Perhaps nothing sums up the legacy of Netflix co-founder Reed Hastings as neatly as a certain Dr Pepper commercial.
In the 30-second spot, a staple of live sports, a group of friends gather to watch a college football game – but, gasp, the TV has disconnected from the streaming service. A mad scramble ensues to track down a paper slip with the password and painstakingly enter it via arrows on a remote. Once they are logged back in, the room exhales, but not before one fan vents his frustration. “I miss basic cable,” he huffs.
During a company earnings call on Thursday, Hastings, 62, announced that he would be relinquishing his daily role as Netflix co-CEO to COO Greg Peters, who will continue working alongside the company’s content chief, Ted Sarandos. The changing of the guard marks the end of an era for the streaming giant, which wouldn’t be an industry leader and cultural force without Hastings – who will continue as the company’s executive chairman.
His departure was revealed in an otherwise mixed bag of a call on which Netflix touted an uptick in subscribers; this is after the company lost almost 1.2 million subscribers in the first half of 2022 and blamed account-sharing. In fact, the competition among streaming services has never been more intense, running the gamut from HBO Max to Amazon Prime to the NFL+. But none of them would exist if Netflix hadn’t come along.
Hastings didn’t set out to take over the entertainment industry when he founded the company with Marc Randolph in the summer of 1997. Hastings, a computer scientist and mathematician, claims the idea was born out of panic – that he was six weeks late returning a VHS rental of Apollo 13 and was struggling with how to explain the $40 late fee to his wife. He wondered why video rentals couldn’t work like a gym membership, where subscribers watched as little or as much they wanted. Randolph counters that he and Hastings hatched the idea for Netflix together.
The business they eventually launched was like some weird Columbia House derivative – a service that allowed customers to browse an online catalogue and rent movies by mail for a subscription fee. This was heady stuff for the turn of the century, when there was at least one video store in every neighborhood and Amazon was just a humble bookseller.
Hastings, who would invest $2.5m into the startup from a software company he founded and sold, didn’t expect many to sign up for his library of 925 titles. But people took to it so eagerly that two months later, Jeff Bezos offered to buy the business out from under Hastings and Randolph for $16m. In September 2000, after the dotcom crash stymied growth, Hastings and Randolph nearly sold Netflix again to Blockbuster for $50m; Blockbuster, convinced the offer was a joke, declined.
Not long after, Netflix was shipping a million DVDs per day, racking up more than $500m in revenue and putting Blockbuster and mom-and-pop video stores out of business. Before Amazon, an online shopping leviathan by this point, could horn in on Netflix’s market share, Hastings, inspired by YouTube, pushed the company to branch into streaming video. In short order, its library mushroomed from 1,000 titles to nearly 6,000 in the US alone. Under Hastings, Netflix went from signing content distribution deals with television and film companies to making original content.
For the price of a frou-frou Starbucks drink, a Netflix subscriber could binge this content ad nauseam without suffering through a single commercial – the ideal home viewing experience.
Hastings helped turn Netflix into a one-stop shop. It streamed hot movies within weeks of their box office debuts, as well as hit original TV series including Orange Is the New Black and cherished network mainstays like The Office. It had Samsung and Sony rushing to integrate Netflix and other major streamers into their TV menus. Before Netflix, we were taxed for receiver boxes, bogged down with too many remote controls and at the mercy of customer support from Time Warner and the like. It took Hastings to show us that TV didn’t have to be so complicated. It could even be on a phone or a tablet.
Unfortunately for Hastings, Netflix became a victim of its success. It not only prompted Hollywood studios to get into the streaming business, but tech rivals like Amazon and Apple, too. Where Netflix was once synonymous with streaming, now it’s one in a smattering of options and hardly the best of the bunch any more.
As Netflix grew and made Hastings a billionaire, he would struggle to navigate criticism for pulling an episode of the topical comedy show Patriot Act with Hasan Minhaj in which the host roasted the Saudi crown prince, Mohammed bin Salman, and for continuing to bankroll Dave Chappelle and other comedians who court controversy in their standup specials. Hastings’s response – “We’re not trying to do truth to power. We’re trying to entertain” – only made him seem like another out-of-touch corporate tycoon.
As Silicon Valley leaders go, Hastings is more Tim Cook than Elon Musk, an understated pragmatist at his core. The legacy he leaves behind is immense. Before Hastings came along, watching television was a passive experience. Thanks to him, viewers have more remote control than ever – whether they like it or not.