Looking Back: 2004 — Double-Digit Gains Fuel DVD Mania

DVD was launched in 1997, but its peak year didn’t come until 2004, when sales targets were routinely broken, and studio executives were ecstatic over yet another year of double-digit growth. TV DVD alone was bringing in an estimated $4 billion in sales, prompting Sony Pictures Home Entertainment to hold gala parties in New York and Washington, D.C., to celebrate the DVD success of “Seinfeld” (and the induction of the iconic “puffy shirt” into the Smithsonian). While all eyes were on disc sales, Netflix had quietly resurrected the rental business with its subscription DVD-by-mail service, although few believed founder Reed Hastings when he said disc rentals would soon be replaced by movies streamed over the internet. (Photos courtesy of the Media Play News archive)

Ted Sarandos: Netflix Looking for ‘Excitement’ in Live-Sports Streaming

With Netflix recently adding a live streaming boxing rematch between undisputed super lightweight world champion Katie Taylor (23-1, 6 KOs) against unified featherweight champion Amanda “The Real Deal” Serrano (46-2-1, 30 KOs) on the undercard of the Mike Tyson vs. Jake Paul fight July 20 from AT&T Stadium in Arlington, Texas, the streamer is all-in on signature live events, according to co-CEO Ted Sarandos.

Ted Sarandos

Speaking on the company’s April 18 fiscal webcast, Sarandos added no updates on longstanding hard “no” about whether the streamer might engage in procuring streaming rights to professional sports leagues when their TV contracts come up for renewal over the next 10 years. Instead, the executive said he believes the drama of singular sports events is what motivates viewers, such as the original split decision for Taylor over Serrano on April 30, 2022, at New York’s Madison Square Garden. The fight was the first women’s boxing match to headline MSG and more than lived up to its billing.

“There’s something incredibly magic about folks gathering around the TV together in the living room to watch something all at the same time,” Sarandos said. “We believe that these kind of ‘eventized’ cultural moments … are just that kind of television that we want to be part of winning over those moments with our members as well.”

Sarandos said the streamer has signed up 52 weeks of live “WWE Monday Night RAW” beginning in 2025, part of a reported $5 billion license deal between the streamer and WWE.

“We think it’s going to be a real value-add to watch those things in real time,” he said. “And we’re going to continue to try a lot of new things, but the core of it is, do our members love it? And judging from the early excitement around the Jake Paul, Mike Tyson fight, there’s going to be a lot of people waking up in the middle of the night all over the world to watch this fight in real time.”

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Netflix Not Scaling Back Original Movie Production, Despite Pending Exit of Studio Boss Scott Stuber

Netflix’s Hollywood-leading 18 Oscar nominations came the day after it was disclosed that Scott Stuber, chairman of films for the streamer, would be exiting the company in March to start his own company.

The departure comes as Netflix in 2023 saw increased subscriber interest in third-party licensed content, such as “Suits,” and “Young Sheldon,” in addition to licensed Sony Pictures (The Equalizer 3, Bullet Train, No Hard Feelings) and Universal Pictures (The Super Mario Bros. Movie, Minions, Trolls, The Boss Baby) movies.

Scott Stuber

While no reason was given for Stuber’s pending departure, whose position will be handled by chief content officer Bela Bajaria in the interim, co-CEO Ted Sarandos, who made no mention of Stuber on the Jan. 23 fiscal webcast, reiterated the streamer’s ongoing motivation for spending big to produce critically acclaimed feature films, in addition to licensing third-party content.

He said that by some accounts The Mother, about a former covert assassin turned single mom played by Jennifer Lopez, was the most-watched movie in the world in 2023.

“Our original movies are attracting some of the biggest audiences in the world,” Sarandos said, adding that Netflix original movies comprised 48 out of 52 weeks on Nielsen’s Top 10 movies chart in 2023.

Current action thriller Lift, co-starring Kevin Hart, has dominated the streamer’s overall viewership for the past two weeks through Jan. 21, a benchmark rivaled by the streamer’s apocalyptic thriller Leave the World Behind, co-executive produced by former President Barack Obama and First Lady Michelle Obama.

