How Netflix wants to change television forever

Netflix (s NFLX) Chief Content Officer Ted Sarandos called his company’s newly-announced Disney (s DIS) deal a game changer when quizzed about it by Harvey Weinstein during Wednesday’s UBS Media conference. The deal, which will bring new and catalog titles from Disney, Marvel and Pixar to the service, marks the first time a major Hollywood studio has chosen Netflix over a traditional pay TV network.

But Sarandos also made it clear that he doesn’t just want to steal away big blockbusters from the likes of HBO and Starz. Throughout the conversation, he explained that Netflix aims much higher: it wants to change television forever. Asked about how TV will look like in five years, Sarandos replied: “It’s gonna look nothing like we’re seeing today.”

So what is going to change? Sarandos gave us some good clues Wednesday:

Ratings don’t matter. Come February, Netflix is going to launch two original TV shows, and chances are that millions will tune in to watch the new season of Arrested Development alone.  But don’t expect Netflix to brag about it. Sarandos made it clear that he won’t release any numbers, no matter how good they are. “It’s a really irrelevant number,” for a subscription TV service, he argued, because it doesn’t have to sell large simultaneous audiences to advertisers.

And what’s worse, once you start releasing these numbers, everything is going to get measured by it. Your new show isn’t as good as last season’s hit? Then it must be a failure. Well, in the case of Netflix, it may not, because audiences may discover the content over time. Sarandos said the same thing could be true for HBO, and argued that it was a mistake for the pay TV network to put such a big emphasis on ratings.

Time slots are for sports and talk. Netflix has a pretty straightforward understanding of the TV space. On one side, there’s content that works well on linear TV, like sports and nighttime talk. “The immediacy of Jon Stewart…. lends itself to linear business models,” Sarandos said. On the other side, there is scripted content, which comes with a much longer shelf life.

Sarandos made it clear Wednesday that he has no intention to mess around with scheduled content. And for good reason: Making successful linear TV, getting people to tune in every night at a certain time — that’s hard. “The most difficult thing in linear television is the pressure on the time slot,” Sarandos said. With a Netflix-like on-demand model, you don’t have any of those issues.

This is on the surface just a simple business decision – but it could foreshadow a much bigger change. After all, if Netflix is successful with its no-schedule strategy, should other TV networks stick to the schedule as their viewing is shifting towards an on-demand world?

In related news: Viewers don’t want to wait for the next episode. One of the biggest differences in the way Netflix approaches its original content is that it releases an entire season at the same time. Weinstein had some doubts about this approach, arguing that people who grew up with traditional TV may prefer a staggered approach, and that it may take away from word of mouth and other marketing opportunities. But Sarandos countered that this is how people already watch traditional TV, thanks to DVRs. And in the end, it’s giving subscribers what they want: “People have the most satisfaction with immediate access,” he said.

Creators love this as well. Turns out that there is an unintended side-effect of releasing an entire season at once: If you give people the ability to watch two to three episodes at a time, or an entire season over a two-week span, they’ll be less prone to TV schedule amnesia. Right now, many shows spend a number of minutes recapping the previous episode — which makes little sense if viewers finished the previous episode minutes ago. “If you don’t do all that, you have all of this additional story-telling time,” explained Sarandos.

TV is getting more personal. Netflix has been investing in personalization for years, fine-tuning its recommendation engine to highlight movies and shows you might like to watch. However, so far most of this has been happening on the household level. Now, the company is taking steps to differentiate even further. One of the first steps was Just for Kids, the UI that separates kids’ content from other streaming fare. Next up are efforts to take this even further. “There is all of these things that we are looking at (around) deep personalization,” explained Sarandos. “Voice recognition, visual recognition.” In the future, Netflix could be able to pull up a user’s personalized recommendations as soon as that person walked into the room, he added.

Image courtesy of (CC-BY-SA) Flickr user joe.ross.