Netflix Sticks to Its Upfront Talent Payment Model Amid Industry Speculation

Netflix co-CEO Ted Sarandos dismissed ongoing speculation about the streaming giant altering its upfront talent compensation model, assuring analysts on Thursday that the company is committed to its current approach. Sarandos stated that Netflix believes it has the right system in place and is not considering any changes to it.

His comments came in response to rumors suggesting that Netflix might shift towards a more traditional compensation model, where talent receives lower upfront payments but shares in profits once certain milestones are reached. This model is more commonly used by legacy media companies. Sarandos made it clear, however, that Netflix has no plans to adopt such a practice. He emphasized that both Netflix and its talent are satisfied with the current system, noting that it benefits the business more to focus on improving the quality of its content rather than reducing costs.

Earlier that day, Netflix reported third-quarter revenues of $9.83 billion, a 15.7% year-on-year increase. The company also projected revenues of approximately $38.9 billion for 2024, with an anticipated growth of 11%-13% in 2025, reaching $43-44 billion.

Speculation about a potential change in Netflix’s compensation model had intensified following meetings with talent agencies in late September, which one source described as inconsequential. Sarandos reiterated that Netflix assumes all the financial risk, allowing creators to concentrate on delivering the best possible version of their work. He added that the model enables Netflix to attract top-tier talent globally.

While Sarandos acknowledged that the company is open to making custom deals when talent expresses interest, he noted that such deals are rare because most talent opts for the upfront payment model. He reaffirmed the company’s stance, saying that Netflix is confident in its approach and does not plan to make any changes.

Sarandos also addressed the frequent question of why Netflix does not release its films in wide theatrical runs before debuting them on the platform. He explained that Netflix prioritizes adding value to its subscribers by ensuring they don’t have to wait months to watch major films. According to Sarandos, Netflix’s ten biggest films have each garnered over 100 million views, and the platform offers filmmakers the opportunity to reach the largest audience in the world, helping them create the best work of their careers.

He also discussed the impact of last year’s Hollywood strikes, which resulted in a more disrupted first half of the year than expected, particularly affecting Netflix’s business in the U.S. and Canada (UCAN). Sarandos expressed optimism that operations would return to normal by 2025.

Looking ahead, Netflix’s 2024 feature highlights include the next Knives Out film, Guillermo del Toro’s Frankenstein, Happy Gilmore 2, and The Electric State, a new project from the Russo Brothers starring Millie Bobby Brown. Additionally, strike-delayed seasons of Wednesday and Stranger Things are set to arrive in 2025, along with new series from renowned showrunners Shonda Rhimes and Ryan Murphy.

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