Reed Hastings, The co-founder of Netflix and its CEO in the company’s 25-year history announced on Thursday that he was stepping down from the position. It’s the end of an era for the company that first killed Blockbuster and then made cable TV slowly bleed out.
This is the end, which may have come a long time ago. Netflix was once alone in the streaming space, but in early 2023, it faced a cluttered landscape filled with streamers like Disney+ and HBO Max and video platforms like TikTok and YouTube. Acclaimed for outstanding original hits such as very strange things and WednesdayThe seemingly endless stream of Netflix original content has also come under fire in recent years for its emphasis on quality over quantity. This combination of increased competition and content tagging led to a tumultuous 2022 that slowed down the company’s growth.
But Hastings’ departure could show that Netflix is still in better shape than it was a year ago, when it was rapidly losing subscribers and share value. The streaming behemoth changed dramatically in November after quickly developing a new offer where customers could pay less ($6.99 per month instead of $9.99 per month). basic plan) to stream Netflix content if they have agreed to watch ads. Now, Ted Sarandos, who was already co-CEO of Hasting, will be joined by Netflix chief product and COO Greg Peters as co-CEO. They will oversee Netflix’s transition to a new iteration: if mail-order DVDs were Netflix 1.0 and Streaming was 2.0, then an ad-fueled Netflix that disrupts the non-stop streaming phenomenon could be Netflix’s third act.
“This is a huge transformational change for Netflix,” says Tony Gunnarsson, TV, video and ads analyst at Omdia, of subscription ads. “Once you start advertising, you can’t do it as a side business. It cannot be something that simply complements another model. It’s quickly becoming the dominant way of doing things.”
Hastings previously and repeatedly rejected the idea of advertising on Netflix. Hulu has been offering ad-supported streaming for a long time, and Disney+ launched an ad-supported option in December (Disney is also the majority owner of Hulu). As of 2019 70 percent Hulu viewers were watching ads instead of paying the full price of an ad-free subscription. And TikTok and YouTube fans have become accustomed to a barrage of ads. After a few years of hiatus, advertisers have returned to your personalized entertainment, and it looks like it will stay there.
Netflix advertising service available in a dozen countries covering North America, Europe, Asia and South America. The company ended 2022 with 231 million subscribers and generated $32 billion in revenue. He said Thursday at letter Shareholders are told that few customers have so far switched from an ad-free subscription to an ad-supported subscription, and instead the new lower price offer has resulted in a “gradual increase in membership.” It ended the year with higher-than-expected growth and still plans to cut back on password sharing by pushing accounts to use a paid sharing option where they can add users from other households for a fee.
“Netflix has become a much more mature business,” said Sarah Henschel, media and entertainment analyst at Omdia. “They are starting to focus less on subscriber growth and more on revenue growth. Perhaps this should be a compromise when they lose some subscribers, but in the end their income increases.
Hastings said in his letter that he would remain as executive chairman, a move that is common for founders to step down from the reins. He noted that a succession plan has been discussed in recent years and this has led him to split the CEO role in 2020. As the doom and gloom that followed Netflix in early 2022 fades, Hastings is leaving at a time when Netflix is more stable and possibly entering a new season.