In the third quarter, Netflix witnessed a remarkable increase of 5.1 million subscribers, exceeding Wall Street predictions by over a million users, which resulted in a significant surge in its stock price.

Analysts had anticipated Netflix would gain around 4 million new subscribers during the three months leading to September. This period’s new content featured the murder-mystery series The Perfect Couple, the innovative Greek mythology-inspired show Kaos, and the romantic comedy Nobody Wants This.

The Los Gatos, California-based streaming service, originally established in 1997 as a DVD rental service, reported a quarterly revenue of $9.825 billion, slightly surpassing the consensus forecast of $9.769 billion.

Following the earnings announcement, Netflix’s stock rose by $30.49, or 4.3%, to reach $717.01. Since January, the stock has increased by 47%.

Although this marks the slowest growth in new subscribers over the last six quarters, Netflix continues to lead in a highly competitive streaming landscape, where it competes against major players like Amazon Prime, Apple TV+, and Disney+.

The company has made efforts to shift the focus from subscriber counts to other metrics such as revenue and profit margins, especially after implementing restrictions on password sharing last year. Netflix reported an operating margin of 30% for the quarter, up from 22% a year prior.

In a letter to shareholders, Netflix expressed, “We have successfully executed our strategy to accelerate business growth and look forward to finishing the year strong with an exciting lineup for the fourth quarter.”

With a total of 282.7 million subscribers, Netflix is working to enhance revenue through its newly launched ad-supported plans, though it does not foresee advertising as a major growth contributor until 2026. According to Antenna, Netflix added over 1.9 million subscribers to its ad-supported service in the third quarter.

The company’s strategy also includes live events, especially sports, which are attractive to advertisers. Notably, Netflix will stream a high-profile boxing match between YouTube sensation Jake Paul and former heavyweight champion Mike Tyson in November, followed by its debut NFL games in December.

Additionally, Netflix made headlines by surpassing a traditional studio in the demand share for original series for the first time in the third quarter, as reported by Parrot Analytics. It captured 9.6% of the market for original TV content, outpacing NBCUniversal, which secured 9% and took fifth place.

This indicates that Netflix’s original content, which began in 2012, is more in demand than NBCUniversal’s programming, which has origins in the 1940s. However, Netflix’s share lagged behind longstanding studios like Walt Disney, Warner Bros Discovery, and Paramount, which held 18.4%, 16.7%, and 11.1% shares, respectively. The demand for original programming is viewed as a crucial indicator for subscriber growth.

According to Mike Proulx, research director at Forrester, while Netflix shows positive trends, the decline in net new subscribers is worrisome. Proulx commented, “While there is potential for growth internationally, the U.S. market appears to be reaching its limits.” He cautioned that as audiences have more streaming options, fragmentation may occur within the user base, limiting advertising budget allocations. For sustainable long-term growth, Netflix needs to ensure that its advertising solutions can effectively reach audiences and deliver measurable results compared to competitors.