Netflix reported an increase of 7.66 million subscribers in the last half of 2022 after launching its cheapest subscription with added ads. This is higher than the streaming platform’s forecast of 4.5 million.
The above-expected growth changed the mood of the market, which predicted Netflix’s lowest fourth-quarter growth since 2014. What’s worse, the pessimistic forecast caused the company’s shares to drop. However, the company’s revenue has been beneficial, reaching $7.85 million in the fourth quarter of 2022 and is expected to grow to $8.17 million in the first quarter of this year.
Though Netflix has been recovering since the third quarter of 2022 when it first started adding subscribers that year, the company was forced to reevaluate its past years after reporting a loss of customers. In addition to several rounds of layoffs and tighter budget control, it debuted a cheaper subscription tier with ads on November 3.
Amid this turnaround, Netflix now completes its reinvention with the announcement of the biggest leadership change since its launch, with Reed Hastings, the company’s founder, stepping down as co-CEO. He was a staunch opponent of ads on the platform and argued that the platform should spend, spend, spend. The company’s new business model, resulting from last year’s crisis, is the opposite and has proved to be the way out to return to growth. With the changes, Hastings has lost momentum and will now take a position on the company’s board as executive chairman.
His replacement is Greg Peters, who joined the platform in 2008 and was director of operations and products at Netflix. He will share the leadership of the company with Ted Sarandos, who was the director of original content for streaming before being promoted to CEO by Hastings.
“2022 has been a challenging year, with a bumpy start but a brighter finish. We believe we have a clear path to accelerate our revenue growth again: continue to improve all aspects of Netflix, roll out paid sharing and make grow our advertising offering,” Hastings said in a letter to its shareholders. “As always, our guiding stars continue to delight our members and build even greater profitability over time.”
Indeed, Netflix has helped a lot to close 2022 with several successes, such as the series “Wandinha”, the film “Glass Onion: A Knives Out Mystery” and the documentary series “Harry & Meghan”.
“It has been a baptism of fire given the pandemic and the recent challenges in our business,” added Hastings. “But both [Sarandos e Peters] managed incredibly well, ensuring Netflix continues to improve and develop a clear path to re-accelerate our revenue and earnings growth. Therefore, the board and I believe the time is right to complete my succession.”
“I want to thank Reed for his visionary leadership, guidance and friendship over the past 20 years,” Sarandos said in a statement. “Since Reed began delegating management to us, Greg and I have built a robust operating model based on our shared values and like-minded approach to growth. I am very excited to begin this new chapter with Greg as co-CEO” .
The command changes also affected other departments with some promotions. Former global head of TV Bela Bajaria is now the company’s chief content officer, a position recently filled by Sarandos, and Scott Stuber is now president of Netflix Films, responsible for the company’s feature films.
It’s worth noting that Netflix’s recovery saves Hollywood and Wall Street’s faith in streaming. When the company entered the first half of 2022 with a series of disastrous earnings reports revealing the loss of more than 970,000 subscribers, investors started to panic. Netflix has lost billions in market value, and that fear has been echoed by other companies betting on streaming, like Disney and Warner Bros. Discovery: The former impacted $1.47 billion in streaming losses, and the second is still being reworked.
Netflix is expected to maintain its $17 billion budget for content spending this year, Chief Financial Officer Spencer Neumann said on previous conference calls. But the list of films announced for 2023 will be significantly reduced compared to previous years. In all, 49 feature films will be released, well below the 86 titles in 2022.
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Source: Terra
Jason Root is a writer at Gossipify, known for his in-depth coverage of famous people in entertainment, sports, and politics. He has a passion for uncovering the stories behind the headlines and bringing readers an inside look at the lives of the famous. He has been writing for Gossipify for several years and has a degree in Journalism from UC Berkeley.
