The company has a major leadership change as it officially names longtime lead independent director Jay Hoag as chairman of the board. He takes over from Reed Hastings, the co-founder who turned the business, a DVD-by-mail rental service, into one of the world’s most powerful streaming services. The change came into effect on the day of the annual shareholders’ meeting on June 4 and was announced by Netflix in a regulatory filing one day later, on June 5.
This isn’t a surprise if you have followed Netflix’s journey the past 25 years. Hoag has served a regular, regular presence on the board since 1999. In fact, he’s seen each major turnaround, each chance to take a gamble and each turbulent period the company has endured, including the almost fatal decision to separate its DVD division from its video business and expand internationally into original content. He had already held a unique role of oversight and strategic counsel for over 10 years, as lead independent director. His ascension to chairman seems to be a more natural process than a quick change.
Hastings’ resignation from the board is the end of a era. He was co-founder of Netflix, which was a novelty and fresh concept in the days where mail-order movies in red envelopes were still a novelty. He navigated the company through the era of physical media, streaming, and the harsh realities of today’s entertainment landscape. He was perhaps best known for leading Netflix through the COVID-19 pandemic, when many traditional entertainment brands had to stop productions and reimagine their business models. In the meantime, Netflix’s subscriber count increased as millions of people worldwide found shelter in streaming. In recent months Hastings has publicly stated that he wants to devote more of his attention to philanthropy and other personal interests, and the company has complemented him on this.
Hoag’s length of service is not the only reason he is well qualified for this position, but the type of job experience he brings to the table. He joined TCV as a founder, a growth equity firm, which has long invested in Netflix. It’s an altogether different kind of experience that can come to the boardroom table with a numbers-heavy, yet creative and disciplined approach. While some corporate boards may only have a surface-level knowledge of the business, Hoag has been in the trenches with Netflix on several economic cycles, content strategies, and shareholder debates. He’s observed the company at their worst and best.
The move has got some intriguing questions of governance for Netflix from an editorial perspective, too. At Hastings, he was not a mere chairman but a man of great initiative and action. He was very involved in the creative process and was known for his making of shows such as House of Cards and Stranger Things that were at risk of being too lean. Hoag, on the other hand, is from the investment community. However, the lack of vision does not imply that he is not willing to take risks, particularly in unconventional situations, but his approach to leadership has more of a focus on stability, measured growth and shareholder returns. This isn’t necessarily a criticism. Indeed, following years of rapid growth and growing competition from Disney, Amazon, Apple and others, a steady hand at the helm may be just what Netflix requires right now.
The industry response has been generally favourable but tempered with some healthy scepticism. Some analysts note that Hoag already has a firm grasp of the company, so there shouldn’t be any surprises when it comes to strategy. Others say the power has always been in the hands of the co-CEOs, Ted Sarandos and Greg Peters, as well as the chairman’s job, which is more of an oversight and long-term-planning thing. Nevertheless, it’s intriguing that Hastings is leaving completely. Whether good or bad, he was the poster boy for Netflix’s risky gamble on streaming, and his ousting from the board is the end of one of the company’s chapters.
In terms of trustworthiness, however, it is important to recognise that sometimes, changes in board leadership can be an indicator of a change in the culture within the organisation, and not always ones that are apparent to the public. Netflix hasn’t shared any major shift in policy or strategy as a result of this move. The company is continuing to pursue its key objectives, such as growing its ad supported business, combating password sharing, and developing live content, including stand up comedy and sports specials. For his part, Hoag has not taken part in any public interviews about his new job, but from his past, he seems to prefer quiet over showy.
