Netflix added 2.4m new subscribers in the last three months, more than twice what had been expected and reversing back-to-back quarters of decline, the company announced on Tuesday.
The streaming company had been expected to add 1m new subscribers over the latest quarter, which included the release of hit shows including the latest series of Stranger Things, Sandman and Dahmer – Monster: The Jeffrey Dahmer Story.
But the company comfortably beat its own forecasts as subscribers returned and spent 1.35bn hours viewing series four of Stranger Things, among other shows.
“After a challenging first half, we believe we’re on a path to re-accelerate growth. The key is pleasing members,” the company said in a letter to shareholders. “It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us.”
Netflix has suffered as competitors including Amazon, Apple, Disney and Hulu have poured billions into streaming content. The company took the opportunity to note its peers were losing money on their investments and still lagged behind in terms of viewers.
“Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard – we estimate they are all losing money, with combined 2022 operating losses well over $10bn v Netflix’s $5 to $6bn annual operating profit,” the company said.
Netflix attracted record subscriptions and viewership during the coronavirus pandemic – adding 15.8m subscribers in the first quarter of 2020. But subscriber numbers suffered as lockdowns eased leading to a heavy selloff in its shares. It’s shares are down 60% this year.
After scorning advertising for years, Netflix announced it is preparing to launch a cheaper ad-supported service this November and is cracking down on password sharing, where a number of households share a Netflix subscription.
Netflix is still growing far more slowly than it was. In the same quarter last year it added 4.4m subscribers. The company announced that it will stop sharing subscriber numbers as it evolves its business to include ad revenue.
Netflix shares surged by over 14% in after-hours trading.