Wall Street Times

Netflix: Founder steps down as Co-CEO

Image Source: Shack News

The idea was that when people had less money, they would use streaming services less.

But at the end of last year, Netflix went against this trend by adding more than seven million new subscribers, which was a lot more than analysts expected.

People were interested in what Harry and Meghan said, as well as the new show Wednesday and the movie Glass Onion.

Reed Hastings, who was CEO, was happy with the better numbers, but he also said he was stepping down as CEO.

His move, which he has been planning for a long time, means he is leaving the company he started, which is in a market with a lot of competition and challenges and where 231 million people have signed up to watch.

Hastings will keep his job as the company’s executive chairman. He was one of the first people to make waves in the tech industry. He was an early leader in the business of streaming.

The company will now be run by Ted Sarandos and Greg Peters, who were already top executives.

Reed Hastings, who helped start Netflix and is now one of its co-CEOs, is stepping down from his job as CEO. He will still work for the company and be the board’s executive chairman.

Ted Sarandos, a chief content officer before becoming co-CEO, and Greg Peters, a chief product officer and COO before becoming co-CEO, will now work together as co-CEOs. Bela Bajaria used to be in charge of global TV, but now she is Netflix’s chief content officer. A former head of global films, Scott Stuber, is now chairman of Netflix Film.

Netflix reported its earnings for the fourth quarter of 2022 on Thursday. It gained a total of 7.7 million new subscribers, which is a lot more than the 4.5 million it had expected.

Hastings said in a blog post that the Netflix board has been discussing succession planning for many years. In July 2020, the company made Hastings and Sarandos joint CEOs. In addition to being the chief product officer, Peters was also named the chief operating officer.

Hastings praised Sarandos for having “the early foresight and skill to push into original programming, which changed our trajectory as a company,” as well as for expanding into international originals, film, animation, and unscripted programming. Hastings also said that Peters was “instrumental” in building partnerships, putting together and launching Netflix’s first ad-supported plan, and leading the company’s push into gaming.

Netflix Q4 performance review

With its new, cheaper plan with ads, the streaming giant Netflix may have gotten the boost in new subscribers it was hoping for.

Netflix will report its earnings for the fourth quarter of 2022 after the market closes on Thursday. One of the most important things for investors to keep an eye on is how well the $6.99/month tier with ads does. This level started in 12 markets at the beginning of November.

In the past, it was said that Netflix’s Basic with Ads plan started slowly. But new evidence shows that the launch was a success: Ampere Analysis, a research company, released a study on Thursday that found that when Netflix’s ad-supported plan came out on November 3, the most people signed up for subscriptions every day in the U.S. since the pandemic started in April 2020. In particular, the researcher said that the average number of people who signed up for the streamer from November 3 to 5 was 58% higher than in the three days before the launch.

Since the ad-supported service went live, Ampere found that 8% of people who signed up for Netflix or changed their plan chose the ad-supported plan. Three out of four of these are new sign-ups. Most are returning customers (64%), while the rest are first-time users (36%). Also, 67% of Netflix subscribers who switched to the tier with ads were on the Basic plan, 21% were on the Standard plan, and 12% were on the Premium plan.

In its Q3 earnings report, Netflix didn’t say how many subscribers it expected for the plan with ads, but it did tell investors that Netflix Basic With Ads wouldn’t make a “material” difference to Q4 earnings. Executives have said that they expect the package with ads to bring in the same amount or more per subscriber as the plans without ads.

Analysts will also be looking for news about Netflix’s plan to make users who share their accounts without permission pay more if they live in a household where the passwords are shared. Early in 2023, the company said it would start “a smart way to make money off account sharing.” This would mean going beyond its initial test markets in Latin America, and all signs point to a more honor-based system than a punishment-based system.

The company’s two new plans for growth are just getting started. In a research note, UBS analyst John Hodulik said they “will take time to scale.” For example, Hodulik said that Netflix’s upsell program for sharing passwords “should make more money, but will probably make people leave.” “With management’s “crawl, walk, run” strategy, we also expect similar comments about [the advertising tier].

Read Also: Netflix password sharing will end in 2023

Now that Netflix management isn’t giving guidance on how many subscribers to expect, Wall Street will focus on revenue and earnings guidance for Q1. Based on data from Refinitiv, analysts expect sales of $8.15 billion in the first quarter of 2023, which is 3.6% more than the same time last year, and earnings of $2.97 per share, which is 16% less than the same time last year.