Netflix announced Thursday that founder Reed Hastings has stepped down as co-CEO of the company to become chairman. Hastings will be replaced by co-CEOs Ted Sarandos and Greg Peters.
“Our board has been debating succession planning for years (even founders need to evolve!),” Hastings wrote in a blog post Thursday. “As part of that process, in July 2020, we promoted Ted to co-CEO and Greg to chief operating officer. I have entrusted you.”
Hastings founded Netflix in 1997 and changed the way countless families watch movies and shows. At first he was in the mail business with DVDs, then in the streaming video service.
Under Hastings’ leadership, Netflix helped shake up Hollywood by disrupting traditional movie rental companies like Blockbuster and launching a race to invest in original content. The company also survived a notable failure in 2011 when it briefly planned to spin off a streaming service from its DVD business, the latter of which he rebranded as Qwikster.
But last year, Netflix lost subscribers amid increased competition from rival streaming services, taking a toll on its stock price and reputation. In response, for the first time in its history, Netflix introduced an ad-supported tier for lower prices.
Those changes may have paid off. In Thursday’s earnings report, the streamer said he added more than 7.6 million subscribers in the last three months of last year.
The company said the growth also shows that its ad-supported subscription service, which launched in November, is gaining momentum.
“Advertising is in its infancy and we have a lot of work to do,” the company wrote in a letter to shareholders. However, engagement has been better than expected, and he said, “We believe the low prices are driving membership growth.”
Netflix also plans to “begin rolling out paid sharing more broadly” later this quarter as part of an effort to crack down on people sharing passwords rather than paying for their accounts.
Netflix shares rose nearly 4% in after-hours trading following Thursday’s report.
Hastings’ departure from the CEO position marks the end of an era of sorts, but with a change of leadership, Netflix “formalizes outside the company what it’s done internally.” said. In his own blog post, Hastings added that Sarandos and Peters have “complementary skills on his set, deep knowledge of entertainment and technology, and his track record at Netflix.”
In particular, Sarandos has led Netflix’s content operations since 2000 and pioneered the company’s transition to original content production in 2013.
“Since Reed began delegating management to the company, Greg and I have built a strong operating model based on shared values and a like-minded approach to growth,” Sarandos said in a statement. “We are very excited to begin this new chapter with Greg as co-CEO.”