Netflix Inc. co-founder Reed Hastings is stepping aside as chief executive officer of the company he’s led for more than two decades, leaving the position to his two longtime associates, Ted Sarandos and Greg Peters, reports Bloomberg.
Sarandos, who was already co-CEO, is the company’s public face in Hollywood while Peters, previously chief operating officer, has overseen its product development and push into advertising. Hastings, 62, will serve as executive chairman of the company.
“Our board has been discussing succession planning for many years (even founders need to evolve!),” Hastings said in a blog post. “The board and I believe it’s the right time to complete my succession.”
Netflix ended the year on a high note. The company added 7.66 million subscribers in the final quarter of 2022, easily topping the 4.5 million average estimate of Wall Street analysts. Revenue, at $7.85 billion, was in line with estimates, while earnings, at 12 cents per share, fell well below the same period a year ago. The company forecast that its profit margin and free cash flow would improve in the year ahead.
Netflix jumped about 6% in after-hours trading after the announcement. Shares of Paramount Global, Walt Disney Co. and Warner Bros. Discovery also rose in late trading.
Sarandos and Peters must guide Netflix through a turbulent time in the media industry. The company just reported its slowest year of subscriber growth since 2011, the year it split its streaming business from its DVD-by-mail service. Shares in the company lost half of their value last year, while its growing frugality alienated some of the creative people who once hailed Netflix as a champion of the arts.
The programming slate was one of Netflix’s strongest, however. The company released its third most popular TV show ever with Wednesday, its most popular foreign-language movie with Troll and its fourth most popular movie ever, Glass Onion. Its titles accounted for more than 80% of the 10 most-watched streaming titles every week during the quarter, according to Nielsen.
Hastings has been signaling he would step aside for a few years. He elevated Sarandos to co-CEO in 2020 and named Peters COO at the same time. He already delegated almost all Hollywood decisions to Sarandos, and has gradually pulled back from the day-to-day affairs of the business.
Hastings founded Netflix in 1997 alongside Marc Randolph. Randolph served as Netflix’s CEO for its first few years, but Randolph proved to be better at coming up with the idea for a company than leading a growing enterprise. Hastings supplanted his co-founder as CEO and never looked back.
He took the company public and guided Netflix through its triumphant tussle with the video rental chain Blockbuster. Hastings introduced a streaming service in 2007 and four years later separated the streaming service from the DVD-by-mail service. That maneuver proved to be his single biggest flub at Netflix since it amounted to a 60% price increase for its customers. He also gave the streaming service the unfortunate name of Qwikster. The company lost 800,000 customers and its stock collapsed.
But Hastings’s vision of the future was sound. Customers wanted to stream video on-demand over the internet. That same year, Sarandos decided to spend $100 million to make two seasons of a show called House of Cards. A pop culture encyclopedia, Sarandos joined Netflix in 2000 from a regional video rental chain and had been angling to fund original programming for more than a decade.
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