Netflix Hits 200 Million Subs: Reed Hastings Orders Denny’s Takeout

With Netflix officially surpassing 200 million paid subscribers (actually 203 million) through Dec. 31, 2020, co-founder and co-CEO Reed Hastings took to Twitter to post a picture eating Denny’s takeout solo at home.

While some might wonder why a guy reportedly worth close to $6 billion would celebrate the milestone not ordering a Grand Slam breakfast (!), the venue has special meaning to Hastings. The executive has marked several subscriber accomplishments during the streamer’s 20+ years eating steak at Denny’s — alone.

Hastings did the same in 2017 when Netflix topped 100 million subs and in 2003 when it reached 1 million subs renting DVDs through the mail — underscoring the moves with the hashtag #superstitious.

Hastings eating solo after 100 million Netflix subs in 2017.

 

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A noteworthy post among responding messages on social media came from Netflix’s other co-founder Marc Randolph: “Congratulations Reed. I never imagined this crazy idea would get this far.”

Indeed, Randolph and Hastings’ crazy idea at the time had little to do with streaming video and everything to do with one question: Could you send a CD disc in the mail and not have it arrive cracked, chipped or scratched? The answer was yes and the by-mail DVD rental business was launched with initial TV ads featuring Ryan Seacrest pitching the concept to consumers.

Randolph’s post also included a financial spreadsheet marking Netflix topping 500,000 subscribers on Jan. 13, 2002. He said that milestone took three-and-a-half “brutal years” to realize at a time when Blockbuster Video dominated the market.

“I think this only merited a celebratory cupcake,” Randolph wrote.

 

 

 

 

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.”

Netflix Brass Come Out Swinging Following Record 2020 Report

Following a 2020 that saw record 37 million new subscribers, record revenue of nearly $30 billion and profit of $2.76 billion, Netflix is firing on all cylinders — the envy of the over-the-top video ecosystem and Hollywood. And the SVOD pioneer’s executives weren’t afraid to say so.

On the pre-recorded fiscal webcast, co-founder/co-CEO Reed Hastings appeared to take offense to a question from analyst/moderator Kannan Venkateshwar with Barclays Bank, who suggested Netflix was underachieving in comparison to Disney’s branded SVOD platform Disney+.

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“Underachieving, Kannan?,” Hastings responded. “The annualized return over 18 years being 40% … if that’s underperformance, we’ll do more of that.”

Hastings called Disney’s streaming video rise “super impressive,” and said Disney+ has “fired up” Netflix to up its game and compete against them on content, “show by show, movie by movie,” and catching/passing them in family animation.

“We have a long way to go just to catch them [in family animation] and maintaining our lead in general entertainment, it’s so stimulating, like [recent original] ‘Bridgerton,’ which I don’t think you’re going to see on Disney anytime soon,” Hastings said.

Earlier in the month Netflix reported that “Bridgerton,” the first original Netflix series from “Grey’s Anatomy” creator Shonda Rhimes, and featuring an interracial cast in the period piece, is on track to be streamed by 63 million subscriber homes in the 28 days following its Dec. 25 release — the fifth-highest tally in the SVOD pioneer’s history.

Spencer Wang, VP of finance and corporate development, was quick to point out that 30% of Disney+’s 87 million paid subscribers are actually from India’s Hotstar streaming service, “which I think we all sort of recognize as a bit of a different service.”

Wang said the Disney Plus sub count is actually closer to 60 million, with Netflix’s average revenue per user (ARPU) roughly double or more.

“So I think when you factor in those dynamics on the fact that we’re coming from a higher level of penetration globally, I think we feel very good about the performance,” he said.

Sarandos appeared to recognize the provocative nature of the questions posed by moderator Venkateshwar, telling Wang, “so you took the bait.”

“Can I just try to get us to chest pound some more?” he quipped.

Reed Hastings Sells $225 Million in Stock Options; Now 120th Richest Person in the U.S.

