Viaplay says Aggressive Cutbacks are Steadying the Ship

Tim Cross 22 February, 2024 

Embattled Nordic broadcaster Viaplay says that its aggressive restructuring of the company is bearing fruit, setting the stage for continued growth, after a turbulent year for the company. Viaplay posted three percent organic sales growth for Q4 last year, and 13 percent growth for the year as a whole. But more importantly, the company announced it has completed its recapitalisation programme, enabling it to focus on executing its new strategy.

At a glance, Viaplay’s results look strong – 13 percent organic growth is very high compared to other European broadcasters. But that revenue came off the back of an ambitious, but ultimately expensive and loss-making, international strategy.

Viaplay over the past few years launched its paid streaming service in a number of European markets and the US, betting that its mix of Nordic noir content and sports rights could drive growth. But while the strategy initially paid off in some smaller markets, bigger markets proved hard to crack.

All of this culminated in the sudden announcement in mid-2023 that the company was laying off more than 25 percent of its staff, exiting several international markets, and sublicensing expensive content to stem the losses. Anders Jensen, the CEO through Viaplay’s period of expansion, left the company as well.

Since then, Viaplay has been working to right-size its operations, while also recapitalising its business. And new president and CEO Jørgen Madsen Lindemann says a lot of this groundwork is now done.

“We have become leaner after the measures that we have taken over the last nine months,” he said. “Moving forward in the coming years, we will work to optimise in all areas, in order to open up new revenue streams and increase efficiency levels. We are beginning the journey now with commercially focused goals, clear operational accountability, and the ability to put the right teams in place now that we have secured the refinancing.”

A focus on efficiency

Lindemann said that more progress was made in Q4 in terms of pulling out of unprofitable markets. “We agreed the sale of our UK operation, are withdrawing from the Baltics and North America, and will exit Poland by the middle of next year,” he said. “We have written off and provided for our content costs in these markets, which make up the majority of the IAC this quarter, but we are left with the cash costs for the content that we cannot sell back or sublicence.”

“The exiting of these non-core markets enables us to focus on our core Nordic operations, in markets where we have delivered profitable growth with double digit margins and strong cash conversion in the past,” added Lindemann. “And that, combined with our scale and soon to be profitable business in the Netherlands, is what we are aiming to do again.”

Alongside refocussing on profitable markets, Lindemann said Viaplay is focussing on profitable content too.

The company has invested a lot in big-budget dramas, again looking to capitalise on the Nordics’ reputation for quality content. But this investment hasn’t paid off. Viaplay has sold off rights to its more expensive original shows where it’s been able to, and will now focus on more profitable local formats, as well as licensing US-produced content.

The strategy extends to sports rights as well. Lindemann says Viaplay is looking to sublicense sports rights it’s already committed to where they’re not paying off, instead focusing on rights which “move the needle” for the company.

And Viaplay is also looking at raising its prices in order to boost average revenue per user (while also cutting down on password sharing and piracy, a strategy which has seemingly paid off for Netflix). Previously the broadcaster has focussed on piling as many subscribers as possible into its SVOD offering, keeping prices low to attract them in. Lindemann was fairly derisive of this tactic, describing it as an “expensive and value-destructive hunt for customers and revenue, which was not creating long-term value”.

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About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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