Viaplay Revamps Strategy with Ad-Supported Tier, Tackles Account Sharing, and Refocuses Content Amidst Recovery Efforts
Viaplay is gearing up to launch an ad-supported tier to its streaming service, planning to address the account-sharing issues and scale back on producing original scripted series to maintain its momentum following a fourth-quarter performance that hinted at a recovery from a particularly tough year for the Nordic streaming company.
After restructuring, Viaplay has reiterated its financial goals for the year, buoyed by a solid fourth-quarter showing. However, the financial strain of exiting certain international markets remains a concern.
The company has had to write off and set aside funds for content expenses in markets it plans to exit – the UK, the Baltic states, North America, and Poland. This has left Viaplay with unavoidable cash costs for content that it can’t sell or sublicense. The company is now emphasizing sublicensing content as part of its strategy to improve profitability.
During the earnings call, CEO Jørgen Madsen Lindemann emphasized Viaplay’s shift towards prioritizing profitability over expansion, with plans to increase prices instead of focusing solely on subscriber growth.
Lindemann highlighted the importance of addressing account sharing and piracy and minimizing customer turnover.
“Inspired by our competitors’ successful account-sharing initiatives, we aim to learn and adapt,” Lindemann noted.
The company plans to introduce a hybrid VOD service this year, incorporating advertising to complement subscription revenue.
Lindemann expressed the company’s intent to leverage the potential of digital advertising. “Our goal is to attract more digital viewers by launching HVOD services in 2024,” he stated.
When queried about the possibility of offering a more cost-effective Premier League package with advertisements, Lindemann mentioned that “all options are being considered.”
The introduction of an HVOD service is expected to help the company capitalize on digital advertising revenue, counterbalancing the decline in traditional ad revenue.
As part of its strategic realignment, Viaplay is moving away from expensive original dramas towards more profitable local shows and Hollywood content, with some original content rights being sold to other streaming platforms. The company is also curbing its sports rights investments and sublicensing some.
CFO Enrique Patrickson emphasized the company’s efforts to enhance content sublicensing.
Lindemann suggested that selling drama and sports content to other media outlets could generate funds for investing in content that offers a higher return on investment.
Viaplay reported a modest Q4 organic sales increase of just over 3% to SEK4.9 billion, primarily driven by a 9% rise in linear subscription and other sales, including content licensing. Viaplay’s organic sales slightly declined by 0.3%, and advertising organic sales dropped by 3%.
Despite a negative operating income of SEK230 million, an improvement from the previous year’s negative SEK284 million, the losses from its international operations set to be discontinued or already discontinued overshadowed the positive results from its Nordic operations.
The company’s Nordic subscriber count fell by 39,000 quarter-over-quarter, mainly due to a reduction in Finland, resulting in a year-on-year decrease of 519,000 subscribers as Viaplay phased out unprofitable promotions.
The traditional pay TV business Allente, partly owned by Viaplay, continues to underperform, with both subscriber numbers and sales declining.
Viaplay’s international subscriber count was 2.396 million at the quarter’s end, down 11.1% year-on-year, mainly due to customer churn in the Dutch market after the Formula 1 season ended – the only international market Viaplay intends to remain in.
Streaming services now generate 51% of Viaplay’s revenue, with linear subscription and other revenues (including content licensing) making up 30% and advertising 19%.
Ragul Thangavel
With over nine years of diverse professional experience, Ragul has made significant contributions across various domains, including Media Operations, OTT Technologies, Video Production, Ecommerce, and Social Media.
Holding an Engineering degree, Ragul's career took an unconventional turn when he discovered his passion for writing, leading him to begin his journey as a content writer.
His career has been exclusively dedicated to the growth and development of startups, where he has played a pivotal role. His unique blend of technical knowledge and creative prowess has enabled him to drive innovation and success in every venture he has been a part of.
