Newly minted Netflix Co-CEO Greg Peters and Ted Sarandos, who has held that title since 2020, say no major strategic shifts are in the immediate offing after Reed Hastings passed them the leadership baton.
“We don’t have a bank of changes that we’ve been holding for this moment,” Peters said during the company’s fourth-quarter earnings interview, “so mostly it’s just continuity and moving forward.”
Hastings, who co-founded Netflix, is stepping down from an executive role and becoming executive chairman of the company. He said during the earnings interview that the move had its roots a decade ago, as the two Co-CEOs began establishing their bona fides. Peters, at that time a senior product executive, spearheaded the company’s move from the physical DVD business to streaming over the internet in the mid-2000s. Sarandos scaled the company’s original content efforts.
The news of the executive changes (with promotions and new titles for Scott Stuber and Bela Bajaria as well) came out at the same time the company reported gaining almost 7.7 million subscribers in the fourth quarter. They tally was well ahead of Wall Street expectations. Earnings per share in the quarter fell below estimates, however, and revenue was nearly flat at $7.8 billion.
“It feels like yesterday we were having our IPO,” Hastings said during the interview, during which he stressed that the three execs have worked together closely for 15 years. “I couldn’t be happier,” he added, and moderator Jessica Reif Ehrlich, an analyst with Bank of America, described the transition as one of the smoothest in media history (take that, Disney). “This started about 10 years ago with the board, trying to think through how this could work.”
Hastings noted the IPO price in 1997 around $1 and the stock appreciation, particularly over the past decade. “I know they want to beat that, and I’m all for that,” Hastings said. “They’re very ready, that’s what’s driving the timing.”
Sarandos expressed his thanks to Hastings for “changing my life personally and professionally for the better over the past 22 years” and expressed confidence in the “shared leadership model” the company has put in place. Hastings leaves big shoes to fill, he acknowledged, “but at least we have four feet to fill them with.”
Ehrlich asked if the company would have to grow or swing major M&A deals — or even sell assets or the entire company — as the marketplace evolves. Sarandos replied that streaming is “in its infancy,” with the company still accounting for just 8% of TV viewing time in the U.S.
While it wasn’t a total surprise that Hastings would move on a quarter-century after founding Netflix as a DVD-by-mail company, his absence from the executive management team will be another turning point for a company that has seen plenty of late. In addition to pioneering the field of streaming, Netflix became one of the paragons of the internet era of start-ups under Hastings, completely disrupting traditional Hollywood en route to a market valuation of $140 billion.
It has often enjoyed (in dotcom-era parlance) first-mover advantage, expanding globally and offering viewers innovations like skipping credits long before rivals. More recently, though, the company has been swarmed with rivals like Disney+ and Apple TV+ and has also been willing to be a follower, including in its recent pursuit of video games and advertising, if it can lead to revenue growth.