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Netflix changes CEO-sharing arrangement, teases paid password-sharing

Reed Hastings steps down as joint boss to become board chair

The co-founder of vid-streamer Netflix, Reed Hastings, has announced he will step down as co-CEO.

Hastings penned a blog post in which he explained his move – and the elevation of chief operating officer Greg Peters to serve as co-CEO alongside Ted Sarandos – was all part of Netflix's succession plan.

"In the last 2½ years I've increasingly delegated the management of Netflix to them," Hastings wrote.

"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."

Hastings will stay on as executive chair of the streamer's board.

In a letter to shareholders that disclosed Q4 2022 and FY 2022 results, the streamer revealed it will extend its paid password sharing scheme during Q1 2023.

The letter explains that over 100 million households share their Netflix accounts with people who don't dwell in the same residence, and explains that it "undermines our long term ability to invest in and improve Netflix, as well as build our business."

Netflix has therefore trialled a scheme whereby folks outside a household can stay attached to an account by paying a password-sharing fee, and reported it created "some cancel reaction" in Latin American markets.

Stranger things aren't expected when the option is rolled out elsewhere, although execs did say Netflix could take a revenue and viewership hit.

Making punters pay for password sharing is one way Netflix hopes to improve revenue. Cheaper subs that require viewers to endure ads is another, and execs said that recently introduced offer has done well.

Peters lauded Microsoft's role in making that happen, adding that "a bunch of technical improvements in terms of ad delivery validation [and] measurement" are on the drawing board.

Speaking of tech, Netflix is famously an enormous AWS customer, but has never explained just how much it spends with the cloud colossus. The company's Q4 results report doesn't change that – but does include a line item for "Technology and development" detailing FY 2021 spending of $2.3 billion and FY2022 spending of $2.7 billion. Just what the extra ~$400 million bought is not discussed in the company's various written and spoken comments on performance.

Revenue for FY2022 came in at $31.6 billion – up just under $900 million for the year. Q4 revenue was up $140 million year over year, to $7.85 billion. Full year net income dropped $600 million to $4.5 billion.

The attention-grabbing service signed up 231 million paid subscribers – an increase of nine million across the financial year.

Execs predicted the sequel to this year's performance would feature modest growth, as Netflix tries to compete against linear TV, games, YouTube, TikTok, and rival streamers.

They suggested Netflix needs to be considered a minor player in the entertainment caper – despite also championing the outsized cultural footprint of shows Stranger Things and Wednesday because each featured songs that did not trouble the pop charts for many years until viewers were able to rediscover them on Netflix. ®

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