Netflix chief creative officer Ted Sarandos has hit back at claims the US company has artificially inflated the cost of digital rights by overpaying for acquisitions.

Speaking at the Edinburgh International TV Festival, Sarandos said Netflix’s spend in the UK was justified because of the potential size of the market.

“Most other VoD businesses offer distributors a revenue share to acquire their rights, but we pay a licence fee that is competitive with broadcasters,” he said. “It’s a well-established market, so if you think the fees are too high, they’re too high for the BBC and Sky too.”

Netflix, which said it had hit 1 million UK subscribers, plans to boost growth by introducing “taste- based algorithms” to suggest relevant content for viewers.

Sarandos criticised the fragmented nature of the international rights market, with content sometimes available to stream months apart in different territories, as contributing towards piracy.

He acknowledged that Netflix’s spend on original commissions was “a tiny part of the business” and refused to say if it was likely to grow. He said it had focused on scripted, serialised content, such as House Of Cards, having identified a shortage in the genre

This story was first published by Broadcast.