Hastings stepped down as chief of the online streaming service, handing control over to his longtime colleague and co-CEO, Ted Sarandos, and his COO, Greg Peters, Reuters reported.
The co-founder decided to step down as Netflix made a recovery in the last quarter of the year, following millions of dollars in losses in 2022.Since then, Netflix has seen a recovery in subscribers, which exceeded expectations in its 2022 fourth-quarter earnings report, released on Jan. 19.
About 18 brokerages raised their price targets on the stock as they rallied to Netflix’s 7.66 million new subscribers, greatly beating estimates of 4.57 million, reported Reuters.As of the end of December, Netflix’s total global subscriber base was at 231 million paying customers.
Shares of Netflix rallied on the positive earnings report, up by 6.58 percent, to $336.57 per share on the morning of Jan. 20, its highest level in nine months.
Netflix Sees a Change in the Guard
Peters will be elevated to co-CEO, joining Sarandos in that position, while Hastings will serve as Netflix’s executive chairman, with the change being effective immediately.
Peters and Sarandos were both elevated into the line of succession in July 2020, at the height of the pandemic, which was a challenging time and an era of growth for the company, as millions of Americans were locked at home.
“It was a baptism by fire, given COVID and recent challenges within our business,” Hastings said in a press statement.Hastings’s exit at CEO saw a boost in high viewership from its release of the “Harry & Meghan” and “Wednesday,” an Addams Family spin-off, as it fought off competition from other streaming rivals during the quarter.
The “Wednesday” series is the third-most watched show in the company’s history, while its murder mystery “Glass Onion” has become its fourth most popular movie, said Netflix.Netflix has been facing the dual threat of competition from Walt Disney Company, Amazon Prime, and other online streaming services, and reduced consumer spending, while spending billions of dollars to produce fresh TV content and movies for its audiences.
The company’s net income fell to $55 million, or $0.12 per share during the period, from $607 million, or $1.33 per share a year earlier, a 91 percent decline in value.Streaming Service Partially Recovers Losses in 2022
Netflix sent a quarterly letter to shareholders, stating that “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 lost millions of customers in the first half of 2022, but saw a recovery in growth by the second half. However, the rate of customer gains remains below the average in recent years.
Meanwhile, a new range of recent initiatives were announced that are intended to help turn the company’s fortunes around. In order to jumpstart growth, for example, the streaming service introduced a cheaper, ad-supported option last November in 12 countries.
The $7 per month charge is less than half the price of its most popular commercial-free plan.
Netflix said that it will get more revenue out of the 100 million non-paying users and would start rolling out features in the first quarter of 2023, to force more password sharers to become paying subscribers.
“This will not be a universally popular move,” said Peters, who compared it to a price increase, which will likely increase cancellations in the short term but pay off with added revenue in the long term.
Netflix stated that it projects “modest” growth in subscribers through March, with a fiscal forecast of 4 percent year over year in growth in revenue for the first quarter, with the help of new revenue streams.
Exiting CEO and Co-Founder Looks Back at Success and Losses
Hastings, who is now 62, had been Netflix‘s CEO for more than 20 years, after taking over from his friend and fellow co-founder Marc Randolph in the late 1990s.
“It feels like yesterday we were at our IPO. We were covered in red envelopes,” Hastings said on Jan. 19, in his last post-earnings video interview, reported Reuters.He told his audience about how he founded the company with Randolph as a DVD-by-mail business in 1997, after he became frustrated when he returned a rental of Apollo 13 to the local Blockbuster store and getting slapped with a $40 late fee.
Netflix then evolved into a video-streaming service in 2007, which revolutionized Hollywood and the TV industry, forcing its media rivals to invest billions in their own streaming services.Hastings had, though, made serious errors during his tenure, such as his plan to spin off the company’s DVD service into a new company called Qwikster in 2011, which cost the company 800,000 subscribers and sent the stock tumbling.
Reuters contributed to this report.
