Netflix gained 7.66 million subscribers in the last quarter of 2022, beating its own forecast, taking its global to total to over 230 million. The co-founder Reed Hastings has moved to the role of executive chairman, with Ted Sarandos and Greg Peters becoming co-chief executives, having been taking more responsibility in recent quarters. They will now share responsibility for further growth at a time of increased competition.

The subscriber growth was higher than Netflix had forecast, although lower than in the same quarter the previous year, when it gained 8.29 million.

In the United States and Canada, Netflix gained 900,000 subscribers in the last quarter of 2022, but it ended the year with over 900,000 fewer than at the start of the year.

The greater gains came in the Europe, Middle East and Africa region, up 3.20 million for the quarter, and 2.70 million over the year.

Netflix Paid Streaming Subscriptions 2018-2022 Q4. Source: company reports

It was encouraging news for investors, who have seen the Netflix share price fall from a high of $645 in November 2021 to a low of $162 in mid-2022, recovering to over $340, which is what it was around three years before.

Netflix reported annual revenue of $31.6 billion, compared to $29.7 billion the previous year. Operating profit was $5.6 billion, compared to $6.2 billion the year before.

Netflix says it is still early days for the advertising supported plan that it launched in 12 countries in November. It says the lower price point is driving incremental subscriber growth, with very little switching from other plans, but gave little detail.

Netflix says that advertising will generate incremental revenue and profit, though the impact on 2023 will be modest given that this will build slowly over time. It is aiming for advertising to account for at least 10% of its revenue in time but executives seem far from excited by the prospects.

The company is meanwhile planning to crack down on account sharing, offering ways to encourage free riders to get their own accounts, a move that it recognises will not be universally popular but expects to result in a net gain in subscribers and revenue. Netflix estimates that over 100 million households share their accounts outside the home.

In the United States and the United Kingdom, which are two of the largest markets for Netflix, it accounts respectively for 8% and 9% of television viewing. Netflix optimistically sees this significant room for growth.

Ted Sarandos was promoted to co-chief executive in July 2020, with Greg Peters as chief operating officer, who now becomes co-chief executive. Bela Bajaria becomes chief content officer.

Reed Hastings hands over management responsibilities, becoming executive chairman, although he says that he is heavily invested in the success of Netflix. He hopes to focus more on philanthropy.

“Ted, Greg and I have been working closely together in different capacities for 15 years,” he said. “As is common in long, effective relationships, we’ve all learned how to bring out the best in each other. I look forward to working with them in this role for many years to come.”

The succession strategy has been long-planned and it is no great surprise that Reed Hastings is stepping down from day-to-day responsibility for Netflix, preparing the way for the next step in its journey.