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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.

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.”

Ted Sarandos: Netflix Not Interested in ‘Renting’ Sports

With streaming services Paramount+, Peacock, Apple TV+ and Prime Video investing heavily in live sports rights, speculation that the market’s biggest player — Netflix — might reverse its opinion on the genre (as it did on advertising) continues.

Speaking on the UBS Global TMT confab in New York, Ted Sarandos, co-CEO/chief content officer, was asked whether Netflix has changed its view on sports.

“Look, we’ve not seen a profit path to renting big sports today,” Sarandos said, adding that the streamer keeps the door open on future possibilities.

Indeed, Netflix has had much success with its original reality show, “Formula 1: Drive to Survive,” which has contributed to a significant increase in U.S. consumer awareness and appreciation of the European-based auto racing circuit.

“If we could figure out a path that renting big-league sports would be neutral to slightly — even slightly more, but it’s dramatically more expensive, I think, in terms of watching,” Sarandos said. “It’s very popular. I definitely agree. We are not anti-sports just pro-profit.”

The executive contends Netflix can double its global subscriber base without live sports programming. Sarandos believes that if Netflix can figure out how to monetize sports through scale, it would revisit the idea.

“Maybe by that time, maybe the economics change,” he said, adding that owning a sports franchise like F1 is a different question.

“Look at the impact Netflix has had on Formula 1,” Sarandos said. “So that should be able to translate, but in this case, if you create the value, it just transfers into higher prices for licensing down the road.”

Sarandos cited the popularity of Netflix’s original South Korean show “Squid Game,” which he said didn’t have to premiere after the Super Bowl to attract hundreds of millions of viewers.

“We didn’t need a big loss leader [sports] to build a big audience,” he said. “And if we can keep doing that, maybe that is our structural advantage to linear television.”

Ted Sarandos: New Netflix Series ‘Wednesday’ Chasing ‘Squid Game’ for Global Viewership

Netflix’s new coming-of-age supernatural comedy horror series “Wednesday,” based upon the character Wednesday Addams from “The Addams Family,” continues to resonate with streamers worldwide.

Starring Jenna Ortega as the title character, the Tim Burton-produced series has become a global hit on track to match Netflix’s surprise South Korean behemoth “Squid Game,” which to date is the most-viewed program ever on the platform with more than 1.6 billion hours viewed.

Netflix Dec. 6 disclosed that “Wednesday” has generated more than 752 million hours of viewership since its Nov. 23 debut. The streamer says the show has been seen by more than 115 million subscriber homes to rank No. 3 on the all-time most-viewed shows in the first 28 days.

Co-CEO/chief content officer Ted Sarandos called out the show during an appearance at the UBS Global TMT confab in New York City.

“[‘Wednesday’] is chasing ‘Squid Game’ right now for the most-watched show in the world,” Sarandos said.

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He said the program’s success underscores Netflix ability to create localized content that appeals globally.

“Nobody has done that before,” Sarandos said, adding that subscriber engagement is key to Netflix’s ongoing content spending ($17 billion) and profitability.

The executive said that as “Wednesday” chases viewership benchmarks established by “Strange Things” season four (1.35 billion) and “Dahmer — Monster: The Jeffrey Dahmer Story” (856 million), the show’s U.S. success is replicating internationally.

“It’s a top three show in Korea, India and Japan, which are all the places that really have a preference for local content,” Sarandos said. “So, we’re strengthening both our ability to make local content, but are even better doing it from just about anywhere. And having that emphasis on the local market helps us tremendously is storytelling from pretty much everywhere, which gives us a lot more variety in storytelling.”

Netflix’s Ted Sarandos Reiterates Spending Big on Content ($17 Billion) Drives Viewer Engagement

In the third quarter Netflix righted its subscriber vessel and generated some of its biggest viewership for original content. Both realities appeared to give co-CEO/chief content officer Ted Sarandos a momentum he hasn’t experienced all year.

Speaking on the Oct. 18 fiscal webcast, Sarandos mentioned the quarter’s honor roll of movies and limited series, including “Stranger Things” season four, The Gray Man, Seabees, Purple Hearts, “Dahmer — Monster: The Jeffrey Dahmer Story” and “The Watcher,” that dominated streamers’ attention.

