Netflix and Amazon are streaming-service rivals, but today the two were united as defendants in a multimillion-dollar defamation and wrongful-termination lawsuit by a former employee of both companies. In his suit filed in Los Angeles Superior Court (read it here), which also names top Netflix execs Reed Hastings and Ted Sarandos as defendants, Jerry Kowal is seeking at least $1 million — and damages potentially worth millions more. The former Director of Content Acquisition for Netflix claims he was “blacklisted” by the company after he left to join Amazon’s streaming business and that Netflix falsely accused him “of stealing confidential information, disclosing confidential information to Amazon, and using confidential information to compete against Netflix.” In what the suit refers to as “the proverbial David and Goliath,” Kowal says Netflix “did everything it could to dissuade him” from leaving to join Amazon. And when he did exit in June after a year on the job, Netflix “proceeded to interfere with Kowal’s employment with Amazon in a malicious attempt to ruin his reputation and prevent him from working there and leverage its substantial business relationship with Amazon to guarantee that Kowal would be terminated from his position at Amazon and would be substantially hindered in his efforts to secure comparable replacement employment.”
Netflix chief content officer Ted Sarandos kicked off his quickfire Bloomberg and Tribeca Film Festival Business of Entertainment breakfast by defending his recent back and forth with theater owners. “I wasn’t calling for day and date with Netflix. I was just calling to move all the windows up to get closer to what the consumer wants,” Sarandos said of his incendiary October 26 speech that riled up theater owners. “I think there’s a better business in giving people what they want than creating artificial distance between the product and the consumer.” A week after accusing theater owners of killing the movie business with inflexible theatrical windows, Sarandos maintains his position that what’s good for the consumer is good for the film and TV industry. NATO CEO John Fithian hit back at Sarandos, accusing Netflix of only looking out for Netflix at the expense of the film industry, but “[Fithian] and I don’t have uncommon ground,” Sarandos told me. If Netflix starts producing original features suited for theatrical exhibition “we of course would seek screens, for more choice.”
On Saturday, Netflix chief content officer Ted Sarandos outraged NATO when he slammed theater owners with potentially killing the movie business. Here’s Sarandos’ keynote speech at Film Independent‘s 9th annual confab at DGA HQ.
EXCLUSIVE: NATO president/CEO John Fithian struck back at Netflix chief content officer Ted Sarandos, who today gave the keynote speech at the Film Independent Forum and charged theater owners with potentially killing the movie business by being inflexible with shrinking theatrical windows. Fithian said that if anybody is imperiling the time-tested movie going experience, it is upstarts like Netflix.
“Subscription movie services and cheap rentals killed the DVD business, and now Sarandos wants to kill the cinema as well,” Fithian said. As for Sarandos’ assertion that studios should offer their films on Netflix day and date with theatrical openings, Fithian said that “The only business that would be helped by day-and-day release to Netflix is Netflix. If Hollywood did what Sarandos suggests, there wouldn’t be many movies left for Netflix’s customers or for anyone else. It makes absolutely no business sense to accelerate the release of the lowest value in the chain.”
Netflix is just the latest party to join the ongoing argument over how movie distribution models should evolve, if at all. TV has grown nimble, with cable systems and networks making it easier than ever for audiences to catch shows so that initial air times are almost irrelevant. In the independent film space, multi-platform releasing continues to grow as a viable alternative to a theatrical model which requires a significant P&A spend. The major chains have largely refused to play ball, and often force multi platform distributors to “four wall” screens, instead of the revenue split formula that is usually the way distributors and theaters do business. Many have argued that it is inefficient for studios to spend huge P&A sums to open films in theaters, and then be forced to wait half a year or more, and spend more money to rebuild awareness for the DVD, VOD and pay windows for films that consumers have long since forgotten about. But the last time a studio tried to buck the system, as Universal did on the Brett Ratner-directed Tower Heist, the major film chains banded together and arm-twisted Universal to shut down a limited test that would have offered day and date VOD viewing at a premium price. The theaters are protecting their own business, after having gone to the expense of building and upgrading theaters all over the country.
