Reed Hastings Takes Cautious Victory Lap; Pending Ad-Supported Plan Won’t Have Access to All Content

After Netflix disclosed it lost less than 1 million subscribers in the second quarter, co-founder/co-CEO Reed Hastings appeared relieved while circumspect on the fact the streamer still lost subs — just not the 2 million net global subscribers it had forecast to shed.

“We’re talking about losing 1 million instead of 2 million,” Hastings said on the July 19 webcast. “Our excitement is tempered by less bad results.”

One quarter removed from criticizing his company’s content offerings in part for the streamer’s 200,000 net subscriber loss, Hastings reversed course 90 days later, contending programming such as the recent release of the fourth season of “Stranger Things” helped retain subscribers.

“We’re executing really well on the content side,” he said.

Indeed, with much of Hollywood eyeing the streaming pioneer/behemoth’s subscriber second-quarter (ended June 30) numbers with rapt attention, many observers saw the fortunes of studio rivals HBO Max, Paramount+, Disney+, Hulu and even Amazon Prime Video hanging in the balance.

Netflix re-elevated its dominating global subscriber count past 220 million, while executives disclosed the service plans to launch its less-expensive ad-supported subscription plan in early 2023. Hastings also proclaimed that linear TV would be gone in five-to-10 years.

“Looking forward, streaming is working everywhere,” he said. “Everyone is pouring in … definitely the end of linear TV over the next five, 10 years. So, we’re very bullish on streaming.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The market responded approvingly, sending Netflix shares up more than 7% in after-market trading. Shares are up almost 4% July 20 in heavy trading.

When asked if the ad-supported subscription would include access to all programming, co-CEO and chief content officer Ted Sarandos said the undisclosed priced tier would include most content.

“The vast majority of what people watch on Netflix, we can include in the ad-supported tier,” Sarandos said. “So, there are some things that don’t that we’re in conversation with the studios on. But if we launch[ed] the product today, the members in the [ad-supported plan], would have a great experience. And we will clear some additional content, but certainly not all of it.”

Greg Peters

Separately, Greg Peters, chief operating officer/chief product officer reiterated that Netflix’s recently disclosed deal with Microsoft for the service’s pending ad-supported streaming plan, and move to charge subscribers in select South American countries an additional fee for sharing their passwords, was well-thought-out strategy.

“We’re looking at this as an extension of two things we think we have historically done, which is one, be very consumer-centric and think about the consumer experience,” Peters said. “We think we have a real opportunity here.”

He said the March rollout of the $2.99 monthly password surcharge in Chile, Costa Rica and Peru, and subsequent bow in August to subscribers in Argentina, Honduras, the Dominican Republic, El Salvador and Guatemala who share their accounts with non-subs, have been well thought out.

“We’re not asking customers to not share, but to pay a little more to add a member or additional home,” Peters said. “We’ve been working behind the scenes on this for almost two years. And now this is where the rubber hits the road.”

Netflix Opens Italian Office

Netflix’s international charm offensive continues. The subscription streaming video behemoth has opened an Italian office in Rome, with plans to up local content production.

The move comes after the service reported a net loss of 200,000 subscribers globally in the first quarter, ended March 31. The streamer lost 300,000 subs across Europe, the Middle East and Africa. That prompted co-CEO Reed Hastings to board the company jet and personally welcome the Italian press.

“Today we celebrate our new Italian home, our growing business in Italy, the creative community we are so honored to be part of, and all of the fantastic Italian stories on our upcoming slate,” Hasting told the Italian media. “The breadth and variety of our Italian slate perfectly represents our ambitions — new series, films, documentaries and unscripted shows from Italy’s most prestigious creatives and exciting new voices. Stories that are Made in Italy and watched by the world.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Hastings explained his longtime Italian connection began 15 years ago when he moved his family there for 12 months while he ran Netflix’s by-mail DVD rental business.

“I was so amazed to come visit here,” Hastings said. “At the end of that year we had so many great memories.”