Netflix’s Oscar nominations are led by Bradley Cooper’s Leonard Bernstein tribute Maestro with seven nominations, including Best Picture, Best Actor, and Best Actress, among others.

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“Fans don’t care about budgets and [theatrical] windows, they want a movie that they love. A movie to make them cry, or make them laugh, or give them something to talk about over dinner,” Sarandos said, adding that the streamer’s original movies outperform licensed studio feature films.

“We do not plan the strategy, or the mix, it’s always going to be that blend of first window, second window and deep catalog,” he said. “We think that formula works best to entertain the world.”

Ted Sarandos: ‘Super Excited’ About WWE ‘Raw’ Deal, Expanding the ‘Sports Entertainment’ Market Internationally

Netflix pursued the WWE’s “Raw” live weekly pro wrestling show due to the content’s “sports entertainment” focus, mirroring the streamer’s strategy for producing reality-based docuseries on Formula 1, NASCAR, tennis, golf and the Tour de France bike race.

Speaking on the Jan. 23 fiscal webcast, co-CEO Ted Sarandos said he was “thrilled” with the deal that begins in 2025, but it does not alter Netflix’s heretofore limited interest in live sports streaming. Instead, the executive reiterated that “Raw” hits the streamer’s “sweet spot” revolving around the “drama” of sport, and not necessarily the score, wins or losses.

“Fifty-two weeks a year of live programming feeds our desire to expand our live event [content],” Sarandos said. “But, more importantly, fans love it. For decades, WWE has grown this multigenerational fan base [that] we believe we can serve and we can grow.”

The executive contends the WWE has been historically under-distributed outside of the United States — a key point since the majority of WWE content licensed to Netflix outside of “Raw” is for international markets only. NBCUniversal’s Peacock streaming platform holds the U.S. rights to that WWE programming.

“We can help them, and they can help us build that global fandom around the world,” Sarandos said, adding that “Raw” would help with Netflix’s nascent ad-supported content as well.

The executive said the deal would not increase the streamer’s current $17 billion annual content spending, but rather be a part of that spending. Sarandos characterizes the agreement as the inverse of Netflix’s deal with Formula One, which saw the streamer capture the international auto racing circuit’s fan base and replicate it in the United States.

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“We can build on that as we have with Formula 1, and other sports programming, like ‘Drive to Survive,’ ‘Full Swing’ [golf], ‘Break Point’ [tennis], and the Tour de France bike race,” he said. “Storytelling is part of WWE, so this is a proven formula for us… so, super excited about this.”

Ted Sarandos: Netflix Scaling Back on Original Content Production

Netflix is ramping up licensing third-party content heading into 2024, with content spending around $14.5 billion (down from previous highs around $17 billion), according to co-CEO Ted Sarandos.

Speaking at the UBS Global Media & Communications Conference in New York, Sarandos said the recent Hollywood strike and separate success of former USA Network legal drama, “Suits,” underscored the power of licensed programming, including catalog, on the streaming platform.

“It’s the more natural state of the business,” Sarandos said, alluding the streamer’s exclusive pay-one window access to Sony Pictures’ theatrical releases. “I mean they’ve always built the studios’ [business model] to license [content]. The unnatural state was, I think, the kind of forced vertical integration [toward original content].”

The executive said the fact “Suits,” co-starring Meghan Markle before she quit acting to marry Prince Harry, had been streaming on Prime Video and Peacock with little attention before becoming a streaming behemoth on Netflix, underscores the platform’s appeal. The show was the top-streamed Netflix/Peacock content on U.S. household televisions over the summer, only recently dropping below the 1 billion-minute threshold.

“The show that didn’t make a lot of noise on USA Network,” Sarandos said. “I think that there will be opportunities for us to license, and I think more than just opportunities for us.”

Specifically, Sarandos is talking about the value Netflix brings to third-party content holders seeking distribution. The streamer has been the No. 1 distributor on Nielsen’s weekly charts for movies, licensed and original content since Nielsen began tracking streamed content across household televisions.