Related: Netflix Shares Hit New Highs in Q3
“Our intent is that the show keep going for sure,” said Netflix‘s Ted Sarandos today. “It was a 26-episode commitment. It was not our intent that it just run for two seasons,” he added of House of Cards’ run on the streaming service. Netflix’s Chief Content Officer was delivering the keynote Saturday at Film Independent‘s 9th annual confab at DGA HQ. “Talks are in progress right now,” he told me afterwards on a further deal to lock in more seasons of the Emmy-winning political drama, “so stay tuned.” Former House of Cards EP Rick Cleveland said last month that the series would wrap up after its second season. The lack of any new deal announcement despite the breakout HoC proved to be for Netflix fueled speculation about its demise after the current two season deal was up. The second season of the Kevin Spacey starring series, which is presently in its last week of production, is expected to debut on Netflix early next year. The Film Independent Forum continues Sunday.
Related: Netflix Shares Hit New Highs in Q3
A lot of tidbits from Netflix‘s quarterly conference call with analysts — including the fact that the final season of Breaking Bad won’t be available on the service until 2014. But one of the most interesting disclosures is that the execs want to back movies — which they would transmit to living rooms faster than conventional Hollywood productions do. The company is “actively looking at documentaries,” Chief Content Officer Ted Sarandos says, though he adds that he’ll “keep my mind wide open” for other genres. The company’s intrigued in part because it wouldn’t have to wait for its titles to sell on home video before it can stream them to subscribers. “Even though that window is moving, it isn’t moving aggressively enough,” he says. A more aggressive timetable “would be good for our members.” But he squashed a recent report in The Wall Street Journal that said Netflix might be interested in cutting a deal to offer NFL games. “We’re still not interested in sports,” he says, calling matches “primarily a linear experience.”
“We’re fundamentally in the membership happiness business as opposed to the TV business,” is the way CEO Reed Hastings described his view in Netflix’s first video conference call for analysts. CNBC’s Julia Boorstin and BTIG analyst Rich Greenfield pitched the questions, on a Google Hangout, synthesizing contributions from analysts. …
Netflix Chief Content Officer Ted Sarandos echoed the premise of a gushing question about the streaming company’s deal yesterday with Disney posed by The Weinstein Co co-chairman Harvey Weinstein in an interview. “Netflix as a real Pay 1 alternative [to premium channels] is a game-changer,” Sarandos said at the UBS Global Media and Communications Conference. Having exclusive access to movies from all of Disney‘s studios, as well as direct-to-video releases, “is going to be a huge step forward for our programming.” He contrasted that to the exclusivity terms that recently lapsed in Netflix’s agreement with EPIX. Since its product went to Netflix three months after appearing on cable “their brand of exclusivity wasn’t exclusive enough,” Sarandos says. “It wasn’t valuable relative to the premium.” He also says that Netflix did fine after losing access to Starz early this year. By cutting other deals, “our movie selection was better post-Starz.”
“We never thought we’d operate without competition. We’re surprised it’s taken this long,” Netflix Chief Content Officer Ted Sarandos told investors today at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference. And he says he’s not concerned after the e-retail power doubled its video streaming library by cutting a deal with EPIX. That became possible after the end of August when terms giving Netflix exclusive Internet rights to the channel expired. “People don’t watch [EPIX's movies and shows] more because they’re exclusive,” Sarandos says. “Over time it proved to be not differentiated enough” from other programming. What’s more, since EPIX shows run on pay TV before they hit the Internet, the channel “wasn’t that exclusive.”
Netflix Chief Content Officer Ted Sarandos walked a tightrope this morning as he tried to assure cable execs at the industry’s annual convention that he’s their friend. It’s debatable; Cox Communications chief Pat Esser, who joined Sarandos on a panel at The Cable Show, referred to the streaming service as a “frenemy.” But the Netflix exec assured the audience that his service — which is so important to cable’s broadband customers — is no threat to their traditional TV business. That includes Nickelodeon, where ratings are down 30% so far in Q2 vs the same period last year – many believe because kids now can watch SpongeBox Squarepants and iCarly on Netflix. “People’s tastes are so diverse that no specific network and no specific show has such high viewing concentration that you’d see that kind of cause-and-effect on ratings,” Sarandos says.