Netflix original Italian content includes a pending series based on the classic novel Il Gattopardo; holiday series I Hate Christmas, an unnamed animated series, and a show about the biggest lottery scam in Italian history.

Netflix original Italian movies include Robbing Mussolini, the revenge film My Name is Vendetta, and romantic comedies Love & Gelato and Under the Amalfi Sun. Other content includes documentary series “Wanna” from Fremantle, race-walking doc “Running for the Truth: Alex Schwazer,” and reality series “Summer Job.”

Current Netflix Italian series include “Lidia Poet,” “Brigands,” “The Lying Life of Adults,” “Tutto Chiede Salvezza,” “Framed! A Sicilian Murder Mystery,” “SKAM Italia” and “Di4ries,” among others.

Hastings: Netflix Considering Cheaper Ad-Supported Subscription Option

Netflix is considering launching a less-expensive ad-supported subscription offer, co-founder/co-CEO Red Hastings disclosed on the streamer’s Q1 fiscal webcast.

Netflix is one of the few major SVOD platforms on the market, along with Amazon Prime Video, that are not ad supported — at a time when slowing sub growth is pushing services such as HBO Max, Disney+ and Paramount+ to mine their significant subscriber bases to marketers with less-expensive ad-based subscription plans.

“Those that have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant, get what they want, makes a lot of sense.”

While no details about a potential plan was announced, with Hastings’ advocating the move, the option is sure to be made available in the near term.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

And following a net subscriber loss of 200,000 in the first quarter, and projections of a 2 million net sub loss in the current quarter, Netflix needs to act proactively to assure investors and the bottom line. With more than 221 million paying subscribers and a projected 100 million non-paying members accessing the platform, Netflix needs to explore alternative revenue sources.

Reed Hastings Buys $20 Million Worth of Netflix Stock to Slow Streamer’s Market Stumble

With shares down more than 37%, Netflix co-founder/co-CEO Reed Hastings on Jan. 28 acquired 51,440 shares of the SVOD behemoth, paying $388.83 per share, or $20 million — the executive’s largest inside stock purchase since 2010, according to a regulatory filing.

Prior to the purchase, Hastings owned more 8 million worth of Netflix shares, making him one of the company’s largest stockholders.

The move was simple: Show executive confidence in Netflix and help slow the market selloff, which began even before the streaming giant missed slightly on its fourth-quarter subscriber growth projections, and estimated just 2.5 million sub growth in Q1, ending March 31.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Netflix, which has seen its shares reach more than $612 per share in valuation earlier this month, closed Jan. 28 priced at $384 per share.

The lower stock price prompted Wall Street hedge fund operator Bill Ackman to acquire 3.1 million shares, valued at more than $1 billion. The Pershing Square Capital Management owner said the hedge fund was “all-in on streaming video.”

“Many of our best investments have emerged when other investors, whose time horizons are short term, discard great companies at prices that look extraordinarily attractive when one has a long-term horizon,” Ackman wrote in a note to shareholders.

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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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 Co-CEOs Give Shout Out to Arizona Video Store Founder

In a Dec. 4 social media post, Netflix co-CEOs Reed Hastings and Ted Sarandos paid tribute to pioneering video rental dealer Dale Mason, whose Arizona Video Cassettes West in Phoenix in the early 1980s was an early regional powerhouse in the then-nascent video rental business.

“Dale was Ted’s break into the video business in 1983. His stores lasted a long time. Thank you, Dale!” Hastings wrote.

Netflix started business in the late 1990s as a pioneering by-mail DVD rental website. Current co-CEO Ted Sarandos joined the company following stints in the video retail business, including in 1983 as a teen clerk at Arizona Video Cassettes West in Phoenix — when consumers primarily rented movies on VHS cassettes.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Sarandos’ love for movies and insight what consumers might like to rent was apparent early, and store owner Mason soon made his passionate employee a store manager. Sarandos would continue working at the eight-store chain until 1988 when he joined East Texas Distributors, and then later as VP of product and merchandising at Video City/West Coast Video, which operated 500 stores.

