After seriously disrupting the television market with cable-beating shows like House of Cards and Orange is the New Black, Netflix’s move into original feature film production was always going to be one for the industry to watch. And chief Ted Sarandos hasn’t disappointed, committing $90 million to David Ayer’s Bright, of which half has gone on salaries and back-ends for the filmmakers and stars, including Will Smith. Sarandos wanted his first big franchise, and he got it. And then there’s the Brad Pitt-starring War Machine from Aussie auteur David Michôd, which shot in London last year, and Adam Sandler’s Ridiculous Six, the first of a four-picture deal Netflix made with Sandler’s Happy Madison Productions. Last year’s Beasts of No Nation picked up Indie Spirits and a Golden Globe nom, though it didn’t follow through to Oscar. This eclectic spread is his studio slate, Sarandos says, but that’s where comparisons to the establishment stop. With a global platform delivering his originals direct to audiences, he wants to re-envision the distribution landscape.
DEADLINE: I have covered festivals like Sundance and Cannes, and the markets, for material for a long time, and the biggest disruption has been how companies like Netflix and Amazon have supplanted studios as the main buyers of big properties.
SARANDOS: We’re not the same.
DEADLINE: These are different mousetraps for sure, but among other films this Cannes, they took the backers of Woody Allen’s film out of a risk position, then found a distributor and put it on Amazon’s service.
SARANDOS: They put themselves in the place of Sony Pictures Classics. That’s not really a disruption, as much as it is a replacement. What I’m trying to do is take the benefits and the beautiful byproduct of the internet, which is all about consumer choice, and apply it to movies where no one else has. The theatrical movie window is the only window that really still exists. Every other form of entertainment is pretty much available to consumers where and when they want it. Perpetuating the movie window—adding new money to perpetuate the old system—I don’t think is really that interesting.
DEADLINE: There are clear distinctions, but much like Screening Room, you are all disruptors trying to find niches in a changing landscape.
SARANDOS: If Screening Room happened, that would be real disruption. I love those guys [at Amazon] by the way. Bob Berney did one of our first streaming deals, for a Susanne Bier movie called The Heartbeat. That was disruption back then, almost nine years ago, to take a movie and open it on Netflix. That was really bold back then.
DEADLINE: It doesn’t seem that long ago we were all putting DVDs in red envelopes and mailing them back and forth to Netflix. Blockbuster had all these brick and mortar outlets, and you proved they weren’t necessary. Back then, how much of your current business was a realistic goal, where you would be financing star caliber movies and TV series for members around the world?
SARANDOS: I met Reed Hastings in 1999 and our discussions then were about Netflix, almost exactly like it is now. Except it was downloading. That’s why he didn’t call it DVDflix or DVDmail or Mailflix or anything like that. The eventuality was all about the content, that every piece of film entertainment would come into the home by the internet. That was Reed’s belief in 1999. That week that I met him, my first internet transaction was to buy that plane ticket, and that week someone emailed me a video clip of South Park. It felt like it took a month to open, so it didn’t seem to me that this was the common belief. It was a pretty bold abstract, and he was 100% that Netflix would be a pure digital company. If he was wrong about anything, it was that we’d still be shipping DVDs in 2016.
But the key was the global platform, the idea that physical distribution is fragmented out of necessity and that the internet would remove that necessity because it’s a form of distribution that doesn’t need to be fragmented. There’s no physical supply chain. So the idea that you could do something on a global platform was impossible then and more than possible right now—and the norm. Netflix now, we’re in every country in the world except for Syria, North Korea and China. When we launch our movies and TV shows, we launch them everywhere at the same second. When we buy a movie at Sundance, it’s available to the whole world.
DEADLINE: Perhaps the most disruptive thing you’ve done so far was commit $90 million to Bright, the David Ayer-directed Max Landis-scripted film that stars Will Smith and Joel Edgerton. Studio execs groused and said they need to turn a profit on each movie and couldn’t spend that much; they said your concern was Netflix’s Wall Street valuation so you can overspend. How does Bright serve your model?
