Reed Hastings, Netflix’s founder and CEO for 25 years, has stepped down as co-CEO to take over as CEO. Current CEO Ted Sarandos will continue to lead the streaming giant and will be joined by new CEO Greg Peters, who has served as Netflix’s chief operating officer for three years and chief product officer for six years.
The order was announced Thursday as Netflix posted better-than-expected growth in the fourth quarter, capping a tumultuous year that included an earlier ad launch, the company’s first loss of subscribers in a decade and a promise to crack down on password sharing.
The world’s dominant streaming-video subscription service said that the number of members increased by 7.66 million to 230.75 million between October and December. That beats Netflix’s October guidance of adding 4.5 million new members. It also beat analysts’ average expectations, which were slightly more optimistic, with 4.57 million new members, according to Refinitiv. The latest increase is a reversal from the first half of last year, when Netflix recorded unprecedented subscription losses.
Shares were up 5.9% at $334.29 in late trading. By Thursday’s close, the stock had lost more than a third of its value over the past 12 months, as Netflix’s membership growth drama and concerns about the broader economy weighed on investors.
In a separate post about his decision to step down, Hastings wrote that he had already handed over the leadership 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. “However, they have both managed incredibly well, ensuring Netflix continues to improve and develop a clear path to accelerate our revenue and earnings growth. So, the board and I believe the time is right to complete my succession.”
Before this year, Netflix’s extraordinary subscriber growth prompted almost every major media company in Hollywood to embrace streaming as the future of TV. Because they spend billions of dollars on their streaming operations, so to speakled to a wave of new services including , , , and .
The flood of streaming options makes it difficult to decide how many services you need to use (and often pay for) to watch your favorite shows and movies online. But it also strengthens Netflix’s competition, intensifying the company’s struggle to win new members and keep existing ones. The pressure has prompted Netflix to pursue strategies it has rejected or avoided for years: In November, the companyand will expand a to more countries than a few Latin American markets where it is already testing account sharing fees.
On Thursday, Peters said password payments will be rolled out more widely in the first quarter and will take several quarters to fully roll out.
Netflix also said members of its new ad-supported plan are watching more than the company expected, matching ad-free members.
“Also, as expected, we saw very little switching from other plans,” Netflix said in its report — meaning people aren’t trading up from a more expensive, ad-free plan to a cheaper, ad-supported tier. many.
This is contrary to third-party speculation that the opposite is the case. Earlier this week, a study by data and consulting firm Kantar claimed that almost all of Netflix’s ad-supported subscriptions accounted for lower trading in the first two months of the tier’s launch.
When asked about the possibility of a free version of Netflix with advertising, Sarandos said that 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 its paid “Ad-Prime” offering and launching an account-sharing fee system. “We have a lot on our plate this year,” he said.
As part of the executive reshuffle, Bela Bajaria, previously Netflix’s head of global TV, became chief content officer, which Sarandos previously held. Scott Stuber has been named chairman of Netflix.
In the fourth quarter, Netflix added 910,000 streaming customers in the US and Canada, for a total of 74.3 million. Membership in Europe, the Middle East and Africa increased by 3.2 million to 76.73 million. The number of subscribers in Latin America increased by 1.76 million to 41.7 million. And in the Asia Pacific region, 1.8 million new members expanded its base there 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 per share, a year earlier. Revenue rose 1.9% to $7.852 billion.
Analysts expected earnings to be a nice surprise, estimating earnings per share of 45 cents versus Netflix’s guidance of 36 cents. The consensus estimate for revenue was $7.848 billion.