s the biggest thing that when you ask, ‘are we sharpening our tools, are we getting better?’ we’re definitely getting more mature about the process,” he said. “We’ve released seven of our most popular releases of all-time just in this last quarter.”

Sarandos said Netflix is working to getting better and better at getting more impact per $1 billion in content spend than the competition.

“That’s how we’re focusing on it,” he said.

With Netflix reportedly shelling out almost $450 million for two follow-up movies to 2019’s theatrical hit Knives Out, including releasing the sequel, Glass Onion: A Knives Out Mystery, exclusively in theaters before streaming, Sarandos bristled at the unusual release strategy portending any future trend.

“Well, first, I’ll tell you, we’re in the business of entertaining our members with Netflix movies on Netflix,” he said. “So, that’s where we focus all of our energy and most of our spends. Our films are always heavily featured in film festivals around the world, because they’re in demand, made by the greatest filmmakers on the planet. And for all those folks who can’t get to a festival, this one-week release on 600 theatrical screens is a way of creating access to the film and building buzz the same thing we’re doing in those festivals.

“There’s all kinds of debates all the time back and forth, but there is no question internally that we make our movies for our members, and we really want them to watch by Netflix. And of course, with one week of release in theaters, most people will see them on Netflix, just like they see all movies.”

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