Netflix announced that co-founder Reed Hastings would step down as CEO, capping a two-decade tenure. Netflix announced on Thursday that it had more than 230 million global subscribers at the end of last year, exceeding analysts’ expectations as hits like “Wednesday” and “Harry & Meghan” drew in new viewers.
Netflix also announced that co-founder Reed Hastings would step down as CEO, capping a two-decade tenure that saw the company grow from a mail-order DVD rental service to an entertainment behemoth.
“2022 was a difficult year, with a rocky start but a brighter finish,” the company wrote in a letter announcing record fourth-quarter earnings. Hastings handed over primary control of Netflix to his two longtime associates, Chief Operating Officer Greg Peters and Ted Sarandos, who has been the face of Netflix in Hollywood and was already named co-CEO.
“Our board has been discussing succession planning for many years (even founders must evolve!).” wrote Hastings in a blog post. He stated that he would accept the new position of executive chairman, noting that this is a role many tech titan founders take, citing Amazon’s Jeff Bezos and Microsoft’s Bill Gates as examples.
The change of guard was announced as Netflix reported earnings and subscriber data far exceeding even the most optimistic forecasts. The streaming service said it gained 7.7 million new subscribers in three months, bringing the total number of subscribers to 230 million.
Netflix praised a successful slate of new content, including the horror-themed comedy “Wednesday,” calling it the company’s third most popular series. According to Netflix, “Harry & Meghan: A Royal Tell-All” and “Glass Onion: A Knives Out Mystery,” starring Daniel Craig, also scored.
As consumers cut back on entertainment spending due to soaring inflation and an uncertain economy, the new titles helped attract users to a new lower-priced “Basic with Ads” subscription.
Revenue from October to December was $7.85 billion, which was in line with expectations and helped send Netflix shares up more than 6% following the announcement.
Netflix maintains that counting new users is no longer the most important metric for assessing the company’s health and that revenue should be the primary metric.
After years of being the world’s premier streaming service, Netflix faces fierce competition from deep-pocketed rivals such as Disney +, which has also introduced an ad-based subscription.
Despite the new challenges, Netflix is one of the few tech behemoths that has earned Wall Street’s trust, with its stock up nearly 50% in the last six months.