Netflix founder and CEO for 25 years, Reed Hastings has stepped down from his role as co-CEO to serve as executive chairman instead. Current co-CEO Ted Sarandos will continue to lead the streaming giant, and he will be joined by new co-CEO Greg Peters, who has served as Netflix’s Chief Operating Officer for three years and Chief Product Officer for six years.
The follow-up was announced Thursday as Netflix reported better-than-expected fourth-quarter growth, capping off a turbulent year that saw earlier ad launches, the company’s first subscriber losses in a decade, and pledges of a crackdown on video sharing. passwords.
, the world’s dominant streaming video subscription service, said its membership increased by 7.66 million between October and December to reach a total of 230.75 million. That’s better than Netflix’s October guidelines to add 4.5 million new members. It also beats the average analyst expectation, which Refinitiv said was slightly more optimistic with 4.57 million new members. The latest growth is a rebound from the first half of last year, when Netflix recorded an unprecedented loss of subscribers.
Shares are up 5.9% in recent trading to $334.29. By Thursday’s close, the stock had lost more than a third of its value over the past 12 months as the drama of Netflix’s membership growth and concerns about the economy in general worried investors.
In a separate post about his decision to step down as chief, Hastings wrote that he had been delegating management to Sarandos and Peters for more than two years.
“It was a baptism of fire given COVID and the recent challenges within our business,” said Hastings. “But they’ve both been incredibly successful, helping Netflix continue to improve and establish a clear path to reaccelerate our revenue and earnings growth. So the board and I believe now is the right time to complete my succession. “
Before this year, Netflix’s relentless subscriber growth forced nearly all of Hollywood’s major media companies to embrace streaming as the future of TV. While pouring billions of dollars into their own streaming business, the so-calledspawned a wave of new services, including , , , and .
The plethora of streaming options complicates the number of services you have to use (and often pay for) to watch your favorite shows and movies online. But it’s also pushed up competition from Netflix, intensifying the company’s battle to win new members and keep those it has. The pressure has pushed Netflix to pursue strategies it had rejected or avoided for years: In November, the company launchedand it will widen a lot to more countries than the few Latin American markets where it is already testing account sharing fees.
On Thursday, Peters said the password charges would launch more widely later in the first quarter and would take a few quarters to fully roll out.
Netflix also said members of the new ad-supported plan watch more than the company expected, with their engagement consistent with that of ad-free members.
“Plus, as expected, we’ve seen very few people switch from other subscriptions,” Netflix said in its report, meaning it believes people aren’t trading in for the cheaper, ad-supported tier of a more expensive, ad-free one. a lot.
That contradicts third-party estimates that the opposite is happening. Earlier this week, a study by data and consulting firm Kantar claimed that trade-in accounted for nearly all of Netflix’s ad-supported subscriptions in the first two months after the tier launched.
When asked about the possibility of a free version of Netflix with ads, Sarandos said the company is open to all kinds of business models, but does not plan to pursue a free version this year. Instead, it’s focused both on expanding the paid “Basic with Ads” offering and launching the account sharing system. “We have a lot on our plate this year,” he said.
As part of the management reshuffle, Netflix’s Bela Bajaria, formerly head of global TV, has become chief content officer, a title Sarandos formerly held. Scott Stuber has been named chairman of Netflix filmmaking.
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, the number of subscribers grew by 1.76 million to 41.7 million. And in the Asia-Pacific region, 1.8 million new members expanded their base there to 38.02 million.
In total, Netflix reported earnings of $55.3 million, or 12 cents per share, compared to $607.4 million, or $1.33 per share, a year earlier. Revenue increased 1.9% to $7.852 billion.
Analysts had expected earnings to be an upside surprise, forecasting earnings per share of 45 cents versus Netflix’s expectation of 36 cents. The consensus estimate for revenue was $7.848 billion.