Indeed, “Stranger Things” season four and “Dahmer” totaled more than 2.1 billion hours of collective streaming in their first 28 days of release to remain No. 1 and No. 2 on Netflix’s all-time most-viewed English language series.

Of course, that content costs money. Lots of money. Netflix is spending $17 billion on original programming in 2022, with designs to up that spending that almost rivals the combined fiscal output of its competitors.

“Look, big shows that folks engage with and talk about drives a lot of [subscriber] growth,” Sarandos said. “I do think people come to value that. And for us, our goal is we’ve got to get them to come to expect it.”

The executive said that Netflix is getting better at “smoothing” out distribution and release dates for original content that he contends keeps subscribers engaged (or coming back).

“Remember … we’ve only been at it for 10 years,” Sarandos said.

The former home video store manager said the practice of synchronized releases of local content for global audiences is playing out with “Sintonia” in Brazil, “The Empress” in Germany, “High Water” in Poland, and “Narco-Saints” in Korea.

“And probably, none was a better example of this than ‘Extraordinary Attorney Woo,’ with 400 million hours of watching around the world,” Sarandos said. “Just a real phenomenon that we can take a show that other folks would view as being extraordinarily Korean and make it work around the world.”

Hitting an apparent nerve, Sarandos returned to the fact that what Netflix is achieving in content output after a decade beginning with no IP or library, now gets more viewing, more revenue and more profit than the streamer’s competitors who have been at it for more than 100 years.

“So, for me, that’s the biggest thing that when you ask, ‘are we sharpening our tools, are we getting better?’ we’re definitely getting more mature about the process,” he said. “We’ve released seven of our most popular releases of all-time just in this last quarter.”

Sarandos said Netflix is working to getting better and better at getting more impact per $1 billion in content spend than the competition.

“That’s how we’re focusing on it,” he said.

With Netflix reportedly shelling out almost $450 million for two follow-up movies to 2019’s theatrical hit Knives Out, including releasing the sequel, Glass Onion: A Knives Out Mystery, exclusively in theaters before streaming, Sarandos bristled at the unusual release strategy portending any future trend.

“Well, first, I’ll tell you, we’re in the business of entertaining our members with Netflix movies on Netflix,” he said. “So, that’s where we focus all of our energy and most of our spends. Our films are always heavily featured in film festivals around the world, because they’re in demand, made by the greatest filmmakers on the planet. And for all those folks who can’t get to a festival, this one-week release on 600 theatrical screens is a way of creating access to the film and building buzz the same thing we’re doing in those festivals.

“There’s all kinds of debates all the time back and forth, but there is no question internally that we make our movies for our members, and we really want them to watch by Netflix. And of course, with one week of release in theaters, most people will see them on Netflix, just like they see all movies.”

Netflix Lays Off Another 300 Employees

Netflix has reportedly laid off another 300 employees June 23, on top of the 150 staffers let go in May. The service didn’t outline in which departments the cuts were made.

The streaming behemoth, which employs about 11,000 people worldwide, has been downsizing following a disappointing fiscal quarter that saw the service lose a net 200,000 subscribers. Netflix had projected a subscriber gain of about 2.5 million.

“Today we sadly let go of around 300 employees,” Netflix said in a statement. “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth. We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition.”

Co-CEO and chief content officer Ted Sarandos, who was at the Cannes Lions advertising summit in France, didn’t comment on the layoffs. He did mention that as a Wall Street hero for years, especially during the pandemic when it gained 28 million subs, Netflix takes the good with the bad.

“We’ve gotten through experiences where the market disconnects from core business and you have to prove the thesis still works, and is going to work long-term,” Sarandos said. “There’s a lot of uncertainty in the world today, and if they get anything that rocks the foundation of the narrative, they get nervous.”

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Ted Sarandos: Netflix in Talks With Partners for Ad-Supported Subscription Streaming Service

Netflix co-CEO and chief content officer Ted Sarnados June 23 confirmed that the SVOD behemoth is in discussions with several possible partners for its planned less-expensive ad-supported subscription tier. Partners reportedly include Bluegill Media, NBCUniversal, Google and Roku.

Speaking on the “Future of Entertainment” panel at the Cannes Lions advertising confab in France, Sarandos wouldn’t disclose the name of any partner, saying only that the companies “all have different solutions” for Netflix.

