Co-CEO Reed Hastings steps down as Netflix membership growth zips back

NetflixIts founder and chief executive for 25 years, Reid Hastings, has stepped down as co-CEO to serve as executive chairman. Current co-CEO Ted Sarandos will continue to lead the streaming company and will be joined by new co-CEO Greg Peters, who has been Netflix’s chief operating officer for three years and chief product officer for six.

The successor was announced Thursday as Netflix posted better-than-expected growth in the fourth quarter, a tumultuous year that included early advertising launches, the company’s first subscriber losses in a decade and a tough promise on password sharing.

Netflix, the world’s dominant streaming-video subscription service, added 7.66 million members between October and December to a total of 230.75 million. That beat NetflixOctober guidance to add 4.5 million new members. It also beat analysts’ average expectation, which was slightly more optimistic at 4.57 million new members, according to Refinitiv. The latest growth rebounds from the first half of last year, when Netflix posted unprecedented subscriber losses.

Shares rose 5.9% to $334.29 in early trading on Friday. By Thursday’s close, the stock had lost a third of its value in the past 12 months as concerns about Netflix’s membership growth drama and the broader economy worried investors.

Separately A record of his decision to step down as Chief MinisterHastings wrote that he had already been handing over management to Sarandos and Peters for more than two years.

“It was a baptism of fire, given the recent challenges with Covid and our business,” Hastings said. “But they’ve both managed incredibly well, ensuring Netflix continues to improve and creating a clear path to re-accelerate our revenue and earnings growth. So the board and I believe now is the right time to complete my succession.”

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Before this year, the growth of Netflix subscribers prompted nearly all of Hollywood’s major media companies to embrace streaming as the future of TV. So called because they poured billions of dollars into their own streaming operations Streaming wars brought a wave of new services including Apple TV Plus, Disney Plus, HBO Max, Peacock And Paramount Plus.

The flood of streaming options complicates how many services you need to use (and, often, pay for) to watch your favorite shows and movies online. But it raises competition from Netflix, intensifying the company’s battle to win new members and keep the ones it has. Pressure spurred Netflix to pursue strategies it had rejected or avoided for years: In November, the company launched Inexpensive subscriptions supported by advertisingand it expands a Crackdown on password sharing this year It is already testing account sharing fees in more countries than some Latin American markets.

On Thursday, Peters said password charges will begin to become more widespread in the first quarter and take two quarters to fully roll out.

Members of Netflix’s new ad-supported program are watching more than the company expected, with engagement matching that of ad-free members.

“Also, as expected, we saw very little switching from other plans,” Netflix said in its statement — believing people weren’t trading up from an expensive, ad-free to a cheaper, ad-supported level. Very much.

This is contrary to third-party estimates that the opposite is happening. Earlier this week, a survey conducted by the data and consulting firm Gander Tier argued that sales declined for nearly all Netflix ad-supported subscriptions in the first two months after launch.

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Asked about the possibility of a free version of Netflix with advertising, Sarandos said the company is open to all kinds of business models but does not plan to pursue a free tier this year. Instead, it’s focused on both expanding the paid “basics with ads” offering and launching an account sharing payment system. “We’ve got a lot on our plate this year,” he said.

As part of the executive reshuffle, Netflix’s Bela Bajaria, previously head of global television, a title previously held by Sarandos, became chief content officer. Scott Stuber has been named president of Netflix movies.

In the fourth quarter, Netflix added 910,000 streaming customers in the US and Canada for a total of 74.3 million. In Europe, the Middle East and Africa, membership increased by 3.2 million to 76.73 million. In Latin America, subscribers increased by 1.76 million to 41.7 million. And in the Asia Pacific region, 1.8 million new members expanded its base to 38.02 million.

Overall, Netflix reported a profit of $55.3 million, or 12 cents per share, compared with $607.4 million, or $1.33 a share, a year ago. Revenue rose 1.9% to $7.852 billion.

Analysts expected the profit to be an upside surprise, with earnings per share of 45 cents versus Netflix’s guidance of 36 cents. The consensus estimate for revenue was $7.848 billion.


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