“We added a ton of value to that [‘Suits’] IP,” he said. “So, the creators get a bunch of benefit from it, the owners of the IP get a bunch of benefit from it, and more importantly, the fans get a bunch of benefit from it from having [access to a] show that otherwise would have disappeared into obscurity.”

Sarandos, who began his appearance at the investor confab with the unusual tactic of championing Netflix’s accomplishments in a lengthy intro before engaging in opening pleasantries with the presentation’s host, contends the world’s most popular SVOD (in terms of subscriptions) should be the default platform for third-party content.

Sarandos reiterated the success Netflix has had with “Cobra Kai,” the Sony Pictures Television series that floundered previously, and is now being made into a future theatrical release.

“I think we should win those [content] jump balls,” he said. “I think licensing to us has the added benefit of enhancing the value of [everyone’s] IP on top of the revenue stream. Look, it’s a very competitive business, and folks don’t want the shows that didn’t work on their network to work somewhere else. The opportunity for something to get a second life and work is — the payback is enormous.”

News Analysis: Netflix Posts Big Profits While Saying Actors’ Demands ‘Bridge Too Far’

NEWS ANALYSIS — Netflix hit another home run in its most-recent financial quarter (ended Sept. 30). The subscription streaming VOD pioneer exceeded industry expectations, adding almost 9 million paid subscribers worldwide to top 247 million subs.

Revenue over the 90-day period increased nearly 11% to more than $8.5 billion. The streamer saw a 22.9% increase in operating income to more than $1.9 billion, and net income of $1.67 billion, the latter up more than 20% from $1.39 billion in profit in the previous-year period.

Indeed, profit is no stranger to Netflix. Over the past 12 months, the streamer reported quarterly net incomes of $1.48 billion, $1.35 billion and $1.39 billion. The lone outlier was $55 million in profit in the fourth quarter of 2022 when adjusted operating margin for the year remained an impressive 20%.

Netflix was practically immune from the industry shutdowns during the pandemic, and remains aggressive on multiple fronts, including content spending ($17 billion annually) and in rejecting demands in the ongoing SAG-AFTRA labor strike that has seen working actors (not the stars) on the picket line for almost 100 days seeking higher daily compensation in the production of myriad TV shows and movies streaming on Netflix and other platforms.

A chief studio face during the labor negotiations is Netflix co-CEO Ted Sarandos, who grew up in a pro-labor union household, and says he is committed to finding a solution to the strike.

“That union was very much part of my life growing up,” Sarandos said in July. “I remember on more than one occasion my dad being out on strike. I remember that because [a strike] takes an enormous toll on your family, financially and emotionally.”

Yet, when negotiations between SAG-AFTRA and the Alliance of Motion Picture and Television Producers, the entity negotiating with actors on behalf of Netflix and the major studios, broke down last week over a last-minute $1-per-streaming-subscriber levy actors wanted to impose on streamers, Sarandos went public calling the proposed $800 million fee “a bridge too far.”

Speaking on the Oct. 18 fiscal webcast, Sarandos doubled down on the statement, adding the union’s demand “really broke our momentum, unfortunately.”

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“The industry, our communities, the economy are all hurting,” he said. “So, we need to get a deal done that respects all sides as soon as we possibly can. We want nothing more than to resolve this.”

No doubt, Sarandos and other media giant CEOs want an end to the strike and return to business as usual with all parties satisfied. So how would a $247 million levy (247 million subs x $1) break Netflix? The same company that last month shuttered a profitable by-mail DVD rental business generating $100 million in revenue?

Michael Pachter, media analyst at Wedbush Securities in Los Angeles, said the proposed levy at most would require a 15 cents monthly increase in subscription fees for each service. Virtually every SVOD platform has raised monthly subscription prices in recent years, including Netflix just yesterday upping the fees for its basic and premium tiers by $2 and $3 respectively.

“It’s crazy that any of them can claim [the levy] would bankrupt them with a straight face,” Pachter said. “If the cost is really that modest, they should suck it up and pay.”

The analyst said that as the streaming services raise prices, the actors have a right to ask for a financial participation on the back end.