Ted Sarandos being interviewed at Cannes Lions ad confab in France

“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,'” Sarandos said. “We are adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.'”

Netflix is pursuing an ad-supported subscription plan in part due to an unexpected loss of 200,000 net subscribers in its most-recent fiscal period. The loss has seen Netflix’s stock price lose half of its value. Sarandos said the downturn on Wall Street reflects the market’s fickle nature.

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“We’ve gotten through experiences where the market disconnects from core business and you have to prove the thesis still works, and is going to work long-term,” he said. “There’s a lot of uncertainty in the world today, and if [investors] get anything that rocks the foundation of the narrative, they get nervous. They viewed us as a spoiler, [now] they’re happy to see the spoiler trip.”

The executive also dismissed scuttlebutt Netflix was in merger talks with Roku.

“I don’t know where that came from,” Sarandos 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 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.

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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.

Ted Sarandos Said He ‘Screwed Up’ on Transgender Debate

Netflix co-CEO and chief content officer Ted Sarandos says he “screwed up” handling the controversy regarding stand-up comic Dave Chappelle’s new Netflix special The Closer — now streaming on the SVOD platform.

Chappelle, who has a long-term contract with Netflix, drew criticism from LGBTQ groups over comments he made regarding transgender people, remarks some observers — including Netflix’s transgender employees — viewed as hurtful and discriminatory.

The streamer’s trans employee resource group has a planned Oct. 20 virtual walkout in protest.

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In an Oct. 19 media interview, Sarandos said he should have realized that initial comments supporting freedom of speech and “artistic expression” could hurt some people.

“I 100% believe that content on screen can have impact in the real world, positive and negative,” he said. “I should have first and foremost acknowledged in those [company memos] that a group of our employees were in pain, and they were really feeling hurt from a business decision that we made.”

Sarandos said the internal memos, one of which was leaked to the media resulting in the firing of the Netflix employee who leaked it, were clumsily handled. That said, the CCO said there were no plans to pull Chappelle’s special (which ranks No. 3 on the platform), arguing there would always be content on Netflix that would offend some audiences.

“We’re deeply committed to the culture of transparency [within Netflix],” Sarandos said. “It also depends upon a great deal of trust with our employees that we continue to secure, but we don’t plan on changing any of our internal operations around that.”

Ted Sarandos: Netflix Management Wasn’t Sold on ‘Squid Game’ in the Beginning

With South Korean original horror series “Squid Game” setting viewership records for Netflix, it would be easy for co-CEOs Reed Hastings and Ted Sarandos to take credit for a show 142 million Netflix households streamed in the first 28 days following its Sept. 17 debut.

Speaking on the company’s Oct. 19 webcast, Sarandos gave credit to the streamer’s South Korean team that recognized the show’s potential when acquiring the rights two years ago. It was not a sentiment equally shared stateside.

“I can’t say that we had the same eyeball on it that it was going to be the biggest title in our history around the world,” Sarandos said.

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The executive said that the show tracked like a local-language show that mushroomed globally. At the same time, he said predicting the success of a program is unrealistic.

“In 10 years trying to sell [‘Squid Game’], our team recognized something nobody else did. And created an environment for that creator to make a great show,” Sarandos said. “How something can go viral is really hard to predict, but it’s super powerful when it happens.”

The co-CEO said “Squid Game” has been able to “deliver the goods” to be able and attract monster viewership, and have people talk about it in shorthand.

“Sometimes you think you have lightning in a bottle and you’re wrong,” Sarandos said. “And then you have a really great Korean show that happens to be lightning in a bottle for the rest of the world.”

The CFO was quick to point out that Netflix has had similar successes, just not on the same scale as “Squid Game.” Shows such Spain’s “Money Heist,” France’s “Lupin,” Germany’s “Blood Red Sky” and the U.K.’s “Sex Education,” among others.

Sarandos said Netflix’s content team continually focus on the reality that stories of the world increasingly come from all over the world — not just Hollywood. He said non-English-language content viewing has grown three times since Netflix began making original programming in 2008.

“The thing [our content teams are] mostly focused on are a bunch of shows you’ve never heard of, but are hugely impactful in [different] territories, like Denmark, Italy and India,” Sarandos said. “These are all shows that are meant to be hugely impactful and loved in territory, and if they really catch on, they travel a lot.”