NEW YORK - Netflix said on 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 one million additions for the quarter. Netflix lost 200,000 subscribers in the first quarter and nearly one million in the second.

“After a challenging first half, we believe we’re on a path to re-accelerate growth,” Netflix said in its quarterly letter to shareholders.

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

Netflix generated about US$7.9 billion (S$11.2 billion) in revenue in the third quarter, a nearly 6 per cent increase from the same period last year. The company generated about US$1.4 billion in profit, a 3 per cent decrease from a year earlier.

A strong slate of fresh programmes attracted millions of new viewers in the third quarter. The period started with new episodes of Stranger Things, one of the most popular TV series in the world. Netflix also released Korean smash hit Extraordinary Attorney Woo, movies The Gray Man and Purple Hearts, and the true crime drama Monster: The Jeffrey Dahmer Story, its second-most-popular English-language original series.

Netflix shares were up more than 10 per cent 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 per cent decrease from the 8.3 million subscribers it added during the same period last year.

While investors have long judged Netflix based on the number of customers it adds every quarter, the company is trying to get them to consider more traditional financial metrics like revenue and operating income. As a result, Netflix said it will no longer provide subscriber forecasts. 

Mr 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,” he 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, after announcing subscriber losses on the company’s first-quarter earnings call, co-chief executive officer Reed Hastings reversed course, saying an advertising-supported plan would allow customers to choose their experience.

Streaming has become an increasingly competitive industry in recent years. Disney, for instance, reported in August that it had about 221 million subscriptions across its bundle of services. It will start offering a lower-priced advertising tier for Disney+ in December.

Mr Hastings expressed relief about the company’s financial results during a video interview conducted by an analyst that was posted by Netflix on Tuesday evening.

“Well, thank God we’re done with shrinking quarters,” Mr Hastings said, laughing.

Netflix is breaking with convention in other ways this autumn. The company plans to release Glass Onion: A Knives Out Mystery in 600 theatres across the US for one week beginning on Nov 23 before its streaming debut, the first time the company has struck a deal with the nation’s largest cinema chains at once.

Netflix told employees this year that it was also planning to crack down on password sharing, which allows users to watch content without paying for a subscription. Research firm MoffettNathanson estimates that 16 per cent of Netflix users share passwords, more than any other major US streaming service. Netflix said in April that passwords were being shared with an additional 100 million households, according to its estimate.

The company has also cracked down on costs. In May, Netflix laid off about 150 workers across the company, primarily in the US, or about 2 per cent of its total workforce. Netflix said in a statement that the cuts had been spurred by the company’s slower revenue growth. NYTIMES, BLOOMBERG