Netflix Co-CEO Greg Peters Decries European Digital Services Tax

Netflix co-CEO Greg Peters is pushing back on European efforts to continue imposing a tax on streaming services to offset increasing high-speed internet costs required to deliver their content into consumer homes and devices.

In 2018, the European Commission (EC) proposed a temporary digital services tax on 3% of a streaming service and tech companies’ European revenue, a rule that partially ended in 2021 after the U.S. Dept. of Treasury reached an agreement with France, Austria, Italy, Spain and Britain.

Regardless, speaking Feb. 28 at the Mobile World Congress in Barcelona, Peters said the tax is unfair considering the service’s investment in local content, which he said drives consumers to spend more on broadband in the home.

Netflix has spent more than $60 billion on content over the past five years, which Peters said is equivalent to about 50% of Netflix’s total revenue over the time period.

“It is the part we play in creating a virtuous flywheel: Better, more-varied content, leading to more people willing to pay for better broadband services,” Peters said.

The executive contends any additional streaming tax would result in a reduced investment in content, which he said would hurt the creative community, undermine higher-priced broadband packages to consumers, and ultimately hurt consumers.

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“ISPs claim that these taxes would only apply to Netflix, but this will inevitably change over time as broadcasters shift from linear to streaming,” Peters said.

Citing data from the consumer group BEUC that suggests the taxes do not result in lower broadband prices and better infrastructure to consumers, Peters added that Netlfix’s operating margins are significantly lower than major ISP’s British Telecom or Deutsche Telekom.

“So, we could just as easily argue that network operators should compensate entertainment companies for the cost of our content — exactly as happened under the old pay-TV model,” he said. “But, we aren’t asking for that. I believe the better approach is for entertainment companies and operators to focus on what we each do best — creating a rising tide that will lift all boats.”

Reed Hastings Says Netflix Senior Management Transition Had Been 10 Years in the Works

Netflix co-founder/co-CEO Reed Hastings’ Jan. 19 announcement that he is stepping sideways into the newly created executive chairmanship position, with former chief operating officer Greg Peters assuming the co-CEO position alongside co-CEO Ted Sarandos, had been in motion for about 10 years, Hastings said on the fiscal webcast.

Ted Sarandos on Jan. 19 fiscal webcast

Hastings hailed Netflix’s first 25+ years as “a good start” from DVD by-mail rental pioneer to streaming giant with more than 231 million global subscribers — and the only subscription streaming service generating a profit ($55 million in fiscal 2022).

“We dream of the whole world finding their entertainment on Netflix,” Hasting said. “And the three of us have been working together for 15 years trying to figure out how to get through this issue, that issue, and how to grow. I couldn’t be happier to complete our succession process.”

Hastings, who has had one foot out the senior management door since naming Sarandos his co-CEO in April 2020, said the succession process began about 10 years ago in discussions with the board.

Newly appointed co-CEO Greg Peters on fiscal webcast

When Sarandos was upped to co-CEO, Hastings cautioned that he would remain with the company he co-started in 1997 with Marc Randolph — Netflix’s first CEO —  for at least another 10 years.

Hastings said Sarandos and Peters have been leading Netflix “more and more” and today’s announcement was a formal acknowledgment in how the company has been led over the past several quarters.

“It’s just a good feeling,” he said, adding that as executive chairman, he would be available to help Sarandos and Peters going forward. “But, it’s really theirs to lead and to use that energy and intensity that we have been doing.”

He said Peters and Sarandos are “ready” for the challenge, “so, I couldn’t be happier.”

Sarandos said Hastings would remain a role model, mentor and friend going forward.

“In 22+ years, Reed has positively changed my life in everyway manageable,” Sarandos said, adding that he is leaving “some big shoes for Greg and I to fill. Fortunately, we have four feet to do it with.”

Greg Peters: Netflix’s Ad-Supported Subscription Plan Won’t Cannibalize Existing Subs

Just how big is Netflix’s pending ad-supported subscription plan? Greg Peters, the streamer’s chief operating officer and chief product officer in charge of rolling out the less-expensive plan, accounted for more than 40% of the initial time on the streamer’s Oct. 18 fiscal webcast answering questions about and other issues.

