Netflix Co-CEO Ted Sarandos on diversity efforts and future of theaters: ‘You've got to follow the audience’

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Ted Sarandos, the co-CEO and chief content officer of Netflix, has been with the company since 2000, back when the streaming behemoth was sending folks DVDs in red envelopes.

Netflix recently released a diversity study of its U.S.-based programming. USC Annenberg’s Dr. Stacy L. Smith runs that study, which is ongoing. Sarandos says the idea of hiring a third party to look at Netflix’s diversity performance came to him about three years ago, when some companies were talking about signing pledges to meet race and gender goals. 

Sarandos says, “I didn't want to sign us up for an arbitrary quota, I wanted to commit ourselves to a state of constant improvement.” 

Sarandos also talks about streaming wars, the future of theaters, talent relations, viewership data, and more. 

The interview below has been edited for length and clarity. 

KCRW: The recent Netflix diversity study showed gender parity in leading roles, correct? 

“Absolutely. Gender parity in women in leading roles, industry-leading in women directing. I don't think those two facts are disconnected. And similarly, our Black representation on-screen exceeded the [proportion of the] Black population in the United States, which is good news. 

And there are other things where it was very clear that we have work to do. For presenting folks with disabilities on-screen, we under-indexed the population. For Latinx storytelling, we under-indexed the Latinx population. And we still have some work to do in LGBTQ representation as well.”

The plan now is to invest $100 million over five years to develop talent? Your overall budget for programming is huge, but you already had initiatives in place, is that correct?

“Yes, it's an additional $100 million for just developing new voices and new talents. One of the big issues with inclusion in the entertainment community has been that it's a pretty closed network. You know somebody, and that's how you get in, and it's where you went to school. There are a bunch of different things that make it pretty difficult for new people and voices to be heard. 

What we're trying to do is develop programs that put folks in the network. One of the ones I'm really excited about is a showrunner program, where our producers can nominate candidates for it. It’s a soup-to-nuts training program on how to run a television show. And at the end of the process, they ultimately direct an episode of television. It's real practical experience that gets folks who already exhibited deep interest and skill at doing this, and gives them a chance.”

And having decision makers who are buyers is the other really good thing. In this industry, it’s usually a white man who’s at the top of every company. Down in the hierarchy, you start having some women and diversity, but not a whole ton. 

“I agree. And I do think it's important that my creative content team has to reflect the world that we're serving, and they're more likely to hire directors and creators who look like the world that we're serving. Who's behind the camera has a lot to do with who's in front of the camera. Who's in the executive suite has a lot to do with who's behind the camera. It's ongoing work that we've been working on from the beginning. 

I think our outsider nature gives us the ability to do this better than others. I didn't grow up in this business. I didn't grow up in Hollywood. I'm not second, third, or fourth generation in this business. I didn't even grow up in this town. There's a lot of deeply-ingrained cronyism that happens that we have never really been a part of.”

Up until recently, the people who have power in Hollywood seem to be more exclusive than those in the Senate. I don't know many businesses where it's so concentrated with true legacy kind of power.

“If you dig deeper, our teams at Netflix have unprecedented greenlight authority. I have directors who work at Netflix who have more greenlight authority than the president of a network or studio. So it's not just important that you have the people in your employ, you also have to distribute the power to them. 

When we're moving at the speeds that we're moving, and have the number of projects that we're doing around the world, people have got to have decision-making authority. And holding them accountable for their decisions is pretty unique to the business. The people who work at Netflix who inbound these projects have the ability, without a greenlight committee or having to run it up the flagpole, to say yes. And I think it's what has driven a lot of those results that came out of that study.”

Are you doing this because you're good citizens? Or is it because it's good business? Or do you get the combo platter?

“It's definitely a combo platter. I think it's really good business. It's clearly that people want to see themselves reflected on-screen. And that starts with the organization itself. Half of our leadership team are women at Netflix, half of our leadership team are people from underrepresented communities. Our films are 23% directed by women and 25% written by women, which is fantastic. 

Charlize Theron in “The Old Guard,” directed by Gina Prince-Bythewood. Netflix says the film was one of its most successful of 2020. Photo by Amy Spinks / Netflix

Our most successful film of all time, “Birdbox,” was directed by a woman, Susanne Bier. One of our more successful films in 2020, “[The] Old Guard,” was directed by a woman of color. And these are big action movies. It's important to not think that women make a certain kind of movie, or a director of color makes a certain kind of movie. They make the movies that people want to see, and they're really great at it. That's real opportunity, I think.”

In the early days of Netflix, the philosophy was: We are not doing theatrical releases unless it's day and date [movies are released in theaters and streaming platforms on the same day]. It seems like that is changing as you've gotten to know Hollywood, and maybe as Hollywood has gotten to know you. Am I seeing that right?

“It's not that we changed. Our core is that we make movies for our members. The only thing I ever objected to about the theatrical releasing of our films was that theater owners would require a very long window of exclusivity to have access even to a single screen. That's what I was reacting to. I did not want to hold back a movie for 200 million fans around the world so I could show them in a single theater in New York or LA for a week. That to me was the big disconnect. 

I don't think that consumers who are looking for a great film to watch are thinking about where it was first. They're just looking at: Is this a film I care about? So we invest in those films accordingly. We've been able to gradually work through those things. Even in the pandemic, “The Midnight Sky” has played on about 800 screens around the world. Out of necessity, people are more flexible and creative about windowing. If we can put them in screens to give people who want to go out and see a movie the opportunity to do that, that's a great thing, as long as we can do that in a way that doesn't interfere with the core business.”

George Clooney and Caoilinn Springall in “The Midnight Sky.” Photo courtesy of Netflix. 

