New York, Dusseldorf First, Netflix co-founder Reed Hastings made his living shipping DVDs. But the manager recognized the potential of streaming early on. In 2007, ten years after founding the company, he turned Netflix into a streaming provider. The group later also produced its own content.
Hastings thus revolutionized the entire media industry. Videos on demand are indispensable today. Because the company from Los Gatos in California grew rapidly over the years, this prompted numerous competitors to invest billions in comparable offers. Today, Netflix faces strong competition from Disney and Amazon. German TV stations are now also investing more in streaming.
Now an era in the streaming business is ending. After two decades at the helm of the pioneer, the 62-year-old is stepping down as CEO and is now concentrating on his role as head of the board of directors – a position in which he continues to have great influence.
On Friday night, Hastings handed over the management of the company to Greg Peters, who has been responsible for day-to-day business up to now. Ted Sarandos, whom Hastings had already promoted to a dual leadership in 2020, remains in the office of co-boss. “Honestly, the two of them have run the company more and more,” Hastings wrote on the company blog. Founders also need to develop further.
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“Hastings’ departure as CEO seems well prepared and planned for a long time,” says streaming expert Bernd Riefler, founder of the Munich analysis company Veed Analytics. It is positive that the replacement comes from our own ranks.
After a decade of growth, the stock price collapsed in 2022
Netflix developed rapidly under Hastings, as can be seen from the share price. The issue price was 15 dollars in 2002, today the paper is quoted at over 330 dollars. After a decade of growth, however, this faltered in the past year. The share price collapsed by 50 percent in 2022. User growth was the lowest since 2011.
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Netflix also suffered from a dwindling audience due to growing competition from Disney and Amazon. In addition, the money for streaming services is no longer as easy for customers as it used to be due to rising inflation.
As growth slowed, Hastings became more involved in day-to-day operations. Employees had previously reported that the founder was significantly less committed.
Hastings’ departure as CEO seems well prepared and well planned. Bernd Riefler, founder of the analysis company Veed Analytics
He had recently broken with his principles. For a long time, Hastings blocked advertising on the service. Because of the dwindling number of customers, Netflix introduced a cheaper subscription in the fall, where viewers pay less but have to accept advertising.
>> Read also: An advertising subscription is not a sure-fire success for Netflix
Hastings says goodbye to the post as the number of subscribers increases. The number of users increased by 7.66 million to 231 million in the fourth quarter. Growth was about twice as strong as expected – not least thanks to the royal documentary “Harry & Meghan” or the mystery series “Wednesday”.
However, the new customers seem to take out the cheaper advertising subscription, with which Netflix earns significantly less. Existing subscribers would only rarely switch from the expensive tariffs, it said. Revenue rose 1.9 percent year-on-year to $7.85 billion. However, net income fell from $607 to $55 million in the fourth quarter.
Successors take over in difficult times
The slump in revenue shows: Hastings successors take over the management in difficult times. The competition will intensify, the streaming boom triggered by Corona has ebbed.
The competition from the streaming pioneer is getting stronger.
(Photo: AP)
Netflix is trying to increase its profits by taking action against the unauthorized sharing of passwords across a household. Netflix expects 100 million users to do this. Those affected will have to pay a surcharge in the future.
“It won’t be a popular step,” admitted co-boss Peters, who is one of the architects of the entry into the advertising business. It is therefore expected that some users would leave Netflix, at least temporarily.
Business partner Sarandos hopes above all that the program will be attractive: “If the content works, the business will work.” However, Netflix has to invest a lot of money in new productions for this.
Netflix: Tough management culture, but lots of freedom
Hastings meanwhile has more time for other tasks outside of business. He takes care of charity activities. He and his wife Patty Quillin, a producer, donated $120 million to colleges for black students.
Hastings was born in Boston in 1962. Before starting his studies, he sold vacuum cleaners on the doorstep. In 1983 he completed his mathematics studies at the traditional Bowdoin College in the US state of Maine.
Hastings was known for his tough management culture at Netflix. Those who did not perform well had to fear for their dismissal. However, the employees were given a lot of freedom. There were no specifications for travel, expenses or the number of vacation days.
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