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Netflix's Ted Sarandos Confirms Partner Talks For Ad-Supported Tier And Discusses Dave Chappelle, Ricky Gervais Backlash: Cannes Lions

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Ted Sarandos confirmed Thursday that Netflix is speaking to multiple potential partners to help it introduce ads to its platform.

The streamer's co-CEO and chief content officer was speaking on a "Future Of Entertainment" panel at the Cannes Lions advertising conference where he received the event's Entertainment Person of the Year award.

The streamer said in April that it would offer a cheaper, ad-supported tier to customers after suffering blows to subscriber numbers and its stock. It has reportedly met with Google, NBCUniversal and Roku to discuss potential ad-sales and marketing partnerships. The idea of Netflix buying AVOD specialist Roku has also been rumored, although Sarandos would not be drawn — "I don't know where that came from," he said.

Regarding ads, Sarandos would not comment on a commitment to any one partnership, but he confirmed Netflix had started conversations with "all of them," adding they "all have different solutions."

The plan, he revealed, is to create "a pretty easy entry to the market, which we'll build on and iterate to make Netflix a destination for users. What we'll do first is not representative of what the product will be ultimately. Start light, keep it simple and iterate fast."

He remained agnostic on whether the streamer would then move to owning its own advertising arm. "If it becomes so important [that] we want to have control over it, we might," he said.

Content on the platform, however, remains king, and Sarandos revealed some impressive graphics showing the user pathways for viewers both coming to shows such as Bridgerton and then moving onto other programs and films. He then explained what he believes remains unique about Netflix's offering: "The beauty of content is people have direct relationship with content. Your favorite show is very valuable to you [so] being good at making your favorite show is very important. We have 20 genres of content, and every month the average viewer watches six of them. That's a lot of content, [but] it's not all for you. It's not about volume, it's about variety."

Sarandos remained unflappable even when asked about the stock hit Netflix suffered earlier in the year, saying this was inevitable in the development of a still relatively new industry. "We've gotten through experiences where the market disconnects from core business and you have to prove the thesis still works, and is going to work long-term," he said. "There's a lot of uncertainty in the world today, and if they get anything that rocks the foundation of the narrative, they get nervous.

"We're in the early days of this evolution of watching — the way that people watch and consume television. Today, we're about 10% of what people do on TV, and about 30% of the streaming. We look at that and say there's still a lot of time that people are watching linear TV. You look at the growth of streaming as a percentage of total, and there's a lot of room to grow."

Comedy Controversies

Sarandos also doubled down on his defense of Dave Chappelle, Ricky Gervais and other star comedians showcased on Netflix, saying, "We've always been a supporter of the art."

Sarandos was asked about the recent upset over jokes made, particularly in relation to trans people, by Chappelle, Gervais, Jimmy Carr and other high-profile comedians.

The executive said: "We're programming to people with a real variety of tastes and sensibilities. [There's a range in] how they were brought up, what they think is offensive or what they think is damaging to themselves or to children.

"We won't make everyone happy, but that's the beauty of on-demand: you can turn it off. The reason comedy is hard is we don't all laugh at the same thing. We all cry at the same thing so drama is a little easier to pull off, but when it comes to comedy, it's all very different.

"Also, it's not frozen in time. Those comedians who are good at what they do are always testing the audience. They know what gets laughs; it's road-tested before they record the special. If you look back at Eddie Murphy's Delirious, at the time, it was the greatest hour of comedy ever filmed. Most of that material is pretty out of step today. Eddie says the same thing."

"Part of the art form is to cross the line, and part of the art form means you only find where the line is by crossing it sometimes. Supporting expression is really important.

"It's almost impossible for me to censor Dave in the U.S. and then I've got people all over the world who are super-offended by LGBT+ content, they think it's destroying their society, and we fight for it, all the way to the Supreme Court, and we've never taken it down anywhere in the world. There is a ton of call for us to take down that content, and we won't do it.

"Diversity of thought, expression, is super important to defend. It's good for culture, it's good for society — not just for the U.S. but everywhere."

However, Sarandos admitted that he could have been more sensitive with some of his own staff at Netflix, who revealed their upset at content on the platform. "They were hurting. I gave a real matter-of-fact answer about expression, but I should have been more empathetic with them directly," he said. "That's the thing I regret, but the decision was very important globally."

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