Netflix’s big power struggle and the competition behind the crash – The Hollywood Reporter

Before we delve into the inner drama of Netflix – The intrusive battles between the high command which he calls more than one source “The Hunger Games” – Let’s pause a bit to let the city enjoy this moment.

The thing about schadenfreude is that pleasure (joy) is usually savored when schadenfreude (the bad thing) happens to someone else. However, in the case of Netflix’s ongoing debacle, streaming rivals admit they have been hurt by the sudden discovery that the sky may not be the limit when it comes to live streaming. But they enjoy the bad news anyway.

Yes, says a senior executive at a competitor in Netflix’s old studios, the news caused ratings and was bad for his company, but “the damned sure feels good.” This executive breaks down a brief history of Netflix in Hollywood, including the first word that appears in nearly every conversation about the streaming device. “The whole town is rooting for them,” he says. It’s not just the arrogance of declaring that you are the leaders, not the respect of executive contracts and [poaching] Everyone and the way they manage themselves. There was a sense of anger and then despair – are our business finished? “

Now these studios are feeling a little excited again, explained David Zaslav, CEO of Warner Bros. Discovery, on an earnings call on April 26 when he noted that he heads a “more balanced and competitive company.” “Cable networks may be in decline, but they’re still generating a lot of revenue. … Maybe try to keep the lights on. Maybe it doesn’t kill the play so quickly,” says a key executive at a large media company.

While Netflix’s competitors still have room to grow – and Disney in particular has committed to growing a lot – agents and creators believe they are seeing the end of the spending spree that has swept many pockets in recent years. When asked if the content bubble has burst, Grace and Frankie “Yes,” says creator Marta Kaufman—a unicorn who has reached 94 episodes of a book show on Netflix worthy of a Guinness book. (I met her on an upcoming episode of my KCRW show the work.)

A senior executive at an old company that poured resources into broadcasting suggests that may be the case. “We would all be crazy if we didn’t take a hard look at spending,” he says, adding, “Agents flip more than anyone else. They take it hard.”

However, it’s not clear if Netflix’s hard ride is really a measure of the constraints on subscriber growth, no matter what Wall Street thinks. At a time of war in Europe and high inflation, it may soon be time to write an obituary. Netflix has been out of tight spots before.

Bar chart showing Netflix subscribers over time

Now, back to the drama. Several important Netflix creators express a very consistent theory about what went wrong with the culture of the streaming device. They see a link between Netflix’s woes and the fall of 2020 for Cindy Holland, who played a key role in launching the service’s — clever and often expensive — assets using house of paperAnd Orange is the new black And Weird thingsamong other things.

These sources say it was the Netherlands that fostered strong relationships with talent and took the time to provide thoughtful development feedback while still making people feel safe and supported in pursuing their passion projects.

The various important employees who work or have worked with Netflix say that it was the Netherlands rather than Ted Sarandos, then chief content officer, that gave Netflix its profile as the home of high-quality roaring shows. (It was also Holland who, in vain, warned Sarandos that continuing to solicit specials from one of his comedic heroes, Dave Chappelle, would lead to internal strife and bad journalism.) “This service is built against the back of Cindy Holland’s flair,” says one. “I can give you a list of the people who will lie on it on the rails. Ted fan [of content], not beak. He’s a fairly good cheerleader and cheerleader.”

According to a previous inside source, Netflix has known for years that it will have to significantly increase the volume of its original shows year on year to compete. The service can predict when popular shows will appear on the service, such as friends And the desk, through the studios that made them launch their own streaming services. And for a while, while Netflix ramped up its origins, it seemed like an unstoppable force, growing its subscriber base even as some questioned the underlying economics of its business.

But a former insider says Sarandos’ size strategy is beginning to prove disruptive to the culture and quality of service offerings. “Ted is great at managing growth, but the company got to a point where it needed to be managed differently,” says this person. Whether the Dutch spending approach itself has proven sustainable is a question, but many creators believe that Netflix lost much of its early character by over-rotation to less expensive, less regulated, and less convincing — or, the company might say, simultaneously broader fare. Overwhelmed and stunned some subscribers.

The arrival of Bella Bagaria, the former CEO of CBS and Universal TV Vision in 2016 as head of international unrecorded content, marks a major turning point, according to multiple sources. By that time, Holland was scheduled to oversee 80 shows in service while Bagaria was responsible for 60 shows. Who can do 140 shows a year? Ask one of the creators. “This is crazy. Then the culture of fear took over.” The Netherlands declined to comment.

The demand for a larger volume has never receded. Bagaria, who was also responsible for licensing television and film content from major American studios, quickly moved into the field of Dutch written television. In 2017, she gave a 13-episode order for insatiable, an hour-long dark comedy pilot turned down by The CW. The Netherlands team passed by. One prominent Netflix supplier describes Bajaria’s decision as “the beginning of Walmart’s conversion” of the streaming device. (The series has also attracted negative press to slander obesity, among other sins.)