In 2000, Sarandos joined Netflix as chief content officer, a position he still holds today. The company, of course, transitioned to subscription streaming video, largely turning its back on packaged media.

SVOD Pioneers Make ‘The Forbes 400’ List — in Surprising Order

The Forbes 400 recent list of the richest Americans in 2021 includes subscription streaming video pioneers Reed Hastings, co-founder/co-CEO of Netflix, and Roku founder/CEO Anthony Wood.

In a surprise, Wood ranks 134th with the personal wealth of $6.9 billion. That is 54 spots ahead of Hastings, who charted with a personal wealth of $5.7 billion.

Anthony Wood

Netflix ended the most-recent fiscal period with $1.35 billion profit on revenue of $7.3 billion. Roku ended the period with a net loss of $97 million on revenue of $676 million.

While Amazon founder/chairman Jeff Bezos again leads the list (and world) of multi-billionaires with a personal worth of $201 billion, Hastings and Wood make the list due to their co-launch of a short-lived branded “Netflix player” set-top device manufactured by Roku.

Wood, who once worked at Netflix as VP of Internet TV, went on to market Roku to consumers as a means of connecting the Internet (and third-party streaming apps) through their television.

Reed Hastings

Hastings, along with co-CEO/chief content officer Ted Sarandos, and others, spearheaded the world’s largest SVOD platform with 210 million subscribers. Nearly a decade earlier, Hastings and Netflix co-founder Marc Randolph invented the by-mail DVD movie rental business — after successfully sending a music CD in a First Class envelope.

Hastings has long stated no desire to enter the consumer electronics business with branded a player similar to Apple TV or Amazon Fire TV. Wood, meanwhile, expanded Roku beyond streaming video to include a line of soundbars and televisions — the latter reportedly the fourth-largest selling brand in the U.S.

Wood has also driven the growth of ad-supported VOD through the 2017 launch of The Roku Channel, which is now delving into original programming, with more than 51 million average monthly users.

Notably, the executive considered incorporating a Blu-ray Disc drive in early Roku players, but dropped the idea due to unit size restrictions.

Reed Hastings: Streaming Video Still in Growth Phase

Coming off its slowest fiscal quarter in subscriber growth, Netflix co-founder Reed Hastings contends the SVOD pioneer has plenty of runway left to significantly increase subscribers and revenue over the coming years.

While the service lost 430,000 net subs in North America in the second quarter (ended June 30), Hastings, speaking on the July 20 fiscal interview, said streaming video represents just 27% of the U.S. home entertainment market behind leader linear television. Of that streaming percentage, Netflix holds a market-leading 7% share followed by YouTube TV (6%), Hulu (3%), Amazon Prime Video (2%) and Disney+ (2%), according to Nielsen.

To Hastings, those numbers suggest Netflix’s future is still in the early innings, with unlimited potential.

“Does Internet streaming slow down? That’s seems pretty unlikely,” he said. “At least for the next several years, the growth story as a whole is very intact.”

The CEO said that when it comes to increased secular competition from platforms such as Disney+, Amazon Prime Video, HBO Max and Peacock, Netflix is not seeing a negative impact on its domestic Nielsen weekly streaming metrics (which the streamer has dominated since inception), or in foreign markets.

“That gives us comfort,” Hastings said, adding that when streaming video represents 50% to 60% of home entertainment in the United States, there will be “shakeout” among the competition.

The executive believes the global streaming market could tally more than 800 million before reaching saturation. Netflix ended the quarter with almost 210 million.

“We want to be prepared and lead in that,” Hastings said. “But in the next several years, streaming is still in the early stages.”

CFO Spencer Neumann agreed that the streamer’s growth across multiple indices remains “remarkably” steady despite the ongoing “choppiness” brought on by the pandemic. He said the business continues to perform well, with viewer engagement up nearly 20%, subscriber churn down and comparable to the pre-COVID period in 2019.

