'Right Time For Succession,' Netflix Co-Founder Reed Hastings Steps Down As CEO After 25 Years

Netflix co-founder Reed Hastings has stepped down as CEO of the company, hence handing the reins to long-time partner and co-CEO Ted Sarandos and Chief Operating Officer Greg Peters.

Reed Hastings Resigns As CEO After 25 Years

Co-CEO Sarandos and COO Peters will share the title of chief executives, with the outgoing Hastings serving as executive chairman. The change is effective immediately. Hastings had been Netflix's CEO since 1998.

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"It was a baptism by fire, given Covid and recent challenges within our business," Hastings said in a statement, as per Reuters report. "But they've both managed incredibly well ... so the board and I believe it's the right time to compete my succession."

Hastings made his exit despite Netflix adding 7.66 million subscribers in the fourth quarter (Oct-Dec 2022), beating Wall Street forecasts of 4.57 million with help from "Harry & Meghan" and "Wednesday" in the battle to attract streaming television viewers.

Netflix projected "modest" gains in subscribers through March. It forecast 4% year-over-year growth in revenue during the period with the help of new revenue streams.

The company is facing restrained consumer spending and competition from Walt Disney Co., Amazon, and others spending billions of dollars to make TV shows and movies for online audiences.

Netflix's Rollercoaster In 2022

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Before the better-than-expected gain in subscribers in the last quarter, Netflix had been under pressure for most of 2022 after losing customers in the first half of last year. Its stock, a one-time Wall Street darling, had fallen nearly 38% in the past year, as per the report.

To kick-start growth, Netflix introduced a cheaper, ad-supported option in November in 12 countries. It has also announced plans to crack down on password sharing.

"2022 was a tough year, with a bumpy start but a brighter finish. We believe we have a clear path to reaccelerate our revenue growth," Netflix said in its quarterly letter to shareholders.

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Netflix's Plan For 2023

Netflix will start rolling out features this quarter to try and convert more password sharers to paying subscribers, Peters said. He acknowledged it will not be a "universally popular move," comparing it to a price increase that will increase cancellations for a time but pay off with added revenue.

The company's global subscriber base hit 231 million at the end of December. Audiences flocked to the Addams family tale "Wednesday," the third-most watched show in Netflix history, the company said. The murder mystery "Glass Onion" and the British royals documentary "Harry & Meghan" also were hits during the quarter, the Reuters report mentioned.

Net income fell to $55 million, or 12 cents per share, from $607 million, or $1.33 per share, a year earlier. Revenue rose by 1.9% to $7.85 billion, in line with expectations.

How Hastings Started Netflix In 1997

62-year-old Hastings had co-founded Netflix as a DVD-by-mail business in 1997, saying the idea came from his frustration at having returned a rental of "Apollo 13" to the local Blockbuster video store and getting slapped with a $40 late fee.

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"It feels like yesterday we were at our IPO. We were covered in red envelopes," Hastings said on Thursday in a post-earnings video interview, as per a Reuters report.

The business evolved in 2007 into a video streaming service that shook up Hollywood, prodding Netflix¡¯s media rivals to invest billions in their own services.

Some of Hastings' challenges were self-inflicted, such as his plan to spin off the company¡¯s DVD business into a new company called Qwikster. That 2011 initiative cost the company 800,000 subscribers and sent the stock plunging.

As per the report, Hastings navigated another precipitous stock drop in April 2022, when Netflix reported its first subscriber loss in more than a decade. This forced Hastings to reconsider previously verboten ideas to spur growth, including an ad-supported version of the service.

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