Despite his company’s sluggish performance this year, Netflix co-CEO Ted Sarandos has calmed Hollywood business leaders' nerves, saying the streaming giant planned to keep investing in the Los Angeles neighborhood that has for years benefited from the company's growth.
The Los Gatos-based streamer already has 4,000 employees in Hollywood, its largest worker concentration as a company, and is in the midst of building out an innovation hub in the neighborhood, Sarandos said Thursday at the Hollywood Chamber of Commerce 2022 Economic Development Summit at the upscale W Hotel.
Netflix also is preparing to fully reopen the historic Egyptian Theatre at 6712 Hollywood Blvd. after spending millions of dollars on renovations. The theater was built in 1922 in the Egyptian Revival style as a lavish movie palace to further boost the early years of film business in Hollywood. Netflix bought it for $14.4 million in May 2020, according to CoStar data. "It was home to the very first Hollywood premiere," Sarandos said. "And it'll be the home to our premieres."
Sarandos told CoStar News after the chamber event that the Egyptian would fully reopen in 2023.
The reassuring comments come after Netflix has experienced a challenging 2022 as it lost subscribers, which spooked Los Angeles real estate investors that catered to the streaming giant's growth. In response, Netflix said it was steadying spending by laying off about 450 workers and putting up roughly 340,000 square feet of office space for sublease in Burbank and Los Gatos.
Netflix has been a major driver of real estate development and investment in Hollywood, and its physical space requirements are closely watched by its competitors and the real estate industry. The Los Angeles region has been a key real estate growth area for Netflix, which began as a Silicon Valley mail-based movie rental startup in 1997 and has since morphed into one of the world's largest streaming and entertainment companies.
The company occupies more than 1.5 million square feet of space in greater Los Angeles, according to CoStar data. It also is making at least 40 films and TV series in L.A., Sarandos said at the event.
Netflix has not put up space for sublease in Hollywood, where Sarandos himself said he once leased a small office in Netflix's early days despite living in suburban Palos Verdes. He said that at the time, and to this day, he felt it was important to work in the "creative center of the world."
Sarandos’ career arc is legendary in Hollywood. He dropped out of community college and managed a video rental store. He joined Netflix in 2000 as chief content officer — a position he still holds — and helped grow the company’s original content business en route to Netflix becoming an award-winning entertainment giant.
"There's a creative energy that is very hard to quantify and very hard to put in a spreadsheet, but it's incredibly tangible to work and live in Hollywood," Sarandos said. "No disrespect, but I don't think anyone ever woke up saying, 'I can't wait to grow up and go to Atlanta to be a star.'"
(This story was updated Aug. 26 with additional context.)