Chief Executive Officer Reed Hastings is counting on Sarandos to cut deals with studios giving Netflix rights to show more films over the Web.
Sarandos, 45, says he is willing to write big checks and negotiate directly with studios after Los Gatos, Calif.-based Netflix earlier went around Walt Disney Co. and Sony Corp. to gain access to their titles from the Starz cable channel.
"We have to fight against their fear that we'll destroy the ecosystem," said Sarandos, a former video-store clerk. "We're not destroying anything. We're creating a new opportunity."
Related7/4/09: Netflix's Nashville center feeds demand for moviesSarandos' success is critical to Netflix as viewers move to the Web, endangering the mail-order DVD rental business that helped the company upend brick-and-mortar stores such as Blockbuster. His challenge is to persuade studios to provide content as they explore their own digital options, including offering movies online themselves.
"The challenge for Netflix is what to do when the world migrates to digital distribution and whether it can obtain product from all the studios as that's happening," said Warren Lieberfarb, the former head of Warner Bros.' DVD operations.
Netflix, the largest mail-order film-rental service, offers Web-based movie viewing that's used by 42 percent of its 11.1 million subscribers, the company says. It has an online library of 17,000 films and TV shows.
DVD sales are decliningThe studios, coping with a decline in DVD sales, are trying to avoid the fate of music labels, which lost sales when their content went digital and online. Hollywood executives view digital distribution as a threat to the traditional way money is made from movies.
"Everybody views it as a terminal career decision if you get it wrong," said Frank Biondi, who has led Universal Studios, Time Warner Inc.'s HBO cable network and Viacom Inc., owner of Paramount Pictures.
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