Netflix founder Reed Hastings said Thursday he would step down from serving as co-CEO of the streaming giant after the company survived a “tough year” of subscription ups and downs and falling short of adjusted earnings expectations in the final quarter.
Hastings, who will now serve as the company’s executive chairman, passed the baton to chief operating officer Greg Peters.
Peters joins the current Netflix co-CEO Ted Sarandos, who Hastings promoted to the position in July 2020 and began passing on management responsibilities to him and Peters over the last two and half years.
“It was a baptism by fire, given COVID and recent challenges within our business,” Hastings wrote. “But they’ve both managed incredibly well, ensuring Netflix continues to improve and developing a clear path to reaccelerate our revenue and earnings growth.”
“So the board and I believe it’s the right time to complete my succession,” he added.
The announcement from Hastings simultaneously comes as Netflix reported its fourth quarter financial earnings after the bell on Thursday, which Yahoo Finance showed a mix of subscriber growth coming in at 7.66 million against forecasts for 4.5 million and adjusted earnings missing expectations.
Bloomberg reported company revenue results showed $7.85 billion versus the $7.86 billion expected, and adjusted earnings per share saw $0.12 versus the $0.58 expected.
After the announcement, Variety reported Netflix shares were up approximately 6% at $315.78 per share.
“2022 was a tough year, with a bumpy start but a brighter finish,” the company wrote in a letter to shareholders. “We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering,”
“As always, our north stars remain pleasing our members and building even greater profitability over time.”
According to the report, its Q4 content outperformed the company’s high expectations, with “Wednesday” ranking as its third most popular series ever, “Harry & Meghan” as the second most popular documentary series, and “Glass Onion: A Knives Out Mystery” the fourth most popular film produced by Netflix.
In its second quarterly report, Netflix released “better-than-expected” results earlier this year, which showed the streaming service only lost about half of the two million subscribers projected earlier this year.
However, the report showed approximately 970,000 subscribers canceled their membership during the spring and summer months. The number comes after the service took a massive hit in the second quarter when it lost 200,000 subscribers between January and March.
The company partially blamed the loss of subscribers in the first quarter on competing with other streaming services and massive account sharing, the war between Russia and Ukraine, and the global recession. At the time, Netflix officials warned shareholders that as the U.S. dollar strengthens and global currencies weaken, the historic pace could disrupt its international market, which makes up about 60% of its revenue.
“It’s not easy to build a large and profitable streaming business,” the shareholder letter said. “But we’re competing from a position of strength, as we lead the industry in terms of engagement, revenue and streaming profit. As a pure-play streaming company, we’re also not anchored to shrinking legacy business models, like traditional entertainment firms, allowing us to lean hard into the big growth opportunity ahead of us.”
JustWatch, an international streaming guide across 120 countries, told The Daily Wire that Netflix had a downward trend throughout 2022, which gave way to Amazon Prime Video becoming the subscription video-on-demand ((SVOD) market leader.
“In a historic shift, Prime Video is now the SVOD market leader in the U.S. and now holds a 1% lead over Netflix,” a spokesperson said. “Disney+ edged out HBO Max for third place, maintaining a 5% margin to Netflix. Apple TV+ dropped 1% in Q4, and is now tied with Paramount+.”