Christmas came early to Netflix co-founder/co-CEO Reed Hastings. The executive face of the subscription streaming video pioneer sold $225 million in stock options, according to a Dec. 22 regulatory filing. Hastings, who owns $2.6 billion in Netflix stock, sold $103 million worth of stock options in November. He sold another 83,000 shares on Dec. 8. In 2020, Hastings, who relinquished half of his CEO title to CCO Ted Sarandos, has sold $616 million in stock.

Bloomberg reported that 60-year-old Hastings increased his wealth by $2.2 billion in 2020, to $6.4 billion, making him the 120th richest person in the country. The increase was in part due to a 63% increase in the stock’s price, and the addition of more than 28 million subscribers. Netflix ended its most-recent fiscal period with 195 million subs worldwide.

Interestingly, Roku founder Anthony Wood, a former Netflix executive who helped launch the SVOD market in 2007 with a branded Netflix streaming player, saw his personal wealth reach $7 billion in 2020, due to the company’s stock skyrocketing 165% this year.

Hastings’ sell-off mirrors other Netflix corporate executives looking to exercise stock options before the end of the fiscal year for tax purposes. Interestingly, Sarandos has mostly acquired shares of the streamer in recent months. Netflix has a market capitalization approaching $230 billion.

 

Reed Hastings: Pandemic Video Trends Not Relevant to Real World

When Netflix failed to meet its own subscriber growth projections in the third quarter, ended Sept. 30, co-CEO Reed Hastings shrugged off the shortcoming as inconsequential “forecast noise.” Speaking Oct. 20 on the fiscal webcast, the co-founder of the SVOD behemoth contends the service’s 195 million global subs is a statistical force to be reckoned with going forward.

“We’ve been doing high 20s [in terms of millions of net adds per year] for four years,” Hastings said. “And this year on guidance for 34 million, so [we’re] setting all kinds of records.”

Hastings said the pull-through in outsized sub growth in 2020 due to the coronavirus pandemic into 2021 would be relatively modest, around 5 million to 6 million subs. He said factors such as how much the quality of the service and word-of-mouth increases affects sub growth as well.

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“Our growth sort of seesaws around that number depending on the particular conditions going on in that quarter, but year-after-year, it’s fundamentally followed that improvement in the service growth curve,” Hastings said.

The executive downplayed the pandemic significance on OTT video as a one-time phenomena with a “minor background effect” on the distribution channel. Hastings said Netflix competes against a wide range of distractions, including social media, TikTok, YouTube and Fortnite, among others. He said user engagement, subscriber churn and related trends on the service are similar to what management expected a year ago.

“There was temporary learning when there’s no [live] sports, but it’s like, well, it’s not really that interesting finding because it’s just not relevant to the [non-pandemic] world,” Hastings said. “Now we’re back in a world with partial [TV] sports and that’s fine and we’re [still] growing.

“So really, the limiter for us is what’s the quality of our service, how often, how many nights can you say, ‘oh my God, I want to go to Netflix and watch the next show.'”

Netflix Expands London Digs

Netflix has broken many molds when it comes to distributing entertainment. Working in the corporate office is not one of them.

The SVOD behemoth just signed a new lease in the United Kingdom, tripling its office space in London’s West End as the streamer expands upon original content productions (“The Crown” and “Sex Education”) in its biggest international market. Netflix is taking over the lease on an 87,000 square-foot office building on Berners Street. Netflix currently employs about 269 people in the U.K., including paying rent on two nearby buildings.

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“As part of our ongoing commitment to the U.K., we are excited to expand our operations in London,” Netflix said in a media statement. “It will ensure that we can better serve our members and the local creative community.”

While Netflix has broken barriers in the entertainment industry, including launching the first recommendation software, issuing complete seasons of original TV shows at launch, in addition to advocating for the end of the theatrical window for new movies, working in an office setting remains important to co-founder and co-CEO Reed Hastings.

In a Wall Street Journal interview last month, Hastings said not being able to work with others in an office — especially overseas — due to the coronavirus pandemic is a “pure negative.”

“No. I don’t see any positives,” Hastings said. “Not being able to get together in person, particularly internationally, is a pure negative. I’ve been super impressed at people’s sacrifices.”

