This morning Viaplay downgraded its outlook for 2023 and announced the departure of CEO Anders Jensen, sending shares in the Nordic streaming company plummeting by 60 percent.
The group lowered its annual sales growth forecast from 24-26 percent to 16-17.5 percent. In the Nordic region, the projection fell from 12-15 percent to 7-8 percent. The company also withdrew its 2025 operating and financial targets amid ongoing uncertainty.
Viaplay offered three reasons for the reductions: lower demand in the Nordic and international streaming subscriber markets, plus lower subscription sales by linear distribution partners; the accelerated deteroration of the Scandinavian TV and radio advertising markets; and the company’s cost-saving programmes progressing slower than expected.
The business also posted weak expectations for Q2, anticipating a 12-16 percent drop in organic ad revenues, as well as operating losses of SEK 250-300 million. Viaplay cited “sharp and rapid deterioration” in the advertising market, the impact of rising costs of living on subscription uptake, and high churn levels following price increases.
Alongside the downward revision, Viaplay announced the resignation of Anders Jensen, who has served as CEO since 2018. He is replaced by Jorgen Madsen Lindemann with immediate effect. Lindemann is the former CEO of MTG, which owned Viaplay until the companies split in 2018.
“It has been a privilege and an honour to be on the team making Viaplay Group into the forward leaning and future focused company that it is today,” said Jensen. “I remain confident of the success that lies ahead for the company. But I also feel that, in the light of current challenges, the company is best served if I step down, and I have therefore decided to do so. I wish the company and the team the very best in the future.”
Shifting down
Since committing to its streaming-first strategy, Viaplay has positioned itself as a European competitor to Netflix, amassing 7.7 million subscribers and a healthy roster of sports rights (including Formula 1 and the Premier League). The Nordic streaming service recently launched in the UK, US and Canada, reporting a sevenfold increase in international revenues.
But the company’s Q1 results pointed to a “particularly uncertain” outlook for the second half of 2023, raising its TV prices to compensate for a 2 percent loss in quarterly ad revenues. Nonetheless the company stuck to its target of 5 million domestic subscribers by the end of the year.
The expectations for Q2 suggest growth has slowed considerably, predicting a global subscriber base of 7.7 million. This implies the SVOD service added 60,000 subs in Q2, compared with 325,000 in Q1. The full quarterly results are due for publication on 20th July.
Streaming companies have generally seen their subscriber growth contract in recent years, after periods of rapid expansion, and now it seems Viaplay may have hit a similar ceiling.
“The outlook for the markets in which we are operating has shifted considerably and at a very rapid pace, and the execution of cost savings programmes has not been mitigating the effects from these conditions to a sufficient extent,” said Pernille Erenbjerg, Chair of the Viaplay Board. “The impact of the macroeconomic headwinds on the business require that we execute differently on our strategy.”
“I know Viaplay Group well, and have of course followed the company’s journey closely over the years. I am passionate about the Group’s tremendous potential,” added incoming CEO Jorgen Madsen Lindemann. “I am very much looking forward to the opportunity to be part of leading Viaplay Group through the currently challenging times, and delivering on the next phase of its development.”
