Now all he’s got to figure out is live programming, sports, gaming, pricing and, oh, advertising.
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Netflix Had a Password-Sharing Problem. Greg Peters Fixed It
Now all he’s got to figure out is live programming, sports, gaming, pricing and, oh, advertising.
Co-CEO Greg Peters at the Netflix office in Los Gatos, California.
Photographer: Maggie Shannon for Bloomberg Businessweek
By
Lucas Shaw
May 18, 2024 at 10:00 AM EDT
Updated on
May 18, 2024 at 2:14 PM EDT
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In mid-February, Greg Peters, the co-CEO of Netflix, strode onstage at the Hollywood Palladium, an art deco concert venue in Los Angeles, to deliver a pep talk to what the company calls its New Employee College. Dressed in a button-down shirt and white zip-up sweater, Peters, lanky with striking green eyes, gave a summary of Netflix’s history before analyzing the competitive landscape. Traditional media companies such as Walt Disney Co. and Paramount Global, which had been slow to introduce streaming services, were now
struggling to make money. Big Tech businesses like Amazon.com Inc. and Apple Inc. can outspend others but aren’t focused on entertainment. Some of these companies, he said, will shut down their services eventually. Netflix Inc., already more popular than all its competitors (except YouTube), is growing quickly and generating billions of dollars in cash every year. The business is in a good position—no, “a great position,” Peters said, correcting his teleprompter. He then left the crowd with a simple message: “It’s ours to lose.”
Peters walked off to applause and settled into a dressing room, where he talked to
Bloomberg Businessweek about an idea he’d teased onstage: the company’s next big competitive advantage, a version of the streaming service that will adapt to customers’ preferences. If you like watching documentaries on Thursday nights, that’s what you’ll get served then, and if you like watching comedies on Sundays, get ready to laugh over brunch. The idea is ambitious and unproven, but it could help Netflix differentiate itself from copycats. The company has long tracked the time it’s taken its rivals to rip off its look; Disney and Apple did a quick job, while Amazon took forever. “I would literally start a stopwatch,” he said.
Peters at Netflix headquarters.Photographer: Maggie Shannon for Bloomberg Businessweek
Peters’ confidence would’ve seemed crazy just a couple of years ago. Netflix lost customers during the first half of 2022—the
worst six-month stretch in its history—forcing it to fire hundreds of employees and cut back on programming. Its shares tanked, erasing about $200 billion in market value. After a decade of rapid growth, it appeared Netflix had finally hit a wall. New services were vying for viewers, especially in the US. The war in Ukraine had forced the company to withdraw from Russia, where it had a small but growing customer base. Inflation was making users more sensitive to price, limiting its ability to increase what it was charging. Netflix hits such as
Virgin River and
Ginny & Georgia hadn’t impressed critics or awards voters.
Big Take
The Man Who Ended Netflix Password Sharing
13:53
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Netflix responded with two major initiatives—advertising and a crackdown on password sharing—that many observers interpreted as
signs of desperation. The company had always said it didn’t mind if users shared accounts, and it had made “
no advertising” central to its pitch. Netflix, once a customer-friendly alternative to cable, was starting to feel like just another service, and its slowdown caused Wall Street to question the entire entertainment industry. If the dominant streaming service was no longer growing, what did that mean for other media companies that were spending billions of dollars trying to catch up? Shares in Disney, Warner Bros. Discovery and Paramount fell as well, in what became known as the “
Netflix correction.”
Yet the company has defied the skeptics once again, converting millions of moochers into paying subscribers without a user revolt. The streaming service added almost 30 million customers last year, its second-best annual
performance, and an additional 9.3 million in the first quarter of this year, its best start since the pandemic streaming boom of 2020. While Disney (which owns ABC, ESPN and other networks) and Paramount (CBS, Nickelodeon, Comedy Central, etc.) are struggling with the collapse of cable and the
high cost of streaming, Netflix is growing stronger. The company accounts for the majority of the
most popular streaming TV shows in the US—its
Griselda,
Baby Reindeer and
The Gentlemen are the biggest hits of the year—and faces diminished competition at home and abroad. After years of burning through cash to fuel its expansion, Netflix is on track to generate $10 billion in profit in 2024.
Netflix Subscribers
Quarter-over-quarter change
Source: Company filings compiled by Bloomberg
Much of the credit goes to Peters. His former boss, Netflix co-founder Reed Hastings, put Peters in charge of advertising and account sharing. “He’s made some great decisions for us,” Hastings says from Powder Mountain, the ski resort he owns in Utah. “He inspired the team to get it all done in six months. That’s an amazing timeline, and he was the battlefield general.” Hastings
retired as co-chief executive officer last year, ceding his position to Peters, who, at 53, is a decade younger.