Netflix, like most big corporations, shut down offices when the pandemic hit worldwide in March. Most employees continue to work from their homes. When asked how quickly he would order staff back to the office if he could safely?

“Twelve hours after a vaccine is approved,” Hastings said.

Netflix’s Reed Hastings: ‘Thank God’ Blockbuster Didn’t Buy Us

It’s hard to imagine that 20 years ago Netflix co-founder Reed Hastings and then-CFO Barry McCarthy sat in the Dallas corporate headquarters of Blockbuster Video begging the video store giant to buy the upstart by-mail DVD rental service for $50 million.

As the story goes, Blockbuster CEO John Antioco and other executives practically laughed Hastings and McCarthy out of the building. Blockbuster at the the time was a $5 billion company operating about 9,000 video stores worldwide. Netflix, by comparison, was running TV spots with Ryan Seacrest pitching consumers the concept of DVD movies in the mail. Subscription streaming video-on-demand (and Roku) was still a pipedream.

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Of course, Hastings today is the one laughing as the once mighty Blockbuster brand has been reduced to a singular independent store moonlighting as an Airbnb in Bend, Ore. Hasting is also mindful that Netflix dodged a corporate crossroad that could have significantly changed his life as well as the modern home entertainment ecosystem as we know it.

“Well, now I say thank God that they didn’t want to go ahead [with the deal],” Hastings told Yahoo Finance plugging his co-authored book, “No Rules Rules: Netflix and the Culture of Reinvention,” during an episode of “Influencers With Andy Serwer,” a weekly series featuring business, political, and entertainment leaders. “But you know, at the time, [Blockbuster was] so formidable and even later, when we went public, we were $50 million in revenue, and they were $5 billion, so a hundred times larger than us.”

Indeed, had Blockbuster acquired Netflix, it likely would have rebranded the upstart by-mail disc business. The million-dollar question remains whether the Blockbuster brass would have been receptive to SVOD and its impact on video stores. If not, the subscription streaming video business model might have died on the vine; binge-viewing left to TV on DVD boxed sets; co-CEO Ted Sarandos overseeing Blockbuster video stores; and HBO Max, Amazon Prime Video, Disney+ or Peacock just science-fiction.

“For our first decade, [Blockbuster] was such a big gorilla over our future,” Hastings said. “It was a number of things that made it possible for us to thrive, and eventually then have the chance to move into streaming.”

Today, Netflix has more than 193 million paid subscribers worldwide, and a Wall Street market cap around $223.5 billion.

Reed Hastings Discusses ‘Netflix Keeper Test’ in New Book

Netflix co-founder Reed Hastings has observed much in the service’s meteoric rise from by-mail DVD rental company to global online TV platform and movie studio.

In a new book, No Rules Rules: Netflix and the Culture of Reinvention, co-authored by Erin Meyer, Hastings recounts how his and other executives’ (such as co-CEO Ted Sarandos) thinking outside the box and unorthodox company culture spearheaded the SVOD behemoth, including eschewing the traditional way movies and TV shows are made and distributed. Think binge-viewing and by-passing theatrical distribution, among other non-traditional moves.

A key management strategy disclosed in the book, dubbed “Netflix Keeper Test,” involves monitoring executives and employees’ performance in an unusual way. The policy reportedly contributed to the departure of CFO David Wells in 2018 and subsequent hiring of former Activision Blizzard CFO Spencer Neumann in 2019.

In an interview with Variety discussing the book, Hastings said the test revolves around the question: Would you keep an employee if they wanted to leave the company?

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Hastings said Wells was a very competent CFO when it came to numbers and fiscal policy, but “not hungry” for entertainment. He said Wells’ “resignation” afforded him the opportunity to hire an entertainment CFO.

“That’s a tough one, because your heart cares for the person and the’’re great,” Hastings said. “But your head is like, ‘We could be a better company if we had an entertainment CFO.'”

