Netflix reverses decline, adds 2.4 million subscribers in Q3

Netflix said Tuesday that it added more than 2.4 million subscribers in the third quarter — mainly from outside the United States — snapping a streak of customer losses this year that spurred unease among investors and questions about how much more the streaming business could grow.

The streaming giant said it now has 223 million subscribers worldwide, after beating its earlier forecast of about 1 million additions for the quarter. Netflix lost 200,000 subscribers in the first quarter and nearly 1 million in the second.

“After a challenging first half, we believe we’re on a path to reaccelerate growth,” Netflix said in its quarterly letter to shareholders. “The key is pleasing members.”

Netflix is preparing to introduce advertising on its service Nov. 3, part of a bid to attract more customers with a lowercost subscription. The advertising-supported tier, priced at $6.99 a month in the United States, will show subscribers four to five minutes of ads per hour of content they watch.

Netflix generated about $7.9 billion in revenue in the third quarter, a nearly 6 percent increase from the same period last year. The company generated about $1.4 billion in profit, a 3 percent decrease from a year earlier.

Netflix shares were up more than 10 percent in after-hours trading.

Netflix said in its letter to shareholders that it expected to add 4.5 million subscribers in the fourth quarter, a 46 percent decrease from the 8.3 million subscribers it added during the same period last year. Netflix also said it would stop providing guidance to investors on its projected subscriber count beginning next quarter.

Rich Greenfield, an analyst for LightShed Partners, said the results indicated that Netflix would flourish as competitors continue to lag behind.

“I think the reports of streaming’s death or maturity have been greatly exaggerated,” Greenfield said.

The decision to introduce an advertising option on Netflix was an about-face for the company, which for years had highlighted its ad-free experience as a selling point for customers. But this year co-CEO Reed Hastings reversed course, saying that an advertising-supported plan would allow customers to choose their experience.