By Clare Duffy | CNN

Netflix announced Thursday that its founder Reed Hastings is stepping down as co-CEO at the company and will serve as executive chairman. Hastings will be replaced by co-CEOs Ted Sarandos and Greg Peters.

“Our board has been discussing succession planning for many years (even founders need to evolve!),” Hastings wrote in a blog post on Thursday. “As part of that process, we promoted Ted to co-CEO alongside me in July 2020, and Greg to Chief Operating Officer — and in the last 2½ years I’ve increasingly delegated the management of Netflix to them.”

Hastings founded Netflix in 1997 and changed the way countless households watched movies and shows, first with its DVD-by-mail business and later with its streaming video service.

Under Hastings’ leadership, Netflix disrupted legacy movie rental companies like Blockbuster and helped shake up Hollywood by kicking off an arms race investing in original content. It also survived a notable misstep in 2011 when the company briefly planned to spin off its streaming service from its DVD business, with the latter to be re-branded as Qwikster.

Last year, however, Netflix saw its stock and reputation take a hit after losing subscribers amid heightened competition from rival streaming services. In response, Netflix introduced a lower-priced, ad-supported tier for the first time in its history.

Those changes may be paying off. In its earnings report on Thursday, the streamer said it added more than 7.6 million subscribers during the final three months of last year, well above the 4.5 million additions it had projected, for a total of more than 230 million paying subscribers worldwide.

The company said the quarter’s results indicate that its growth is reaccelerating, thanks in part to popular original programming like “Wednesday” and “Harry & Meghan.” It also said that its ad-supported subscription offering, which launched in November, has gained traction.

“It’s still early days for ads and we have lots to do,” the company wrote in a letter to shareholders. But it noted that engagement is better than what it had expected and “we believe the lower price point is driving incremental membership growth.”

Netflix also said it plans to “start rolling out paid sharing more broadly” later this quarter, as part of its effort to crackdown on people who share passwords rather than pay for their own accounts.

The company posted December quarter revenue of more than $7.8 billion, up just 1.9% from the prior year but in line with Wall Street analysts’ expectations. For the current quarter, Netflix is forecasting revenue growth of 4%, driven in part by a modest increase in paid net subscription additions, a reversal from the slight decrease in subscriptions during the first quarter of last year.

Shares of Netflix rose around 6% in after-hours trading following the Thursday report.

“Reed Hastings stepping down from his current role raises a lot of questions about Netflix’s future strategy,” Jamie Lumbley, analyst at investment firm Third Bridge, said in a statement. “While the subscriber growth numbers are encouraging, revenue growth is sluggish with the backdrop of a potential recession looming on everyone’s mind.”

While Hastings’ move away from the CEO spot represents the end of an era of sorts, Netflix said the leadership change “makes formal externally how we have been operating internally.” And Hastings added in his blog post that Sarandos and Peters have “complementary skill sets, deep knowledge of entertainment and technology, and proven track record at Netflix.”

Sarandos has led Netflix’s content operations since 2000, and pioneered the company’s transition into producing original content in 2013. In the process, he has emerged as not just a key leader at Netflix but a power player in Hollywood.

Peters worked both as the COO and the chief product officer for Netflix prior to Thursday’s promotion. He previously served as the streaming giant’s international development officer, helping to expand the company’s overseas distribution.

“Since Reed started to delegate management to us, Greg and I have built a strong operating model based on our shared values and like-minded approach to growth,” Sarandos said in a statement. “I am so excited to start this new chapter with Greg as co-CEO.”