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Reed Hastings steps down as Netflix CEO

Ted Sarandos and Greg Peters appointed co-CEOs of Netflix

Netflix co-founder Reed Hastings has stepped down as CEO 25 years after being at the helm of the media company that started out as a DVD delivery service.

Announcing the transition Hastings said in a blog post, "Our board has been discussing succession planning for many years (even founders need to evolve!). As part of that process, we promoted Ted to co-CEO alongside me in July 2020, and Greg to Chief Operating Officer – and in the last 2½ years I’ve increasingly delegated the management of Netflix to them."

Hastings will take on the role of executive chairman — a role that founders often take when they pass on the baton to others. The transition is effective immediately.

In addition, Bela Bajaria has been appointed chief content officer and Scott Stuber chairman of Netflix Film.

Hastings announced his exit as the video streaming platform added 7.7 million subscribers in Q4 of 2022, exceeding its forecast of 4.5 million subscribers. However, it is still a slight decrease from the 8.2 million subscribers it added around the same time last year. It now has a total of 230.75 million global subscribers

This is the first quarter that Netflix’s new ad-supported service is included in its earnings results. The cheaper tier was launched in November, but the company has not disclosed what portion of the new subscriptions are from users who have opted for this service.

During the earnings call, Netflix said that it has seen comparable engagement from its new ad tier members as it has seen with its regular consumers. However, it has not seen a significant number of people switching plans. This means its premium subscribers are not shifting to the cheaper ad-supported model.

“We wouldn’t be getting into this business if it couldn’t be a meaningful portion of our business. We’re over $30 billion in revenue, almost $32 billion in revenue, in 2022 and we wouldn’t get into a business like this if we didn’t believe it could be bigger than at least 10% of our revenue," said Spencer Neumann, the chief financial officer.

Netflix will be enforcing its password-sharing rules 'more broadly' in the first quarter of 2023, it said in the earnings report. It aims to monetise users who previously shared passwords with people outside their own homes.

"As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with," Netflix wrote to the shareholders.

It expects some initial 'cancel reaction' in each market, impacting near term member growth, but in the long-term expects to see 'improved overall revenue'.

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