(Bloomberg) -- Netflix Inc. Co-Chief Executive Officer Ted Sarandos once worried that his $100 million gamble on the political thriller House of Cards, one of the streaming service’s earliest original productions, could end his career.
In an interview on Bloomberg TV’s The David Rubenstein Show: Peer-to Peer Conversations, Sarandos recalled a conversation he had with his wife, film producer Nicole Avant, who asked if he could lose his job over his decision to approve the series.
“Well, it’s fireable,” he told her.
House of Cards, of course, went on to become a huge hit, as did Netflix’s strategy to invest in original productions. The company now has a market value of over $300 billion and expects to spend $17 billion this year on programming, most of it made in-house. Sarandos said the company still has plenty of room to grow beyond its 277.7 million global subscribers as people replace cable-TV subscriptions with streaming.
“You could double that and still not be halfway to what the pay television universe was,” he said.
Sarandos joined Netflix in 2000, three years after its founding, when the business was still focused on mailing DVDs to customers. The company launched its streaming service in 2007, and has since been copied by the largest players in entertainment and technology, including Walt Disney Co., Amazon.com Inc. and Apple Inc.
“We couldn’t believe it took so long for ‘em to catch up to it,” Sarandos said. “One of the motivators to make our own content was I was pretty sure that if we were right, that all of these people who were supplying us their old shows would never sell to us.”
Netflix popularized a new way of viewing TV, binge-watching many episodes at once, something Sarandos said management saw first in DVDs. Customers would rent a DVD, which typically had four episodes, and then rapidly return it for the next disc in the series.
Netflix now uses algorithms to recommend new programs to customers globally — Squid Game, a dark South Korean thriller, became a hit in its home country and spread around the world within 35 hours.
“I don’t think a human would have decided to do that,” Sarandos said.
In spite of the company’s belief in technology, Sarandos doesn’t see artificial intelligence replacing actors and writers.
“I really mostly think of AI as a creator’s tool, not a creative tool,” he said. “We’re not using it to tell stories instead of them.”
Sarandos also doesn’t see Netflix acquiring a major a film studio. It’s “not in our DNA,” he said. Nor will the streamer be paying up for major sports rights. It is pushing into live events — and is even broadcasting two NFL games on Christmas Day — but its biggest bet so far is showing World Wrestling Entertainment’s Raw program in a deal beginning next year.
Sarandos sees wrestling as the inverse of Formula 1 car racing. That sport was more popular abroad, until Netflix showed the Formula 1: Drive to Survive series in the US. WWE, he said, will get more exposure in foreign markets as result of the Netflix deal.
Nowadays Sarandos is such a fixture in Hollywood he regularly gets pitched ideas when he’s out at restaurants.
“Somebody tells these people in film school, ‘If you ever see a buyer anywhere, sell to them,’” he said. “It’s never worked.”
For the full interview with Netflix Co-CEO Ted Sarandos, watch The David Rubenstein Show: Peer to Peer Conversations on Bloomberg.com and YouTube.
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