SARANDOS: We don’t spend any time talking about Wall Street when we do content acquisition deals. It serves our model probably in the same way it does to make a season of House of Cards. It’s about making content that people love, value and associate their Netflix membership with. So when they say, “I’m a subscriber to Netflix because I love Orange is the New Black,” or, “I can’t wait to see The Crown,” they know they can’t do it anywhere else. Movies, it’s tough to have the same economics because it’s two hours of watching instead of 13 hours. But Bright is a movie that they would have seen in the theater, yet because they’re Netflix members they get to watch it whenever they want, wherever they want, at the same moment. There’s no window, no waiting. The producers will make money, and they chose this over the other models. They didn’t do it because they had a point to prove or they had any interest in Netflix’s value market gap. They did it because this was a more profitable way to make and release movies. Our first ambition is that it becomes like a major studio slate.
DEADLINE: And you want to be in on these movies really before they go into production, not on an acquisition?
SARANDOS: By the time they get into production they’ve sold off territories. That doesn’t work for us. We want to be global with the films. That isn’t to say we don’t buy individual territories—we do opportunistically—but for the most part our original features initiative is about hitting the globe and improving distribution. So when I say I think about it as a slate, I think about it both in volume and scope from a couple of tentpoles, some nice films in the middle, and some great independent.
DEADLINE: How are directors taking to the idea of streaming over theatrical?
SARANDOS: It’s funny. A lot of directors will come in and they will talk about the movies that they saw, and these are the movies that influenced them and made them want to be a filmmaker, and in almost every case they watched them at home on a VHS tape. There’s a romantic notion about the film being on a big screen. There’s definitely something about a premiere at Eccles that you can’t replicate—that I can’t replicate—but the fact is, that happens for a couple hundred people once a year. We’re doing it every day for the world. People who are discovering a movie that might change their life; that’s who they’re talking to. We have to get rid of the romantic part. I don’t really think that they’re mutually exclusive. I think over time that these films will get booked into theaters at the same time they’re on Netflix.
DEADLINE: As you continue to evolve, how important is re-upping your content deals with the likes of Miramax and TWC? The old films versus the original films you’ll make.
SARANDOS: We said in the US, which is a meaningful part of our business, we have output deals. The Disney deal starts this year and the Weinstein deal starts the end of the year, and those will be our output deals. In the last round of renewals, we weren’t even bidders, and we won’t be bidders in future single-territory output deals. What I’m really excited about is our original films that we’re producing. The ability to buy the pay-TV window worldwide like we did with The Big Short, so that movie will be available with a slightly accelerated window, but available the same time around the world. I think that we can be involved in business that will accelerate the windows and line up geographies over time to complement the original features as they roll out, and also beyond those we’re also doing the festival pick ups and preemptive buys; pre-festival, when movies are in the development stage.
DEADLINE: How important are those to you? Like for instance The Birth of a Nation, where you came in with a superior bid but they chose to go the Searchlight route.
SARANDOS: I think Nate [Parker] is a tremendous talent. That’s a very important movie. We had a very aggressive bid on the table and we just had a differing view of the kind of movie it was. I think there are people that think a movie is not a movie unless it’s in the theater, and there’s a generation just behind us that thinks it’s not a movie unless they can stream it. With that movie it was very important to reach young audiences, too.
DEADLINE: What have been the big lessons you’ve learned along the way with all of this?
SARANDOS: I just feel like everything is such a work in progress, and every day there’s big setbacks and big triumphs. You just have to take them all in balance. What’s cool is we can bring a global footprint to local storytellers like nobody else. In the past, somebody said that, because we’re doing so much original content, we were going to run out of writers. And I said, “If you think the only writers are in America, then yeah.” You might run out of writers in America, but the world is full of great writers and great storytellers.