Netflix Hastings Resigns: Here’s What Went Wrong [Details]

Reed Hastings, one of the people who started Netflix, has stepped down as CEO of the company. This means that long-time partner and co-CEO Ted Sarandos and Chief Operating Officer Greg Peters are now in charge.

Reed Hastings Quits as Ceo After 25 Years

Co-CEO Sarandos and COO Peters will both be called CEOs. Hastings, who is leaving the company, will take on the role of executive chairman. The change takes effect right away. Since 1998, Hastings has been Netflix’s CEO.

“It was like being thrown into the fire,” Hastings said in a statement, according to a report by Reuters. He was referring to Covid and some recent problems in his business. “But they’ve done a great job running things, so the board and I think it’s time for me to step down.”

Hastings left Netflix even though it added 7.66 million subscribers in the fourth quarter (Oct.–Dec. 2022), which was more than Wall Street expected (4.57 million). “Harry & Meghan” and “Wednesday” helped in the battle to get people to watch streaming TV.

Netflix thought there would be “modest” growth in subscribers until March. With the help of new revenue streams, it predicted that sales would grow by 4% from one year to the next.

Customers aren’t spending as much money. Walt Disney Co., Amazon, and others are spending billions of dollars to make TV shows and movies for online audiences, giving the company competition.

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How Hastings Created Netflix in 1997

Hastings, 62 years old, co-founded Netflix as a DVD-by-mail business in 1997. He said he got the idea after renting “Apollo 13” from a local Blockbuster video store and getting charged $40 for being late.

“It seems like just yesterday that we had our initial public offering. There were red envelopes everywhere, “Reuters said that Hastings said this in a video interview after the company’s earnings report on Thursday.

In 2007, the business became a video streaming service that shocked Hollywood and made Netflix’s media competitors spend billions of dollars on their services.

Hastings made some of his problems, like when he wanted to turn the company’s DVD business into a new company called Qwikster. That plan cost the company 800,000 subscribers and caused the stock to drop.

According to the report, Hastings handled another sharp drop in Netflix’s stock in April 2022, when the company reported its first loss of subscribers in more than a decade. This forced Hastings to think about ideas that had been banned in the past, like putting ads on the service.

Netflix’s Rollercoaster In 2022

Before the last quarter’s subscriber growth, which was better than expected, Netflix had been under pressure for most of 2022 because it had lost customers in the first half of last year. The report said that its stock, once a favorite on Wall Street, had dropped nearly 38% in the past year.

In November, Netflix launched a cheaper option with ads in 12 countries to help it grow. It has also said that it wants to make it harder for people to share passwords.

“The beginning of 2022 was rough, but the end of the year was better. We think it will be easy to speed up our sales growth again, “Netflix told shareholders in its quarterly letter.

Netflix’s Plans for 2023

Peters said that Netflix would start adding features this quarter to get more people who share passwords to become paying subscribers. He said it wouldn’t be “a move that everyone likes,” comparing it to raising prices, making people cancel for a while but bringing in more money in the long run.

At the end of December, the company had 231 million subscribers worldwide. The Addams Family story “Wednesday” was watched by many people, and Netflix said it was the third most-watched show in its history. A Reuters report noted that “Glass Onion,” a murder mystery, and “Harry & Meghan,” a documentary about the British royal family, were also big hits during the quarter.

Net income went down from $607 million, or $1.33 per share, a year earlier to $55 million, or 12 cents per share. Sales went up by 1.9% to $7.85 billion, which was about what was expected.

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