But we still feel a little bit of that drag in terms of our acquisition growth as we’re kind of working through.

Neumann says the streamer is on track to add 54 million subs over the past two years through the end of the year, which he said translates to 27 million annually — a benchmark comparable to 2018 and 2019.

“We remain on that growth trajectory,” he said, adding that once the market overcomes the pandemic and Netflix moves into its second half-year content slate, smoother waters await.

“We expect to end the year on a much-more normalized growth trajectory,” Neumann said.

Reed Hastings Wants Rival HBO Max on Weekly Nielsen Chart

Netflix co-founder/co-CEO Reed Hastings has made a career thinking outside the box. But when it comes to quantifying streaming video on the household TV, Hastings apparently opts for old-school Nielsen — a brand synonymous with broadcast ratings.

Responding to Nielsen’s June 18 market report that found streaming video use across all television homes in May climbed to 26% of total viewer spent watching TV, Hastings seemed surprised that pay-TV and broadcast combined still dominate viewership time.

Indeed, Netflix captured just 6% of total TV viewing time, on par with YouTube TV, but ahead of Hulu (3%), Amazon Prime Video (2%) and Disney+ (1%).

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Wild that most TV time in USA is still legacy linear,” Hastings tweeted on social media. “Stream team needs to up its game.”

Hastings added that he wished HBO Max was included in the results. Max is noticeably absent from Nielsen’s weekly Top 10 streaming charts, which include Disney+, Prime Video and Hulu — and is regularly dominated by SVOD pioneer Netflix.

“@jasonkilar we need you on the board too,” Hastings tweeted in reference to WarnerMedia CEO Jason Kilar.

Kilar, the founding CEO of Hulu, responded (with lots emojis) that WarnerMedia was indeed represented in the Nielsen chart, albeit in dominating linear TV.  Kilar, who plans to remain in his position into 2022 following Discovery’s acquisition of WarnerMedia, said HBO Max has been the strongest growing domestic SVOD service in 2021.

HBO and HBO Max ended the most-recent fiscal period with 44 million combined subscribers, including 11.1 million Max subs since the service launched a year ago.

“@WarnerMedia is already on the board strongly in that largest green pie piece Reed (TNT, TBS, CNN, HBO, CN …). Proud to serve customers in whatever way they choose,” Kilar tweeted.”  Slightly smiling faceThumbs up “Fun to also be the crazy fast(est) growing upstart in @hbomax (2 Qs straight of 2.5M+ U.S. sub adds).” Fisted handClapper board


Netflix’s Reed Hastings Jumpstarts CA Gov. Newsom’s Anti-Recall Campaign With $3 Million Personal Donation

Netflix co-founder/co-CEO Reed Hastings has contributed $3 million to California Gov. Gavin Newsom’s campaign against a recall election set for this fall. Newsom, a Democrat, is being challenged by numerous political opponents, including celebrity Caitlyn Jenner and former San Diego Mayor Kevin Faulkner, over his handling of the COVID-19 pandemic in the state.

Hastings’ contribution, disclosed in a May 20 state filing, dwarfs other contributions in a political battle that is expected to cost in excess of $100 million. Interestingly, Hastings supported Newsom’s Democrat opponent, former Los Angeles Mayor Antonio Villaraigosa, in the 2018 governor election.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

With a personal fortune reportedly worth nearly $5 billion, Hastings is no stranger to backing political, public educational and social causes. The longtime Democrat and his wife Patty Quillin last year donated $120 million to educational institutions in support of students of color. The contributions included $40 million each to the United Negro College Fund and private colleges Spelman and Morehouse in Atlanta.

After a stint in the Peace Corps in Africa teaching high school math in Swaziland, Hastings pursued a career in tech before launching Netflix as the first by-mail movie disc rental service with business partner Marc Randolph. Along the way, he’s been a big contributor to charter schools, including spending almost $9 million campaigning for select school measures. In 2016, Hastings pledged a $100 million philanthropic fund for children’s education.