The streamer will launch the $6.99 monthly subscription option in 12 countries beginning Nov. 3.

“We think that this lower price will bring in a lot more members … we’re quite confident in the long term that this will lead to a significant incremental revenue and profit stream,” Peters said, adding that he doesn’t believe the new pricing tier will take away from existing high-priced ad-free options.

“Oftentimes, when [new subscribers] come in, they select the plan for a given feature, let’s say, that’s the 4K resolution,” he said. “We see that to be a pretty sticky choice. We really anticipate that this is going to be a pro-consumer model that will be more attractive bringing in more members in because the consumer pricing price is low.”

Netflix is working with Microsoft to sell ads on the subscription tier, having sold almost all of its ad inventory thus far, according to Peters. The service has also engaged Nielsen in the U.S. and the Broadcasters Audience Research Board to compile audience measurement and television ratings in the U.K.

“The initial demand that we’re seeing is very strong,” he said. “So, people are very excited about the proposition of bringing their brands and their ads to a bunch of consumers around the world that are watching our shows.”

When asked why Netflix is asking for the age and gender of its ad-supported subscribers, Peters was quick to dispel any concerns that the streamer is collecting user information for ulterior reasons.

“We’re very cognizant of privacy and we want to make that paramount and how we think about this offering and all of the data that we use will just be used to basically deliver more relevant ads offering on Netflix, and we’re not using that data in any way shape or form for a profile building off Netflix or anything like that,” he said.

The executive reiterated Netflix plans to introduce a paid sharing option enabling subscribers to share streaming access with non-paying members.  The streamer Oct. 17 released a profile transfer option enabling subscription-sharing users to keep their viewing history and user profiles when transitioning to their own subscription or pending shared option.

“A key component for borrowers, people that are using somebody else’s paid account, is to be able to create their own separate account.,” Peters said. “And part of that is transforming their profile and their viewing history.”

Peters said his team is continuing to come up with a range of options that support paid sharing but also ensures that Netflix has a sustainable business model.

“We’re looking forward to getting that out in early 2023,” he said.

Netflix Senior Executives See Slight 2022 Compensation Bumps

Netflix ended 2021 the same way it ended 2020: No. 1 across most industry metrics. The company’s shares are trading up almost 15% from the end of 2020 at more than $600 per share. But bottom-line results don’t necessarily translate to a significant increase in personal wealth for Netflix senior executives already accustomed to the 1% income bracket.

Netflix co-CEOs Reed Hastings and Ted Sarandos will realize $34.6 million and $40 million, respectively, in total compensation for the fiscal 2022 year, according to a Dec. 21 regulatory filing. The compensation largely mirrors the executives’ 2020 compensation of $34.6 million each.

Hastings, who co-founded Netflix with Marc Randolph, will receive $650,000 in base salary (which Netflix pays payroll tax on), and $34 million in stock-based compensation (which Netflix does not pay taxes). Sarandos will get a base salary of $20 million, which is identical to his base salary in 2021.

CFO Spencer Neumann will split $7 million in base pay along with an additional $7 million in stock-based compensation. That compares with $6 million and $5.5 million, respectively, in 2021.

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Greg Peters, chief operating officer and chief product officer, will see his base pay soar to $16 million from $12 million, while stock-based compensation increases to $8 million from $6.9 million.

Dave Hyman, chief legal officer, sees his compensation increase to $6 million and $5 million, respectively, compared with $4.7 million in separate base salary and stock options.

Finally, Rachel Whetstone, chief communications officer, makes the filing for the first time, realizing $5.5 million base salary and $1 million in stock options.

Netflix’s Greg Peters: We’re Enthusiastic About Shortened Theatrical Window

Netflix has long championed concurrent theatrical/streaming releases of new movies — to the anger of exhibitors and some industry traditionalists. With the pandemic sidelining movie theaters for the past 12 months, studios such as Universal Pictures and Warner Bros. Pictures have aggressively sought to curtail the theatrical window, releasing titles concurrently into consumer homes and retail channels — or just weeks after their box office debut.

