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Reed Hastings, co-founder of Netflix, steps down

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The Netflix co-founder Reed Hastings is stepping aside as co-chief executive of the world’s largest streaming service as it returns to growth.

Ted Sarandos, co-chief executive since 2020, is joined by Greg Peters, who had been serving as chief operating officer, with immediate effect.

Hastings, 62, said it was the “right time” for him to become executive chairman of the group. He plans to spend more time on philanthropy, but stressed that he would “remain very focused” on his company’s stock market performance.

It follows an extraordinary year for shares in Netflix, which halved after its subscriber base slipped into decline for the first time in a decade. They later recovered ground, as the group moved aggressively to revitalise its fortunes, including by ditching a longstanding aversion to advertising and launching a discounted tier in November.

The platform attracted 7.66 million subscribers in the last quarter — beating guidance of 4.5 million — as it released popular series including Harry & Meghan, featuring the Duke and Duchess of Sussex, and Glass Onion, the latest of the Knives Out movies.

Shares in Netflix rose $22.42, or 7.1 per cent, to $338.20 during out-of-hours trading last night.

Hastings compared his transition to that of Jeff Bezos at Amazon, or Bill Gates at Microsoft, and said he had already been delegating management to Sarandos and Peters over the past two years.

“It was a baptism by fire, given Covid and recent challenges within our business,” Hastings wrote in a blog post. “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.”

Netflix, which launched in 1997 as a DVD postal service, is the leader of the crowded streaming market. With a market value of $142 billion, the group is based in Los Gatos, California. It finished December with a global subscriber base of 231 million paying users.

Revenue rose 1.9 per cent to $7.85 billion during the last three months of 2022, in line with expectations on Wall Street. Net income, however, fell sharply from $607 million to $55 million.

Netflix scrambled to revive user growth last year, incorporating adverts and moving to persuade the estimated 100 million additional households accessing its service for free by using others’ accounts to start paying.

Hastings’ decision to relinquish day-to-day management after more than two decades marks the end of an era for the company, which helped to pioneer the online video streaming market. It has faced intense competition in recent years, as established heavyweights — from Disney to Warner Bros — spent billions constructing rival platforms

“I’m so proud of our first 25 years, and so excited about our next quarter of a century,” Hastings wrote. The company begins 2023 “with renewed momentum,” he added, “and a clear path to reaccelerate our growth.”

It forecast revenue of $8.2 billion for the current quarter, up 3.9 per cent on the year, and profits of $1.29 billion.