Can you give us some sense of how long you could be comfortable with a certain number of screens? The legacy studios are obviously breaking the window, and the number seems to shift depending on who you're talking to.

“I agree. But it's a conversation that, I'm going to assure you, no movie lover is having. People just want to watch new movies, and they won't have access to them. And most people don't even have a theater in their neighborhood.”

Filmmakers care, though. It's the passion of the filmmaker.

“And I'm not trying to stand in the way of that. We're trying to enable as much as we can. We bought the Egyptian Theatre in LA, and we bought the Paris [Theater] in New York, so that we would make sure that we'd have access to it, even if other folks who controlled screens wouldn't give it to us. But that's not a big, scalable answer. 

Most people watch most movies at home. And going out is a very different experience. Seeing the movie on a big screen is great, I miss it terribly. And I hope it all comes back healthy and that I could have those opportunities to get back into theaters, both for filmmakers, and for film lovers like me.”

I do wonder about the sustainability because if you don't support theaters, at a certain point, it collapses. And we may be close to that point. What are your thoughts on that? 

“You've got to follow the audience. And if the audience isn't showing up [to theaters], and they're showing up watching at home, you have to adapt. Seeing a movie in a theater might just become rarer. It's a very hard thing to figure out what post-pandemic behaviors will be and how they shift. There's a big financial infrastructure required to support screens that has to ultimately be supported by the fans and the viewers.”

Do you think that legacy studios are going to be harmed by trying to preserve their theater business, which costs so much to market, while trying to stream at the same time? Your mission is clear, but they are trying to do two things, it seems.

“When businesses change, when consumer behavior changes radically, how you navigate those waters is so hard. You might say that not being diversified in our business approach is a challenge. But it's actually been such a blessing that we've not had to try to save a business. Once your primary role is trying to save a business, you're dead. 

Remember, we made the transition from DVD to streaming. We never spent a minute trying to save the DVD business. Our future was always going to be in streaming, and any energy we spent trying to save the DVD business was energy that wasn't being spent trying to create the streaming business. Putting the consumer first was really important. Once you see that happening, you've got to go all in.”

Netflix can harvest very precise data about who watched what for how long, but they don't share that precious information publicly. It feels like data is going to be a looming battle. Do you think you have a date with destiny in terms of data? 

“No. We've become completely open and transparent with our producers, and increasingly transparent with the public. When we were the only ones doing this, it was very hard to have apples-to-apples comparisons on the data, so we didn't want to be blanket publishing everything, because there was no context. 

We're looking at it as: What's the cultural relevance? This is the kind of first 28 day viewing that we talked about on Netflix as having some cultural relevance to the press and to the folks who read it. The people who make the content want a little more level of detail, and we do share that with them because it helps them become better connected to our audiences. We're not trying to hide anything by not being transparent. We're just trying to position it. When streaming is more and more the norm, I think that there will be some uniform way of looking at data.”

In terms of talent megadeals, you've taken some blowback on some of them, while others seem to have worked out magnificently. Do you just throw the dice when you like a talent?

“We kind of foresaw a day when most of our suppliers were going to be competitors in some form. We believed from the beginning that if this was going to be the evolution of filmed entertainment, that the people who make our TV shows and films are not going to want to do that for us for very long. They're going to want to do that for themselves. 

So access to talent is very important. There's a long history of these overall talent deals with Warner Brothers, ABC, Disney, and others. We had, in the past, been able to have them make shows for us under the terms of those deals. And increasingly, what we predicted would come true did come true. Those studios did not want to offer us those programmings anymore.”

They finally figured that one out. It took them a while. 

“Those talent deals were just the way to make sure we had access to the greatest creators on the planet. It wasn't like we chose to do this, and we could have done it otherwise. That's just the way the business worked. I don't know that it will always be that way. There's something great in having the flexibility to work all over town if you want. 

What's happening now is that through those studio overall deals, they don't have the ability to work all over town anymore. You have to look at those relationships over a very long window. This is IP [intellectual property] development that takes several years, and very long just to come to screen. And then after that, has a long tail of the IP that was developed during that time.”

When you look at the landscape now, who are you watching out for? Can you forecast a little for us?

“One thing that's for sure is it's a competitive landscape, for members and for talent. But I've been very impressed with the entries. The rapid growth of Disney+ has been commendable. HBO Max is a fine product. Discovery Plus is a very impressive entry. All of these different things will lead to more cord cutting, more hours of watching on-demand platforms. The linear television world becomes a little more hobbled, and the direct-to-consumer, streaming, on-demand universe becomes more robust. That's a good thing.”

You’ve been doing massive expansion around the world. Can you talk more about that? 

“What's been really encouraging and exciting is the global reach of content from anywhere in the world. One of our most successful shows is “La Casa de Papel,” in the U.S. it's called “Money Heist.” It's in Spanish, we shoot in Spain, and basically [it’s] a show for the Spanish-speaking world. But people watch it in enormous numbers everywhere in the world, including in the United States. When Bong Joon-ho won the Oscar for “Parasite,” he made this reference to Americans needing to get over the “one inch wall,” meaning subtitles. We've been seeing that happening at Netflix for years, including making “Okja” with Bong a few years ago, which was a very global film from Korea. 

Omar Sy in “Lupin.” Photo courtesy of Netflix. 

In the last couple of months, “Lupin” from France has been our most successful non-English language series launched on Netflix to date. We have hundreds of original shows in local languages, filmed with local producers and local storytellers all over the world. While we’re tracking and talking about all this in the middle of award season, we're growing a real global streaming business that's creating content from everywhere in the world, for everywhere else in the world. And that's been an incredible joy to see come together.”




Kim Masters


Kaitlin Parker