“I think if [the streamers] struck a deal with inflation-adjusted escalators built in, they would never face this issue again,” Pachter said.

Netflix’s Ted Sarandos: ‘We Need to Get a Deal Done That Respects All Sides’

Netflix co-CEO Ted Sarandos started the streamer’s Oct. 18 quarterly webcast interview addressing the ongoing 95-day SAG-AFTRA labor strike that continues to shutter content production throughout Hollywood.

Sarandos said negotiations between the actors’ union and the Alliance of Motion Picture and Television Producers (AMPTP), the trade group responsible for negotiating virtually all industry-wide guild and union contracts for studios and streamers, had come close to a resolution last week when SAG-AFTRA presented a “new” demand calling for a reported $1-per-streaming subscriber fee.

Calling the demand a “levy” unrelated to viewing or content success, Sarandos said the union’s demand “really broke our momentum, unfortunately.”

Regardless, the executive said the AMPTP and Netflix are “totally committed” to ending the strike, which currently shows no sign of a resolution after all parties walked away from last week’s negotiations.

“The industry, our communities, the economy are all hurting,” Sarandos said. “So, we need to get a deal done that respects all sides as soon as we possibly can. We want nothing more than to resolve this.”

The executive then lauded Netflix’s deep content portfolio that he claims has the streamer in good shape through the end of the year and beyond. Sarandos said competition for talent, shows and films continues to increase production costs.

“We’ve managed successfully through that year after year,” he said, adding that Netflix maneuvered successfully through the pandemic, which he reiterated shut down all content production worldwide.

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Sarandos then read off a list of pending content releases underscoring the streamer’s ability to weather production shutdowns for the foreseeable future. The list includes the final season of “The Crown,” new seasons of “Big Mouth,” Spain’s “Elite,” the new series “Berlin,” “All the Light We Cannot See” from Shawn Levy, and “Bodies” from the United Kingdom, among other titles.

“And that’s just on the TV side,” Sarandos said, adding that new movies from directors Zach Snyder, David Fincher and John Hayes and Bradly Cooper’s Maestro, among others, underscore a robust feature film slate.

“That’s all coming in Q4,” Sarandos said.

Ted Sarandos Lauds Netflix’s Final DVD Rental Shipment

Netflix co-CEO Ted Sarandos traveled to the streamer’s DVD.com office in Fremont, Calif., to witness and celebrate the company’s last rental DVD shipped (reportedly Coen Brothers’ 2010 True Grit). Netflix in April announced it would shutter its legacy by-mail packaged media business on Sept. 29.

“Today, after 25 years, we ship our last DVD,” Sarandos posted on social media. “It was a huge honor to join the incredible DVD team in Fremont this week to thank them for being a part something that changed people’s lives. Those iconic red envelopes were so loved that we shipped more than 5 billion of them to cities and towns, big and small that otherwise would have had no access to the variety of films and television shows we made available. Thank you to all of our members and DVD employees for 25 history making years!”

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Netflix also marked the moment with a billboard ad on Sunset Boulevard in Hollywood that read: “DVDs Will Always Be In Our DNA”.

In a separate social media post, Netflix said it “redefined how people watched films and series at home and shared the excitement as they opened their mailboxes to our iconic red envelopes.”

Indeed, since 1998 when it launched the legacy rental service shipping the movie Beetlejuice as its first DVD rental, and running TV commercials featuring Ryan Seacrest, Netflix’s disc business would become a $1 billion annual revenue stream that included the status of being the U.S. Postal Service’s No. 1 commercial customer by volume of mail.

But 10 years later, co-founder Reed Hastings had turned a cold shoulder to disc rental, pushing the company toward its pioneering subscription streaming VOD business, which it continues to dominate today.

“It’s the end of an era, but the DVD business built our foundation for the years to come — giving members unprecedented choice and control, a wide variety of titles to choose from and the freedom to watch as much as they want,” Netflix posted.

But business is business, and Netflix has shown over the years it isn’t shy from making tough decisions. And selling a money-losing subsidiary ($355,000 a day renting discs is apparently unprofitable) to a willing buyer would seem a no-brainer.