“it’s called insatiableA gateway into the halls of Netflix,” says this source. “It has given the power of the green light to so many people. It caused utter chaos and frustration. Everyone thought it was a terrible thing Ted did, allowing one team to give the go-ahead for something another team went through.” Although the show was heavily criticized (it was 11 percent on Rotten Tomatoes), it was good enough to get a season Second This source continues “He texted Ted because he did good numbers.” Wanting to ramp up content by a massive amount, he began looking at Bela as what the company should be. Cindy kept saying we still have to bet on premium creators and make cheaper stuff too.” (A Netflix insider notes that Sarandos was touched when Bagjaria picked up the thriller you From Lifetime – a project rejected by the Netherlands as a promotion. The series turned out to be a Netflix success.)

A Netflix representative stated in response to a request for comment, “Bela is an exceptional creative executive who looks forward to quality as well as shows that will appeal to many different audiences. Under her leadership, we have expanded the diversity and breadth of our television programming in the United States and internationally.” Among the shows recorded in Bajaria is Megahit squid game And lupine.

Sources say some Netflix executives are starting to worry about the growing number of shows. It was, ‘Hey guys, do we think that’s enough?’ Because we rummage through our shit, says a former insider. Then there was the Dutch concern about the lack of regulation and quality control. An important creative talent who had success working with inspiring Holland: “I wonder, for example, whether the bonobos would throw their shit at a whiteboard full of titles as a way of deciding which projects to do that would have more or less success than all of these other projects” who think they know what people want and what they don’t want.”

But one prominent creator who was directly involved in the Holland team said, “They put Bella and Cindy against each other.” Adds a former Netflix user, “People always said they didn’t know who to go to [to pitch]. And Ted liked that stupid phrase, “There are multiple ways to yes.”

It was one of Holland’s last projects for Netflix Queen’s gambit, an expensive historical piece that sources say has been derided as “Holland crap” by some within the company. According to sources, Bagaria and her staff were dismissive and even unpleasant to the team that worked on her. (A Netflix spokesperson says that’s not true.) When the series became a phenomenon, Bagaria was routinely credited in the media.

As Holland expressed dissatisfaction with the broader strategy, an insider said the response was that things would go well if a one in 10 bid might work. “That’s one of the things Cindy and Ted have disagreed on for a while,” this person says. “She was the only one who would resist him.” Frustrated sources say, the Netherlands turned to Netflix founder Reed Hastings. This source says Holland also objected to Sarandos’ expensive Oscar campaigns: “Cindy said, You’re losing town. You can’t buy your way to the Oscars. That was another thing Ted was crazy about.”

In July 2020, Sarandos was promoted to the position of co-CEO of Netflix. With that, some believe he is no longer interested in dealing with the backlash from the Netherlands or anyone else. In September 2020, in the middle of the pandemic, Sarandos invited Holland for a meal at Pastis Restaurant in New York — al fresco, of course — and told her he supported Bagaria. A source believes Sarandos, who was said to dislike confrontation, chose a public place to avoid it. “He didn’t bring her into his office and say, ‘We’ve been together for years,’” says a Holland loyalist. “And she was the spirit of the process.” But another source says Sarandos traveled to New York precisely because he didn’t want to have a Zoom conversation.

It is then said that Sarandos has given both Bajaria and Netflix, the head of Netflix movies, Scott Stopper, dizzying heights. While Netflix CEOs are well paid, the Netherlands has been making less than $10 million a year; Stuber and Bajaria were rewarded with salaries ranging from $16 million to $18 million. With that kind of compensation at stake and a capricious Netflix dogma that anyone can kick out at any time, it’s no surprise that both would go out of their way to implement Sarandos’ vision, says a source who worked closely with the service.

While the Netherlands has been criticized for spending too freely, Bagaria has earned a reputation for cutting budgets. Multiple sources say this has already been happening for at least a year at Netflix, and it’s clearly growing. But while Bagaria has its critics, one unhappy creator at Netflix says he doesn’t blame her or, implicitly, Stuber, for the consequences. “You can’t blame Bella for any of this,” this person says. “She has bosses at Red and Ted, and this fish sticks out of her head. Now they’re making widgets. She’s on the road a lot, and she can’t foster relationships with people.”

Another major talent at Netflix agrees that “a profound cultural shift began with Cindy’s departure” but adds a major caveat. “Netflix was a gut-driven, risk-taking splinter culture,” he says. “Now it’s wiser and often indecisive. But what’s also true is that the Cindy era had no cost controls. So it was an unsustainable business model. That’s a fact.”

The rumor mill is now spinning hard about what Netflix will do to address its issues. Which heads will roll? Is Hastings Possible to Sell? Will the broadcaster abandon the strategy of gluttony? Could her ad-supported option work? What about games? Despite the questions, the head of a rival company says the streaming device is still a giant. “I don’t think Netflix is ​​the best,” he says. “I think it’s here to stay. But the idea that they can make their way to world domination is over.”

A version of this story first appeared in the April 27 issue of The Hollywood Reporter. Click here to subscribe.