Netflix shares traded lower Thursday, following a report that indicated that the streaming company is not building a sufficiently large audience in its recently launched ad-supported tier. According to Digiday, Netflix is having to refund some ad spending commitments as it faces disappointing subscriber additions in its new ad-supported service.
The Digiday report mentioned the Netflix has structured the deals in a way that allows advertisers to secure a guaranteed level of views in order to justify paying for their promotions.
During its last earnings in October, Netflix said it will add around 4.5 million subs over the last quarter of the year, meeting analysts' forecasts. But the company stated that starting next quarter, it will no longer provide guidance to investors on paid subscriber additions.