Sarandos adds that Netflix can take credit for helping shows such as AMC’s Mad Men. “In the gap between Season 4 and Season 5 we brought maybe 1M new viewers to AMC. There were people who had four years to watch the show and didn’t. Because we gave them a good opportunity and a well-priced model (they were able) to catch up on the show.” The lesson, he says, is that
EXCLUSIVE: Longtime Playtone development and production executive Peter Friedlander is joining Netflix, where he will oversee original content acquisition. While acquisitions of existing TV series has been the backbone of Netflix’s rise over the past few years, including high-profile recent deals with AMC and the CW, the streaming giant also signaled an expansion into original series with the recent deal with MRC for drama House Of Cards. Netflix’s major acquisitions/output deals have been orchestrated by Chief Content Officer Ted Sarandos. My understanding is that Friedlander will focus on series that will be produced exclusively for Netflix. Netflix has now become a go-to place for every production company shopping a direct-to-series project or a canceled network series they want to keep alive. The online distributor was recently pitched the new Charlie Sheen sitcom Anger Management and the Arrested Development reboot and had been in negotiations for a new comedy series from Weeds creator Jenji Kohan. While it is expanding into original series, Netflix does not plan to expand into development or production and will continue to license shows developed and produced by outside companies. Friedlander’s role will be to help identify and bring new series and other projects to Netflix.
UPDATE: Miramax’s Mike Lang and Netflix’s Ted Sarandos Talk Shop; Netflix Adds ‘Lilyhammer’ To TV Lineup
MIPCOM UPDATE: The video of Miramax CEO Mike Lang’s keynote at the Media Mastermind kickoff today is below, including his chat with Neflix’s Ted Sarandos. The two companies have recently partnered up on the digital side, and the studio is in town to drum up worldwide sales for its content in both film and TV.
PREVIOUS: Ted Sarandos, chief content officer of Netflix, announced in Cannes this afternoon that Netflix is adding Norwegian-produced TV show Lilyhammer to its original programming lineup. Stevie Van Zandt — who so memorably played mob consigliore Silvio Dante in The Sopranos — plays a Mafioso who testified against his former boss in New York and winds up relocated to the Norwegian countryside as part of the Witness Protection Program. Lilyhammer will premiere on Netflix in early 2012, with Netflix acquiring the 8 episodes from the show’s first season as well as the upcoming 8-episode second season. Sarandos, who was being interviewed by Miramax CEO Mike Lang, said that 60% of viewing on Netflix’s newly separated streaming business is for TV episodes, with Mad Men and Breaking Bad being most popular. Deadline understands that Netflix, which is on the hunt for original programming, has also had talks about reviving Arrested Development with 20th Century Fox TV. Netflix surprised Hollywood in March by outbidding major TV networks for the rights to the David Fincher/Kevin Spacey drama House Of Cards.
Lang, meanwhile, said that Miramax is talking to potential partners around the world about the distributor having its own cable network showing the 700 movies in its archives. Miramax signed a long-term deal for its content with Netflix in May, and is partnering with Facebook to launch Miramax Experience, an app that will allow users worldwide to watch its movies. Lang was keen to talk up how Miramax is reinventing itself as an anytime, anywhere distributor. “In a way I’d like to believe our company is a bit more Silicon Valley than Hollywood in that respect,” he said.
Netflix chief content officer Ted Sarandos says the company ran into trouble today with its forecasts for streaming video and DVD rental subscriptions because it’s still adjusting to the decision in July to turn them into separate products. “Being able to precisely forecast and predict the behavior of that many people on a fairly radical change is something we’ll get better at all the time,” he told an audience today at The Paley Media Center. He said that while ”it was a sexy headline” to report that the change in Netflix’s offering increased the price of the combined streaming and DVD service by 60%, “that was only for people who chose both.” The number of people taking both services will dwindle. Although “the DVD business has a long life in middle America,” Sarandos says “it’s just not part of our future.”