Reed Hastings on Leadership Transition

The pandemic years brought triumph and then the seeds of correction. In July 2020 Netflix appointed Ted Sarandos as co-CEO alongside Hastings, the first formal step of succession; that September it signed a multi-million-dollar production deal with the Duke and Duchess of Sussex. In 2021 Netflix earned the most Academy Award nominations of any studio, thirty-six, and won seven, the most of any studio; later that year it won forty-four Emmys, more than any network or studio, tying the single-year record CBS set in 1974. In September 2021 Squid Game, the South Korean survival drama created by Hwang Dong-hyuk, became the service's most-watched show within a week of launch, drawing more than one hundred eleven million viewers in its first twenty-eight days and surpassing Bridgerton. Netflix launched mobile games for subscribers in November 2021, bundling a small library, including Stranger Things titles, into the app. The momentum concealed a saturation problem that would explode in early 2022, when the post-pandemic reckoning arrived and the decade of uninterrupted growth stopped.

Announcing the succession on January 19, 2023, Hastings wrote that he was proud of Netflix's first twenty-five years and excited about the next quarter century, with much more to do to entertain the world and deliver joy to members. The board, he noted, had been discussing succession planning for many years, adding that even founders need to evolve. As part of that process the company had promoted Ted Sarandos to co-CEO alongside Hastings in July 2020 and Greg Peters to chief operating officer, and over the following two and a half years Hastings had increasingly delegated the management of Netflix to them. He described the period as a baptism by fire, given COVID and the challenges within the business, but said both had managed incredibly well, keeping Netflix improving and developing a clear path to reaccelerate revenue and earnings growth. The board and Hastings concluded it was the right time to complete the succession, and Peters stepped up from chief operating officer to join Sarandos as co-chief executive, effective immediately.

The Guardian framed the January 19, 2023 announcement as the end of an era: Hastings, the founder who had redrawn the media landscape and pioneered streaming, was stepping down as co-chief executive at sixty-two, a quarter century after starting a company that once delivered movies on DVDs through the mail. Greg Peters, chief product and chief operating officer, joined Ted Sarandos, who had been elevated to co-CEO in July 2020, as co-chief executive, while Hastings became chairman. Hastings said he had been delegating management to the pair for more than two years and noted that they had steered the company through the pandemic and the upheavals of the streaming industry. The context was a bruising period: Netflix had been under pressure from restrained consumer spending and competition from Disney, Amazon, and others spending billions on programming, and had shocked Wall Street by losing customers in the first half of 2022 before returning to growth. Blockbuster, the first rival, had long since ceased operations, in 2014.

Hastings framed his own new position explicitly in founder terms: executive chairman is the role founders often take, he wrote, citing Jeff Bezos and Bill Gates, after passing the chief executive baton to others. He emphasized that he, Sarandos, and Peters had been working closely together in different capacities for fifteen years, and that as in any long, effective relationship they had learned how to bring out the best in each other. Sarandos and Peters, he wrote, had developed great trust and respect through their collective successes and failures, could always be relied upon to put Netflix's interests first, and combined complementary skill sets, deep knowledge of entertainment and technology, and proven track records at the company, creating a unique opportunity for faster growth with them as co-CEOs. The letter reads as the culture document applied to succession itself: no drama, no interregnum, context shared openly, and an informed captain for the next era identified years before the handover was completed.

The Guardian's account noted the personal stakes in the transition. Hastings, one of Netflix's largest individual shareholders with about two percent of the company, had a personal fortune then estimated by Forbes at 3.3 billion dollars, and he wrote that he would spend more time on philanthropy while remaining focused on Netflix stock doing well, planning to work with Sarandos and Peters as executive chairman for many years to come. The company he handed over closed 2022 with 231 million paid memberships, having added 7.7 million customers in the final quarter, well above the 4.5 million it had forecast, and described the year in its investor letter as tough, with a bumpy start but a brighter finish. The handover capped a quarter century in which the DVD-by-mail startup had become the company that encouraged traditional media and technology players alike to launch their own streaming services, reshaping television around a subscription model its co-founder had first sketched on the way to the gym.

The letter divided the credit with precision. Ted Sarandos, Hastings wrote, had the early foresight and skill to push into original programming, changing the company's trajectory, then moved quickly to expand into international originals, film, animation, and unscripted, bets that broadened the content slate and took courage given the skepticism they faced. Greg Peters had been instrumental in driving partnerships, building and launching advertising, pushing deeper personalization, rebuilding the talent organization, and strengthening the culture; he had also spent several years in Japan as country general manager launching early Japanese originals and was building out the games initiative. For himself, Hastings said he would help the co-CEOs and, like any good chairman, act as a bridge from the board, spend more time on philanthropy, and remain very focused on Netflix stock doing well. The same announcement elevated Bela Bajaria to chief content officer and Scott Stuber to chairman of Netflix Film, and closed with Hastings's confidence that the next twenty-five years could be even better than the first.