Sarandos: Qwikster Intended to ‘Nurture, Grow’ DVD By-mail Business

3 Oct, 2011 By: Erik Gruenwedel

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Netflix chief content officer Ted Sarandos Oct. 3 said the pending rollout of disc rental service Qwikster underscores the company’s long-term focus on digital distribution versus packaged media.

Speaking Oct. 3 in a Q&A keynote session with Miramax CEO Mike Lang at MIPCOM in Cannes, France, Sarandos downplayed recent consumer backlash against the company’s rate hike and Qwikster announcement — realities that have seen share prices plummet and produced seemingly endless comedic riffs on co-founder and CEO Reed Hastings (see latest “Saturday Night Live” skit).

“That certainly has made some headlines,” Sarandos said, adding that Qwikster would by default bring stronger brand clarity to Netflix as a streaming company. “The DVD by-mail business is strictly U.S. and domestic. The idea was to create a separate brand that … could actually nurture and grow the DVD business.”

Sarandos said limiting Qwikster to the United States mirrored its decision not to renew a distribution deal with Starz Entertainment — an agreement he said is confined domestically.

“We are trying to find [content] that scale[s] globally,” he said. “We’re looking more and more [into] how do we acquire rights for multiple territories for streaming.”

Sarandos said the appeal to streaming over physical is the lack of barriers other than language and programing preferences. He said walking around the MIPCOM trade show underscored just how small the global digital world is. He said the old strategy of creating a singular global brand with fragmented content distributed around the world doesn’t work any more.

“How do you take content that is uniquely popular in one part of the world and introduce it to another part of the world? Content that might be big in Brazil in Portuguese [and distributed] in St. Louis is a tough business,” he said.

The CCO said Netflix’s noted user personalization software and recommendation features lend themselves to the global rollout of streaming. He cited the Australian TV show “H2O,” which he said is immensely popular on Netflix in the United States and Canada, yet virtually unknown anywhere else.

Other surprises, Sarandos said, include strong requests for former CBS series “Jericho,” the popularity for Back to the Future movies in Brazil and the fact stand-up performances of Brazilian comic Rafinha Bastos on Netflix are underscored through his 3 million Twitter followers — one of the largest social media fan bases in the world.

“The main thing we have to think about global is put aside all our preconceived notions about what people like and what they don’t,” Sarandos said.

As expected, Sarandos said Netflix subscribers primarily stream TV programming (60%), compared with feature-length movies — a reality that explains the Los Gatos, Calif.-based service’s ongoing efforts to secure original and primetime shows.

By comparison, the executive said Netflix’s by-mail disc rental service has been more movie centric, with 85% of disc shipments geared toward movies.

Sarandos said DVD rentals helped create a “binging” effect toward renting past seasons of TV shows to catch up or become acquainted with a show. Case in point: “Breaking Bad,” the critically acclaimed serial about a high school chemistry teacher with cancer who gets into the crystal meth business. Sarandos said the most popular episode of that show is the pilot from the first season.

“These are brand new people coming into the show four years later,” he said. At the same time, Sarandos said the result doesn’t diminish Netflix’s atttitude toward DVD, just a reflection of consumer preferences.

 

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