Hastings admitted the “Keeper Test” could be intimidating to some executives. Indeed, co-author Meyer wrote about one Netflix director who hadn’t unpacked their boxes after one year on the job. Hastings said the “test” is no different than what any professional athlete deals with facing a career-ending injury on every play.

“We have to hire the psychological type that can put that aside and who aspires to work with great colleagues and that that’s their real love, is the quality of their colleagues or the consistency of that, versus the job security,” Hastings said.

Notably, Hastings, in the book, discusses his ill-fated decision to spin off the DVD rental business as Qwikster in 2011 — a move that contributed to Netflix shares plummeting 75% and calls for Hastings’ firing. Nearly 20 years later, Netflix continues to rent movie discs despite the fact package media’s fiscal impact (and subscriber tally) has all but been removed from the company’s financials.

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 Names Ted Sarandos Co-CEO; Hits Another Fiscal Home Run, Adding Record 10M Subs, Revenue Up 25%

Netflix July 16 named veteran executive Ted Sarandos co-CEO with co-founder Reed Hastings. Sarandos, who has been Netflix since its beginning, is the current chief content officer — a position he will continue. The former home video executive now joins the company’s board of directors. Greg Peters, chief product officer, adds chief operating officer to his resumé.

“Having watched Reed and Ted work together for so long, the board and I are confident this is the right step to evolve Netflix’s management structure so that we can continue to best serve our members and shareholders for years to come,” Jay Hoag, lead independent director, said in a statement.

Meanwhile, Netflix continues to be immune to economic challenges posed by the coronavirus pandemic. The SVOD pioneer said it added 10 million subscribers in the second quarter, ended June 30. It now has more than 192 million subs worldwide. Netflix had projected 7.5 million net new subs and 190.36 million globally — up 25.6% from the previous-year period.

Netflix added 2.94 million subs in the U.S. and Canada, compared to a loss of 130,000 subs in the previous-year period. The service added 2.75 million subs Europe, the Middle East and Africa, versus 1.69 million last year. It added 1.75 million subs in Latin America, compared with 340,000 in 2019; and the SVOD added 2.66 million subs from 800,000 last year in Asia and Pacific Rim countries.

How strong is Netflix’s sub base? The net subscriber additions included a small percentage of subs Netflix canceled due to non-use of the service.

Revenue skyrocketed nearly 25% to $6.14 billion from $4.9 billion in the previous-year period. Net income reached record $720 million, compared with income of $271 million last year.

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Indeed, Netflix in the first half of 2020 saw “significant pull-forward” of subscriber growth with 26 million paid net adds, compared with 12 million the prior year.

“We live in uncertain times with restrictions on what we can do socially and many people are turning to entertainment for relaxation, connection, comfort and stimulation,” CEO Reed Hastings and CFO Spencer Neumann said in an understatement in the shareholder letter.

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The executives said they expect less growth for the second half of 2020 compared to the prior year — with just 2.5 million net sub adds in Q3 (ending Sept. 30) and 195.45 subs worldwide. The streamer added 6.8 million subs in the prior-year period.

“We’re expecting paid net adds will be down year over year in the second half as our strong first half performance likely pulled forward some demand from the second half of the year,” Hastings and Neumann wrote.

The executives said that due to long production lead times, 2020 plans for launching original shows and movies continue to be largely intact. For 2021, Netflix expects the current paused productions will lead to a more second half weighted content slate in terms of big titles.

“We anticipate the total number of originals for the full year will still be higher than 2020,” they wrote.

Recent acquisitions include The Trial of the Chicago 7​ from Aaron Sorkin and ​previously reported The SpongeBob Movie: Sponge on the Run​ (global excluding U.S. and China). Netflix also acquired nearly completed seasons of unreleased original series like ​”Cobra Kai”​(seasons 1, 2 and a brand new season 3) and ​”Emily in Paris,” s​tarring Lily Collins.

“The pandemic and pauses in production are impacting our competitors and suppliers similarly,” Hastings and Neumann wrote. “With our large library of thousands of titles and strong recommendations, we believe our member satisfaction will remain high.”