At the 2014 Golden Globes, Amy Poehler and Tina Fey made an opening speech taking pot shots, as has become traditional, at the major players in Hollywood. But that year, they also trained their guns on a new kind of target. "A lot of nominated shows this year are actually on Netflix. House of Cards. Orange is the New Black," noted Poehler. "Enjoy it while it lasts, Netflix. Because you're not going to be feeling so smug in a couple of years when Snapchat is up here accepting Best Drama."
That Netflix was even rubbing shoulders with the LA establishment - let alone vying for its awards - was in no small measure down to Ted Sarandos. Netflix's 52-year-old chief content officer joined the company in 2000, back when it was in the DVDs-by-post game. He oversaw its transition to online streaming and then instigated its move into original programming. This latest phase has not only proven extraordinarily successful (Netflix Original Series have received 90 awards to date) but is tearing up the TV rule book.
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Netflix is not dependent on advertising. Instead, viewers pay a monthly subscription fee, starting at £5.99 per month in the UK, so the company has been able to do away with televisual norms that serve media execs rather than consumers. Fixed episode lengths? No need when there's no schedule. One-episode-per-week releases? Viewers would surely rather get the whole season at once.
This approach has allowed showrunners to tell longer stories with more cinematic pacing, free from the tyranny of the cliffhanger (look at Netflix's new Marvel drama, Luke Cage - it takes four hours to get past the set-up). Now, other channels such as Sky in the UK and HBO in the US, are imitating the on-demand model, and the impact is travelling well beyond the screen. Discussing last night's TV around the watercooler, for instance, is no more. The tolerance audiences once had for delayed gratification is going the same way. In November 2015, the Collins dictionary made "binge-watch" its word of the year.
But the audience gives something precious in return. Netflix amasses vast amounts of information about its 86 million-plus customers' viewing habits. What they're watching is also assigned granular metadata. By combining the two, Sarandos has been able to upend the traditional small-screen business model. For one, Netflix's recommendation engine is highly informed, thereby sustaining a long-tail of niche content. But, more importantly, the algorithm has enabled Netflix to commission shows without having to test a pilot. Such is his confidence in this approach that Sarandos ordered a second season of Orange is the New Black before the first had come out.
In 2016 alone, Netflix released more than 600 hours of original programming; in 2017 that will rise to 1,000 hours. The consequences for the wider industry have been palpable. In addition to injecting competition, the service has pushed up costs. According to Dan Rayburn, executive vice president of industry analysts StreamingMedia.com: "They needed [House of Cards] so badly, they overpaid, some would say, and as a result they set a precedent in the market where now everyone thinks that's what they're worth."
More recently, Netflix has also got into the movie business, with original films such as Ricky Gervais's Special Correspondents and a four-picture deal with Adam Sandler. Directors are reconciling themselves to a new reality: their next project may never see the big screen.
And although Netflix might be forging the future, the future may not be solely about Netflix. On that Golden Globes night, Poehler's reference to Snapchat, like all good jokes, contained a kernel of truth. Other tech companies such as Amazon and, more recently, AT&T, are after Netflix's market share; precariously, Netflix is $3 billion in debt. "What if," asks Rayburn, "Amazon decided one day that it could give Prime streaming away for free because it had the data to show that, if it did, people would buy more goods and services?"
So what will Sarandos's legacy be in the longer term? "Netflix has made it easy and simple for consumers to realise that they can get content on demand, whether it's from Netflix or someone else," Rayburn says. "Its output was on every single device, and its app was easy to use and reliable." This set the foundation for everyone else in the market. "And that is the biggest thing that we should be thankful for."
This article was originally published by WIRED UK