Netflix COO/CPO Greg Peters

To Greg Peters, COO/CPO at Netflix, the move is welcomed, confirming the notion that consumers should have a choice in how they watch a movie. Speaking March 2 on the virtual Morgan Stanley Technology, Media and Telecommunications Conference, Peters said many employees at Netflix remain “huge” fans of the theatrical experience.

“It’s great to be in a room with a bunch of people, watch incredible content in a high-quality way,” he said. “But it’s a different experience to be able to watch it at home. The way we think about it, it should be a consumer’s choice.”

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Peters said Netflix management is upbeat about shortening windows, and optimistic the trend will continue post-pandemic.

“We’re enthusiastic to see the shift, and maybe enabling more and more of that for other entertainment [i.e. streaming] options out there,” he said. “It’s what consumers want. It’s hard to buck that trend for too long, and I think that’s eventually where things go.”

Co-CEOs Reed Hastings and Ted Sarandos may be the public faces of Netflix, but it takes a village to operate and grow the platform with more than 200 million subscribers worldwide.

Peters said mining user data across myriad interaction points is increasingly key — in addition to localized content — to driving subscriber growth in foreign countries and markets.

“What’s working and what’s not working … helping us evaluate the features or user interfaces,” Peters said of the data. “Launching service [in a country] is the easiest part of it.” He said the service conducts hundreds of data tests, producing “nice” incremental growth wins.

“We’re starting to get be specific to different user needs,” Peters said.

The executive, who helped launch Netflix Japan and is fluent in five languages, is proud how Netflix has been able to produce localized content in a foreign language and make it popular globally. He cited the success of the French miniseries “Lupin,” starring Omar Sy (The Intouchables) as the famed gentleman thief, which has been streamed by 70 million households. Much of the series’ interest generated by was generated by the streamer’s daily Top 10 ranking.

“Some people in the world, they think about popularity [of a show or movie] as an important signal; they want to be part of that conversation,” Peters said.

He said the streamer’s “Watch Something” option has proved equally successful for viewers uninterested in picking specific content.

“What we’re seeing more and more internationally … when you’re sitting down in front of the TV with three generations in your household, that’s [a challenge],” Peters said.

Netflix Set to Raise Subscription Fees in Japan

Netflix is reportedly planning to raise the basic subscription fee in Japan by as much as 13%, following a trend that has seen the SVOD behemoth raise monthly prices in the United States, Canada and the United Kingdom. Japan’s Nikkei 225 Stock Average disclosed the news, which helped send Netflix shares up more than 2% in midday trading.

The increase, which does not affect the premium-priced plan, would see the basic plan price increase to ¥990/month ($9.39) from ¥880/month ($8.34).

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Netflix launched service in Japan — then the world’s No. 2 home entertainment market — six years ago in 2015, largely through the efforts of Greg Peters, current COO/chief product officer, who back then was GM of Netflix Japan.

Peters, on the October fiscal call, said Netflix increased spending of more than $15 billion annually on original productions justified subscription price hikes.

“We feel like there is that opportunity to occasionally go back and ask. for members where we’ve delivered that extra value in those countries to pay a little more,” Peters said.

Netflix added 1.99 million subs in the Asia Pacific region in the most-recent fiscal period (ended Dec. 31, 2020). The region totaled 25.5 million subs, including more than 3 million in Japan. The region is Netflix’s third-lowest generating revenue per subscriber at $9.32, ahead of Latin America at $7.12 per sub. The North American region leads Netflix with $13.51 in monthly revenue per sub.

“With its rich culture and celebrated creative traditions, Japan is a critical component of our plan to connect people around the world to stories they love,” co-founder/co-CEO Reed Hastings said in 2015 at the Japan launch.

