Netflix, the world’s leading streaming service, announced a major leadership change as co-founder Reed Hastings stepped down from his role as co-CEO, taking on the position of executive chairman. The move comes as the company reported mixed financial results for the fourth quarter of 2022, with subscriber growth surpassing expectations but revenue growth falling short.

The company added 7.66 million new subscribers, bringing its total subscriber base to 230.75 million. However, revenue for the quarter only rose by 1.9% year over year, reaching $7.8 billion. Net income also decreased significantly from $607 million the previous year, due to an unrealized loss related to Euro-denominated debt.

The financial results suggest that the company’s introduction of a lower-priced ad-supported tier has brought in more users, but at the cost of revenue growth. The average revenue per subscriber also fell in every region of the world compared to the previous quarter, indicating that the growth in subscribers was driven by the lower-priced ad-supported tier.

As part of the leadership changes, COO Greg Peter will be promoted to co-CEO alongside Ted Sarandos, who has held the co-CEO position alongside Hastings for the past two and a half years. Hastings had previously stated that he would remain with the company for a decade, but it was not clear whether he would retain the co-CEO title for that period.

The move to promote Peter to co-CEO alongside Sarandos is seen as a sign of the company’s focus on its operations and growth, as it looks to continue its dominance in the streaming industry. Hastings, as executive chairman, will continue to play a key role in the company’s strategic direction and provide guidance to the leadership team.

The leadership change at Netflix and the mixed financial results for the fourth quarter of 2022 indicate that the company is facing challenges in terms of revenue growth. However, the strong subscriber growth and the promotions of experienced executives like Peter suggest that the company is well-positioned to overcome these challenges and continue its dominance in the streaming industry.

He wrote (via Netflix news):

I’m so proud of our first 25 years, and so excited about our next quarter of a century. We can do so much more to better entertain the world and deliver more joy to our members.

Our board has been discussing succession planning for many years (even founders need to evolve!). As part of that process, we promoted Ted to co-CEO alongside me in July 2020, and Greg to Chief Operating Officer – and in the last 2½ years I’ve increasingly delegated the management of Netflix to them.

It was a baptism by fire, given COVID and recent challenges within our business. But they’ve both managed incredibly well, ensuring Netflix continues to improve and developing a clear path to reaccelerate our revenue and earnings growth. So the board and I believe it’s the right time to complete my succession.

Starting today, Greg Peters will step up from COO to become Ted’s co-CEO. Going forward, I’ll be serving as Executive Chairman, a role that founders often take (Jeff Bezos, Bill Gates, etc.) after they pass the CEO baton to others. Ted, Greg and I have been working closely together in different capacities for 15 years. As is common in long, effective relationships, we’ve all learned how to bring out the best in each other. I look forward to working with them in this role for many years to come.

Ted and Greg have developed great trust and respect for each other through their collective successes and failures. In addition, they can always be relied upon to put Netflix’s interests first. These qualities — combined with their complementary skill sets, deep knowledge of entertainment and technology, and proven track record at Netflix — create a unique opportunity to deliver faster growth and greater success long term with them as co-CEOs.

Looking back, Ted had the early foresight and skill to push into original programming, changing our trajectory as a company. He then moved quickly to expand into international originals, film, animation, and unscripted — bets that have helped broaden our content slate and which took courage given all the skepticism. Greg has been instrumental in driving our partnerships, building and launching advertising, pushing us into deeper personalization, rebuilding our talent organization and helping to strengthen our culture. He also spent several years in Japan, launching our early efforts in Japanese originals as the country’s general manager, and is currently building out our games initiative.

For myself, I’ll be helping Greg and Ted, and, like any good Chairman, be a bridge from the board to our co-CEOs. I’ll also be spending more time on philanthropy, and remain very focused on Netflix stock doing well.

Also, today, we have made Bela Bajaria Chief Content Officer and Scott Stuber Chairman of Netflix Film. It’s been amazing to see the enormous strides we’ve made across TV and film under their leadership.

We start 2023 with renewed momentum as a company and a clear path to reaccelerate our growth. I’m thrilled about Ted and Greg’s leadership, and their ability to make the next 25 years even better than the first.

Here’s to the next chapter of Netflix and our leadership.

Reed Hastings