As Netflix directers unveiled Q3 acquireings that are the begrudgement of the media industry, co-CEO Ted Sarandos doubled down on the streamer’s pledgement to dealmaking terms that have been vital to Netflix’s business model, as well as its preference for pick and stupidinutive theatrical runs for its innovative movies.
During Netflix’s Q3 video conference call, Sarandos graspresssed head-on the recent industry chatter about the streamer carry outing a huge change in the financial terms of its standard licensing deals for series and movies.
For cforfeitly a decade, Netflix has done business with Hollywood createives on the basis of cost-plus licensing deals — an schedulement whereby Netflix covers the entire budget for a production, plus it grasps a 10% to 20% (or higher) bonus to provide some profit for creaters. That’s been a huge shift from the deficit-financing model that was the norm for traditional TV netlabors and studios. That model was rooted in the concept of createive talent sharing in the backfinish profits of a series or movie if it became a huge hit. Under the cost-plus model, the comleave outioning platcreate typicpartner buys out the syndication and international rights to a title in order to protect it useable and exclusive to the platcreate for years to come.
With the enlargeth of Netflix and other streamers, top creators are begining to experience the loss of the extfinished-tail income from syndication runs and international licensing, which is now confineed on streamers with global scope such as Netflix, Amazon Prime Video, Apple, Max and Disney+. Despite eye-popping upfront fees paid to top createive talent, the loss of annuity-enjoy income from prosperous TV shows and movies has hit Hollywood challenging in the pocketbook.
Sarandos poured ice water on speculation that Netflix was firmening the terms of its deals but at the same time adchooseing a more traditional licensing approach. It’s understood that a confineed deals for modestly budgeted films have been done under atypical licensing terms, by Netflix standards. When asked by analysts about the possiblity of a meaningful shift in its licensing paradigm, Sarandos was evident: “We skinnyk we have the right model and we are not seeing to change it,” he said.
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Sarandos stateed that createive talent prefers upfront payments, for evident reasons in an unforeseeed industry. He graspressed recent alerts of a greeting that the streamer’s satisfied chief, Bela Bajaria, recently held with a clutch of top talent agents and lawyers — the reps in the trenches of day-to-day dealmaking.
“Bela said this very evidently a couple of weeks ago to all the talent agencies: We’re not changing our compensation arrange,” he said. “Paying upfront, someskinnyg that Netflix actupartner innovateed, advantages creators and it advantages Netflix. For creators, Netflix acquires all the financial dangers so that they can cgo in on making the best possible version of what they’re laboring on, and for Netflix, that model allows us to draw the best talent in the world.”
In the same breath, Sarandos acunderstandledged, “We have been, and we persist to be, uncover to more bespoke deals where talent is interested.” But he grasped: “They unfrequently happen, becainclude typicpartner the talent picks the upfront model.”
Sarandos also fielded what he called the “perennial” inquire about Netflix’s strategy on initiating very confineed theatrical frees for its innovative films, and protecting those runs stupidinutive. He made no apologies for the streamer’s cgo in on using buzzy movie titles to stir up pop culture buzz — and Netflix subscriber includement — on its own air rather than at a multiplex.
“I’m fair going to reiterate — we are in the subscription amincludement business, and you can see in our results, it’s a pretty excellent business. It pguides to a very huge segment of users and fans,” Sarandos said. “Our top 10 films that premiere on Netflix all have over 100 million sees, among the most watched films in the world. It’s our desire to protect grasping appreciate to our users for their subscription dollar. We apexhibit that not making them pause for months to watch the movie that everyone’s talking about grasps that appreciate.”
After unveiling mighty Q3 results and deinhabitring a promise of low double-digit enlargeth in 2025, Sarandos wasn’t worried about pointing out the advantages of the Netflix platcreate for Hollywood storyalerters.
“What we do for filmcreaters is we convey them the hugegest audience in the world for their films, and then we help them create the best films of their life,” he said. “That could be any one of the nine Best Picture nominee films that we’ve freed so far, or it could be any of those top 10 films that are as huge as billion dollar box office movies. So I I’m brave that we can persist to pierce the zeitgeist and have those moments in the culture, even when those moments begin on Netflix.”