Netflix Rolling Out ‘Linear TV’ Service Globally

Netflix is planning to expand worldwide a test feature that allows subscribers to simply click a button and let the streamer pick programming to watch. Tested in France and other markets, the “Shuffle Play” feature acts as an old-school TV channel broadcasting shows on a loop.

Greg Peters, COO and chief product officer, said that as Netflix subs come to the service seeking to be entertained in a whole variety of ways, deciding what movie or TV show to stream can be daunting.

“Sometimes … [subs are] not really sure what they want to watch,” Peters said. “And so we’ve had the opportunity to try and be innovative and try new mechanisms to sort of help our members in that particular state.”

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Greg Peters

Peters said the new feature would enable subs to “skip browsing entirely,” click one button and let Netflix’s algorithms pick a title to instantly play.

“That’s a great mechanism that’s worked quite well for members in that situation,” he said.

Joining Peters on Netflix’s Jan. 19 fiscal webcast, co-founder/co-CEO Reed Hastings asked Peters if the feature was going to be called, “I’m feeling lucky,” or if he was going to come up with something better.

“We’re going to come up with something better than that, so standby for this,” he responded. “You’ll see it when it rolls out.”

Reed Hastings Quashes Retirement Scuttlebutt: ‘I’m in for a Decade’

Don’t expect to see Netflix co-founder Reed Hastings exit the subscription streaming video service until 2030, according to comments the new co-CEO made on the July 16 pre-recorded earnings webcast.

With Netflix announcing that longtime executive Ted Sarandos would share the CEO position while retaining his chief content officer title, scuttlebutt suggested Hastings had one foot out the door.

With a net worth of $5.5 billion and proactive interests in public education and social causes, there isn’t much reason for the 59-year-old Hastings to continue overseeing day-to-day operations of the by-mail DVD rental service-turned-SVOD behemoth he co-launched with software executive Marc Randolph in 1997.

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But that’s precisely what Hastings intends to do, working full-time alongside Sarandos for the next 10 years.

“Let me be really clear on that: I’m in for a decade,” he said on the webcast. “As co-CEO, it’s two of us full-time, it’s not like a part-time deal. It’s definitely broadening the management team. It will be great to have some help as we expand and grow.”

Hastings said he see no changes how Netflix is run over the next few years, having worked with both Sarandos and Greg Peters for years. Peters, who was elevated to COO and speaks five languages, helped launch Netflix Japan in 2015.

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Sarandos said he has worked together with Hastings for more than 20 years — a relationship he doesn’t see changing with his promotion and co-title.

“[Reed has] been an unbelievable role model, a source of inspiration for me,” Sarandos said. “We’ve navigated some of the toughest decisions the company has made over those years, from mailing DVDs all over the U.S., to [streaming video] all over the world.”

Hastings said Netflix a few years ago was largely a premium TV service. Now, he says the service is “really good” in movies, unscripted programming, “emerging” animation and “very strong” in local language shows.

“It’s incredible the expansion Ted’s pulled off over the past five years,” Hastings said. “Think of [the next 10 years as] more consistent with the past than different [going forward]. The beautiful thing … is we’ve got a great model. We’ve just got to make it better.”

Netflix Unveils Executive Pay for 2019 — and Hastings’ Salary Isn’t the Highest

In the coming year, Chief content officer Ted Sarandos will get the top salary — $18 million — and CEO and chairman of the board Reed Hastings will garner the most stock options — 30.8 million, Netflix announced in an SEC filing on its executive compensation.

Hasting’s salary is a mere $700,000 (the same as in 2018), as the executive is taking most of his compensation in stock options. Sarandos will pick up 13.5 million stock options. In the end, Hastings and Sarandos should make about the same in salary and options.

Still, Sarandos’ salary jumped considerably. His salary for 2018 was $12 million with 14.25 million options.

Chief product officer Greg Peters will have a salary of $10 million (up from $6 million in 2018), with 6.8 million options.

Among the other executives, CFO David Wells and general counsel and secretary David Hyman will each earn $3.5 million in salary (roughly a $1 million raise for both from 2018). Wells garners 2.8 million options, with Hyman getting 3.85 million.