Netflix founder Reed Hastings steps down as co-CEO

Netflix announced on Thursday that its founder, Reed Hastings, is stepping down as co-CEO of the company and will serve as executive chairman. Hastings will be replaced by co-CEOs Ted Sarandos and Greg Peters.

“Our board has been discussing succession planning for many years (even founders need to evolve!),” Hastings wrote in a blog post on Thursday.

“As part of that process, we promoted Ted to co-CEO alongside me in July 2020 and Greg to COO [executivo chefe de operações, na sigla em inglês] – and over the last 2 1/2 years, I have increasingly delegated the management of Netflix to them.”

Hastings founded Netflix in 1997 and changed the way countless families watched movies and shows, first with its DVD-by-mail business and later with its streaming video service.

Under Hastings’ leadership, Netflix shook up traditional movie rentals like Blockbuster and helped shake up Hollywood by starting an arms race investing in original content.

The company also survived a notably botched decision in 2011, when it briefly planned to spin off its streaming service from its DVD business, which would become Qwikster.

Last year, however, Netflix saw its stock and reputation take a hit after losing subscribers amid fierce competition from rival streaming services.

In response, Netflix introduced, for the first time in its history, a cheaper, ad-supported subscription option.

These changes may be bearing fruit. On its balance sheet, this Thursday, the platform said it gained 7.6 million new subscribers during the last three months of last year, well more than the 4.5 million additions it projected, for a total of more than 230 million paying subscribers worldwide.

The company said quarterly results indicate its growth is accelerating, thanks in part to popular original series “Wandinha” and “Harry & Meghan.”

She also said ad-supported subscriptions, launched in November, are gaining traction.

“It’s still early for announcements and we have a lot to do,” the company wrote in a letter to shareholders.

But he said engagement is better than expected and he believes “the lower price is driving incremental growth in membership.”

Netflix also said it plans to “begin rolling out paid sharing more broadly” later this quarter as part of its effort to crack down on people sharing passwords instead of paying for their own accounts.

The company posted revenue for the December quarter of more than $7.8 billion, up just 1.9% from a year earlier but in line with Wall Street analysts’ expectations.

For the current quarter, Netflix forecast revenue growth of 4%, driven in part by a modest increase in paid subscription net additions, a reversal of the slight decline in subscriptions during the first quarter of last year.

Shares of Netflix were up about 6% in after-market trading following the earnings release.

“Reed Hastings’ resignation from his current role raises many questions about Netflix’s future strategy,” Jamie Lumbley, an analyst at investment firm Third Bridge, said in a statement.

“While subscriber growth numbers are encouraging, revenue growth is slow with the backdrop of a possible recession looming in everyone’s minds.”

While Hastings’ departure as CEO marks the end of an era of sorts, Netflix said the leadership change “formalizes externally how we’ve operated internally.”

And Hastings added on his blog that Sarandos and Peters have “complementary skills, deep entertainment and technology knowledge, and proven Netflix experience.”

Sarandos has led Netflix’s content operations since 2000 and pioneered the company’s transition to original content production in 2013.

In the process, he has emerged not only as an important leader at Netflix, but also as a powerful name in Hollywood.

Peters was formerly COO and Chief Product Officer at Netflix until Thursday’s promotion.

Previously, he served as director of international development for the streaming giant, helping to expand the company’s distribution around the world.

“Since Reed began delegating management to us, Greg and I have built a strong operating model based on our shared values ​​and our similar approach to growth,” Sarandos said in a statement.

“I am very excited to start this new chapter with Greg as co-CEO.”