Netflix has lost almost one million subscribers in the second quarter of the year.

The streaming service, which is losing subscribers for the first time in a decade, said that figures were better than expected on membership growth, having previously anticipated a loss of around two million users.

The company is now introducing a cheaper, ad-based subscription tier to attract new users.

The move came despite Netflix’s chief executive previously saying he was against introducing ads to the platform.

Last week it was announced that Microsoft would be its tech and sales partner for the new subscription tier.

The business told shareholders that moving forward its challenge is to accelerate revenue and membership growth.

It also assured shareholders that the company is in a “position of strength”, given its $30 billion-plus revenue and $6 billion operating profit last year.

In the second quarter, revenue was up nearly nine per cent on the same period of last year, increasing from $7.9 billion to nearly $8 billion.

"Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content, and marketing as we’ve done for the last 25 years, and to better monetize our big audience," said the company in a letter to shareholders.

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