Change of boss at Netflix - many new users with "Harry & Meghan

The era of company founder Reed Hastings is coming to an end at streaming giant Netflix. After more than two decades, the 62-year-old retired from top management. The move followed a surprisingly strong final quarter. Not least thanks to the documentary series "Harry & Meghan," Netflix grew much faster than expected with an increase of 7.7 million users. The service is in a state of flux: A cheaper subscription rate with advertising was recently launched, and action will soon be taken against password sharing.

"Even founders need to evolve," Hastings wrote on the company blog Thursday. He had promoted longtime content chief Ted Sarandos to a dual leadership role in 2020. Now Greg Peters, who was previously in charge of day-to-day operations, is moving up to co-chief executive. "Frankly, the two of them have been running the company more and more," Hastings said in an interview. He is likely to retain great influence as executive chairman of the board.

Hastings rebuilt Netflix into a streaming service

Netflix's first business model was DVD rentals by mail. Hastings, however, recognized the potential of streaming early on and bet on it. The next strategic step was to produce its own content: First, to save on licensing costs. On the other, because Hastings foresaw that studios would keep their programming for their own services during the streaming boom.

At the same time, it opposed advertising on the service, tolerated password sharing, and stayed strictly away from expensive sports rights. Netflix is currently breaking with the first two principles.

The introduction of the cheaper subscription with advertising in November, including in Germany, was a reaction to the increasing competition with more and more streaming services. The big rival Disney+ now also offers a version with ads. Peters emphasized that the advertising subscription has so far mainly attracted new customers, with little switching from more expensive tariffs.

Passwords are made more difficult to share

If Netflix finds that passwords are being shared beyond one household, the service plans to charge extra in the future. "It's not going to be a universally popular move," Peters acknowledged. He said the company is preparing for some users to leave Netflix, at least temporarily.

At the same time, the service is bracing itself for additional revenue from the move. And Sarandos is hoping above all for the program's appeal: "If the content works, the business works."

Significantly more users gained

After a disappointing year for Netflix over long stretches, the end of the year was much better than expected. In the three months to the end of December, the streaming service added 7.66 million new customers - instead of the expected 4.5 million.

Netflix had a total of 230.75 million user accounts at the end of the year. In addition to "Harry & Meghan," the video service also scored with the series "Wednesday" and the films "Troll" and "Glass Onion.

"2022 was a difficult year with a bumpy start but a shinier finish," the annual report said, referring to the weak first half of the year. Netflix had experienced a rush of customers at the start of the pandemic, but then ran into rough waters with customer attrition in between.

Business figures surprise analysts positively

Competition from financially strong rivals such as Disney and Amazon was compounded by the fact that customers' money was no longer so loose due to inflation. Now things are looking up again: fourth-quarter revenues grew by around two percent year-on-year to 7.9 billion US dollars.

Net profit slumped from $607 million to $55 million due to unfavorable exchange rate developments, but Netflix announced an increase to $1.3 billion for the current quarter. In terms of revenue, the company expects an increase to 8.2 billion dollars. Overall, the quarterly report was well above the forecasts of Wall Street experts. Netflix shares started Friday's pre-market trading with strong gains. (SDA)