Redbox kiosk owner Chicken Soup for the Soul Entertainment reportedly offered to buy the business.

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, believes selling the disc rental business would enable Netflix to cash out one last time on a segment that has been margin positive for a long time.

The longtime Netflix bear turned bull has sung the streamer’s praise more recently as the company ups its annual free cash flows. And selling a DVD business that isn’t officially included in the financials would greatly add to that.

“Hard to understand why they would be so disinterested in selling,” Pachter said.

Netflix Co-CEO Ted Sarandos Laments Hollywood Strikes, Says He Grew Up in a Union Home

Ted Sarandos, co-CEO of Netflix, said he regrets the ongoing writers and actors strikes in Hollywood — a labor impasse he said hits close to home.

Speaking July 19 on the pre-recorded fiscal webcast, Sarandos said the strike taken by the separate unions representing writers and actors was “not an outcome” that Netflix, or any company in Hollywood, wanted.

Sarandos said Netflix is “constantly” at the table negotiating with writers, directors and actors on original content, making deals and transactions that impact the entire industry. Sarandos said he hopes a resolution can be ironed out quickly, while adding that there remain “a handful of complicated issues” at play, which he did not elaborate on.

The executive said the work stoppage has hit close to home since his father was a member of a local electrician’s union when he was growing up.

“That union was very much part of my life growing up,” Sarandos said. “I remember on more than one occasion my dad being out on strike. I remember that because [a strike] takes an enormous toll on your family, financially and emotionally.”

The executive said that “nobody” at Netflix or the Alliance of Motion Picture and Television Producers, the entity negotiating with writers and actors on behalf of Netflix and the major studios, is taking the situation lightly.

“We have a lot of work to do. … We’re super committed to getting an agreement as soon as possible — one that’s equitable … and will allow the industry, and everybody in it, to move forward into the future,” Sarandos said.

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When asked about Netflix’s content portfolio and how long it could last should the strike carry on, Sarandos, without elaborating, said the streamer was prepared across all content genres.

Netflix reports it will bring out more new seasons of existing series than any other streamer, including  “The Crown,” “Top Boy, “The Upshaws,” “Sweet Magnolias,” “Heartstopper,” “Virgin River” and  “Too Hot To Handle,” among other series.

Netflix Cancels Live Advertising Upfront Slated for Company-Owned Paris Theater in New York on May 17

Netflix has canceled what would have been it first live programming upfront for advertisers, slated for May 17 at the streamer’s Paris Theater in New York City. Instead, the event, which typically includes the appearance of content stars, will be held virtually.

While the streamer, which last December launched an ad-supported SVOD option, gave no official explanation for the change, media reports suggest the move was done due to planned picket lines by striking Hollywood writers. With much of the issues surrounding the Writers Guild of America’s strike involving higher compensation for streamed content, the labor strife has been unofficially called the “Netflix Strike.”

Ted Sarandos (Shutterstock image)

With a $17 billion annual content war chest, the SVOD pioneer and world’s largest subscription streaming video platform is an easy target for strikers. At the same time, Netflix has become sensitive to the strike, with co-CEO Ted Sarandos canceling a planned appearance at next week’s PEN America Gala (also in New York), where he was to receive the Visionary Award from the literary group.

“Given the threat to disrupt this wonderful evening, I thought it was best to pull out so as not to distract from the important work that PEN America does for writers and journalists, as well as the celebration of my friend and personal hero Lorne Michaels. I hope the evening is a great success,” Sarandos said in a statement.

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In a statement, PEN said it admires “Sarandos’ singular work translating literature to artful presentation on screen, and his stalwart defense of free expression and satire.”

“As a writers organization, we have been following recent events closely and understand his decision,” PEN said.

With content writers alleging their profession is being marginalized into a gig economy, adding fuel to the fire was last month’s Netflix SEC disclosure that co-founder/executive chairman Reed Hastings and Sarandos saw their total 2022 financial compensation increase to $51 million and $50.3 million, respectively.