Netflix announced Thursday that its founder, Reed Hastings, will step down as co-CEO of the company and serve as CEO. Hastings will be succeeded by co-CEOs Ted Sarandos and Greg Peters.
“Our board has been discussing succession planning for many years (even founders must evolve!),” Hastings wrote in a blog post Thursday. “As part of that process, we promoted Ted to co-CEO with me in July 2020 and Greg to COO, and over the past two and a half years I have increasingly delegated management of Netflix to them.”
Hastings founded Netflix in 1997 and changed the way countless households watched movies and shows, first with his DVD-by-mail business and then with his streaming video service.
Under Hastings’ leadership, Netflix upended traditional movie rental companies like Blockbuster and helped shake up Hollywood by launching an arms race investing in original content. It also survived a notable misstep in 2011 when the company briefly planned to spin off its streaming service from its DVD business, with the latter rebranding as Qwikster.
Last year, however, Netflix’s stock and reputation took a hit after it lost subscribers amid increased competition from rival streaming services. In response, Netflix introduced a lower-priced ad-supported tier for the first time in its history.
Those changes may be paying off. In its earnings report on Thursday, the broadcaster said it added more than 7.6 million subscribers during the final three months of last year, well above the 4.5 million it had projected, for a total of more than 230. Millions of subscribers around the world.
The company said the growth also indicates that its ad-supported subscription offering, which launched in November, has gained traction.
“It is still early days for announcements and we have a lot to do,” the company wrote in a letter to shareholders. But he noted that engagement is better than he expected and “we think the lower price point is driving incremental membership growth.”
Netflix also said it plans to “start rolling out paid sharing more broadly” later this quarter, as part of its effort to crack down on people who share passwords instead of paying for their own accounts.
Shares of Netflix rose nearly 4% in after-hours trading following Thursday’s report.
While Hastings’ removal from the CEO role represents the end of something of an era, Netflix said the leadership change “externally reshapes how we’ve been operating internally.” And Hastings added in his blog post that Sarandos and Peters have “complementary skill sets, a deep understanding of entertainment and technology, and a proven track record at Netflix.”
Sarandos, in particular, has led Netflix’s content operations since 2000 and pioneered the company’s transition to producing original content in 2013. In the process, he has become not only a key leader at Netflix, but also a power player in Hollywood.
“Since Reed began delegating management to us, Greg and I have built a strong operating model based on our shared values and a like-minded approach to growth,” Sarandos said in a statement. “I am very excited to start this new chapter with Greg as Co-CEO.”