Reed Hastings, the creator, and co-CEO of Netflix has announced his retirement after more than two decades with the firm. He will give over the reins to Ted Sarandos, his longstanding partner and co-CEO, and Greg Peters, chief operating officer. His revelation came at the same time as Netflix revealed a significant increase in subscriber numbers at the end of last year.
Hastings co-founded Netflix in 1997 as a DVD-by-mail service, citing his annoyance with returning a rental of “Apollo 13” to a local Blockbuster, a chain of physical storefronts in the United States where movies could be rented.
Sarandos and Peters will share the position of CEO, with Hastings serving as executive chairman. The transition is effective immediately and is the board’s culmination of a decade of succession planning. Peters and Sarandos were both elevated in July 2020, during a difficult period for the organization.
At the conclusion of last year, Netflix announced a significant increase in membership numbers. People were supposed to cut back on streaming services when money was tight. On the other hand, Netflix defied expectations, attracting more than seven million additional customers.
Hastings’ departure comes after Netflix said that it added over 7.5 million customers in the December quarter, exceeding experts’ expectations of 4.5 million. However, earnings per share for the corporation came in at 12 cents, falling short of the 45 cents projected by Refinitiv analysts polled.
Netflix expects “moderate” subscriber gains in the March quarter and 4% year-on-year revenue growth, thanks to new revenue streams such as an ad-supported cheaper plan and new account-sharing options that Netflix believes will reduce the number of people who share their accounts.
Netflix launched the ad-supported service in 12 countries in November of last year and remains optimistic about its long-term prospects.
“While it is still early days for ads and we have much to do (particularly better targeting and measurement), we are pleased with our progress to date across every dimension: member experience, value to advertisers, and incremental contribution to our business,” Netflix wrote in a letter to shareholders.
The business stated that it plans to begin rolling out paid sharing “more broadly” this quarter. “When we go through this transition – and as some borrowers stop watching, either because they don’t convert to extra members or full paying accounts – near-term engagement, as measured by third parties like Nielsen’s The Gauge, could be negatively impacted,” the company predicted.
“However, we believe the pattern will be similar to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts.”