Netflix’s Reed Hastings has changed the way we watch TV – for better or for worse

Perhaps nothing sums up Netflix co-founder Reed Hastings’ legacy quite like a certain Dr. Pepper.

In the 30-second spot, a live sports staple, 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 piece of paper with the password in it and laboriously key it in via arrows on a remote control. Once they’re logged back in, the room exhales, but not before one fan vents his frustration. “I miss basic cable,” he snorts.

During a company earnings call on Thursday, Hastings, 62, announced he was handing over his day-to-day role as Netflix co-CEO to COO Greg Peters, who will continue to work with the company’s content chief, Ted Sarandos. The changing of the guard marks the end of an era for the streaming giant, which would not be an industry leader and cultural force without Hastings, who will continue to serve as the company’s executive chairman.

His departure was revealed in an otherwise mixed bag of a call in which Netflix announced a surge in subscribers; This comes after the company lost nearly 1.2 million subscribers in the first half of 2022, blaming account sharing. In fact, competition among streaming services has never been fiercer, ranging from HBO Max to Amazon Prime to NFL+. But none of them would exist if Netflix hadn’t come along.

Hastings had no intention of taking 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 arose out of panic — he was six weeks late returning from a VHS rental from Apollo 13 and was struggling to explain the $40 late fee to his wife. He wondered why video rentals couldn’t work like a gym membership, where subscribers watch as little or as much as they want. Randolph counters that he and Hastings came up with the idea for Netflix together.

The business they eventually started was like a weird Columbia House derivative — a service that allowed customers to browse an online catalog and rent movies for a subscription fee by mail. 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 $2.5 million in 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 embraced it so eagerly that two months later, Jeff Bezos offered to buy the business from Hastings and Randolph for $16 million. In September 2000, after the dot-com crash stunted growth, Hastings and Randolph almost sold Netflix again to Blockbuster for $50 million; Blockbuster, convinced the offer was a joke, turned it down.

Netflix logo over images from movies and showsFor the price of a frou-frou Starbucks drink, a Netflix subscriber could gorge on this content without suffering a single ad. Photo: Adrien Fillon/Zuma Press Wire/Rex/Shutterstock

Not long after, Netflix was shipping a million DVDs a day, grossing more than $500 million and putting blockbusters and mom-and-pop video stores out of business. Before Amazon, by then an online shopping giant, could grab Netflix’s market share, Hastings, inspired by YouTube, pushed the company to focus on streaming videos. In a short time, his library grew 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 creating original content.

For the price of a frou-frou Starbucks drink, a Netflix subscriber could enjoy this content ad nauseam without suffering from a single ad — the ideal home viewing experience.

Hastings helped make Netflix a one-stop shop. It streamed hot movies within weeks of their box office debut, as well as hit original TV series like Orange Is the New Black and cherished network mainstays like The Office. Samsung and Sony rushed to add Netflix and other major streamers to their TV menus. Before Netflix, we were taxed for receiver boxes, stuck with too many remotes, and at the mercy of customer support from Time Warner and the like. It took Hastings to show us that television doesn’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 jump into the streaming business, but also tech rivals like Amazon and Apple. Where Netflix was once synonymous with streaming, it’s now one of a handful of options, and hardly the best of the bunch.

As Netflix grew and made Hastings a billionaire, he battled criticism for pulling an episode of the current comedy show Patriot Act starring Hasan Minhaj, in which the host roasted Saudi Crown Prince Mohammed bin Salman, and for continuing to support Dave Chappelle funded and other comedians who cause controversy in their standup specials. Hastings replied: “We do not try to tell the truth to those in power. We’re trying to entertain” – just made him seem like another aloof corporate tycoon.

For Silicon Valley leaders, Hastings is more Tim Cook than Elon Musk, a reticent pragmatist at heart. The legacy he leaves is immense. Before Hastings came along, television was a passive experience. Thanks to him, viewers have more remote control than ever before – whether they like it or not.