Netflix Co-CEO Hastings Praises Rival's Ad-Based Model: 'They've Got A 10-Year Head Start'

Netflix Inc (NASDAQ: NFLX) outgoing co-CEO Reed Hastings said The Walt Disney Co-owned (NYSE: DIS) Hulu is a model when it comes to advertising-service tier.

What Happened: Hastings said on the company’s fourth-quarter earnings call that Hulu has a “10-year head start” in the ad-service tier. 

Netflix CFO Spence Neumann said, “We're not gonna be larger than Hulu in year one, but hopefully over the next several years, we can be at least as large."

Greg Peters, who will replace Hastings, spoke about the ad-supported service launched in November. “We've learned a bunch already," he said, adding that the “tech is all working; the product experience is good.”

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Why It Matters: Peters said that engagement for ad-plan users was similar to those on the ad-free plans. He said, “take rate and growth” are solid but there’s more to do on validation, measurement, and relevance.

The streaming service said its fourth-quarter revenue rose 2% year-over-year to $7.85 billion beating analyst estimates of $7.84 billion. Earnings per share came in at 12 cents per share missing average estimates of 44 cents per share, according to Benzinga data.

The company ended the quarter with 230.75 million paid subscribers and added 7.7 million during the period beating its own expectations of 4.5 million additions.

Price Action: On Thursday, Netflix shares shot up 7.1% in extended trading to $338.25 after closing 3.2% lower at $315.78 in the regular hours, according to Benzinga Pro data. 

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