Peters is now one of the most powerful media executives in the world. Yet he’s virtually unknown. Ask anyone in Silicon Valley about Netflix, and they’ll first think of Hastings. Ask anyone in Hollywood, and they’ll say Ted Sarandos, Peters’ gregarious co-CEO, who held the same title with Hastings. Colleagues and business partners describe Peters as intelligent, pragmatic and ambitious—the word “polymath” comes up often—and after orchestrating the successful turnaround of the company over the past 24 months, he’s starting to get comfortable with the public nature of his job.
Still, the crackdown on password sharing provided only a temporary boost. When Netflix announced in April that it would
stop reporting its subscriber numbers next year, shares plummeted as investors fretted that the recent growth spurt was nearing an end. They want to know how Netflix can keep growing.
Netflix co-founder Reed Hastings delivers a keynote address at the 2016 Consumer Electronics Show in Las Vegas.Photographer: David Paul Morris/Bloomberg
Netflix didn’t organize a New Employee College when Peters joined the company in 2008, though it did make new hires dress up and perform a skit at orientation. Peters and a few other newbies performed an ABBA song in a Los Gatos, California, theater. (He describes it as “highly embarrassing.”) This was long before
House of Cards or
Squid Game; the company’s year-old streaming service was just a free add-on to its
DVD-by-mail business. Neil Hunt, the chief product officer, was looking for someone who could help put the service onto as many devices as possible. When it made its debut, it was available only via computer. Netflix needed to persuade TV manufacturers and the makers of video game consoles and other consumer electronics to support the product. Hunt arranged a meeting between Peters and Netflix’s leadership in downtown San Francisco. A charming engineer, Peters made an immediate impression thanks to his range of knowledge about sports, music, entertainment and food (in addition to tech) and his willingness to debate without being a jerk. “We couldn’t hire the guy fast enough,” says Leslie Kilgore, a board member who was then the company’s chief marketing officer.
Peters learned to code about the same time he learned to spell. His family bounced around a lot when he was a kid. He spent several years in Minneapolis, where he knew Latin by the fourth grade, and a few years in Kansas, where he got into foreign cinema. Wherever he went, he always had a computer project, making games on his Apple II Plus computer. “I think I was born with a computer attached,” he told the podcast
Stratechery earlier this year.
Although Peters speaks and dresses like a classic Silicon Valley tech exec (he’s a big vest guy), he initially wanted to be an astronaut. He got an ROTC scholarship to attend Yale University, where he double-majored in astronomy and physics; for his thesis, he wrote a software program that modeled the inner workings of stars to explain how they function. After graduation, he joined the US Air Force and was stationed in LA with the idea that his training would eventually prepare him to go to outer space. But he spent most of his time working on GPS satellites and, after a classified assignment in Sunnyvale, ultimately decided he didn’t want to wait the decade it might take for a shot to leave Earth.
Instead he took an engineering job at Wine.com, one of
several startups looking to corner the market online. Flush with cash from venture capitalists, the Bay Area company fell prey to the hype cycle of the first dot-com bubble. But not before Peters got an advanced education. Wine.com employed several master sommeliers who’d sit around the kitchen with 40 to 50 open bottles and talk shop. Today, Peters is still passionate about the subject. During a recent dinner at an Italian restaurant in LA, he spent several minutes discussing the merits of different wines with the sommelier, ultimately settling on a 50-year-old Barolo. (The sommelier approved.) Peters provided regular updates during the meal as the Barolo opened up; the wine at first tasted to him like cigar and “wet cardboard” before the flavor of cherry emerged. “It could be cherry juice,” he said. “It’s remarkable.”
An engineer by trade, Peters was first employed at Netflix in a job that required him to be a salesman. Streaming was so new that most electronics businesses had no interest in working with the company. About 95% of device makers turned Netflix away. But Peters needed only a few early converts. He and Hastings would visit the Irvine, California, television manufacturer Vizio Inc. and pitch it on manufacturing TVs connected to the internet. William Wang, the company’s founder and CEO, had tried making a smart TV in the late 1990s and lost a lot of money. But he was ready to try again. Peters and Hastings also persuaded Vizio to put a button on its remotes to open Netflix with one click. Netflix also scored a big vote of confidence when Microsoft Corp. agreed to make the service
available on its popular gaming console, Xbox.
Netflix’s office building on Sunset Boulevard in Los Angeles.Photographer: Bing Guan/Bloomberg via Getty Images
It didn’t take long for Hastings to identify Peters as one of a handful of executives with CEO potential. Peters did eventually get the company onto every device imaginable; he built local delivery networks to ensure streaming quality even in remote parts of
Latin America; and he assembled an effective team. When the education technology company Coursera Inc. tried to hire Peters as its chief technology officer in 2015, Hastings kept him at Netflix by offering him a dream position. He asked Peters to lead Netflix’s
expansion into Japan, its first market in Asia. Peters’ wife is Japanese, and he’d spent years learning the language. His posting in Tokyo the same year was controversial internally. As general manager, he’d have oversight of not just local operations but also programming, marketing and publicity. This was the first country where Sarandos didn’t oversee programming.
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