Viaplay: Return to profitability includes stronger action against account sharers
The group is particularly focused on sports rights to retain subscribers and attract new households.
Troubled Viaplay Group still has work to do before delivering profitability, according to the company’s latest financial statements. Despite improvement in the second quarter, Viaplay Group recorded a SEK70m (US$7m) loss on operations in the first half of the year.
The group, which operates both linear channels and the Viaplay streamer, did see improvements in parts of its business in the second quarter, as subscriptions to Viaplay have rebounded, but the cost of content is rising.
Viaplay Group’s transformation is still ongoing, with more to come, president and CEO Jørgen Madsen Lindemann acknowledged during a conference call attended by C21Media.
“The changes are necessary for us to deliver competitive products to our customers and partners, and to achieve our long-term goals of delivering profitable growth, generating positive cash flow and creating shareholder value,” he said.
Viaplay’s results for the second quarter of 2024 showed that the company was in the red by SEK70m (US$7m) before factoring in associated company income and items affecting comparability. However, the total reported operating income in Q2 was positive, at SEK7m (US$650,000).
The weakness of the Swedish currency remains a negative factor for Viaplay’s profitability.
“We closed the quarter with a financial net cash position of SEK372m [US$35m] and generated positive free cash flow of SEK606m [US$57m] in Q2, both of which are in line with our plan,” Madsen Lindemann said.
Viaplay’s organic revenue growth of 3% for core operations was driven by a 7% growth in linear channel subscription sales as the streamer raised prices. The 1% decline in Viaplay sales reflected lower subscriber volumes but higher prices.
In terms of content on linear channels and streaming, the group is particularly focused on sports rights to retain subscribers and attract new households.
During the first half of 2024, Viaplay announced new long-term partnerships with Formula 1 motor racing and football body UEFA. Viaplay has secured European club football in five Nordic countries for the next three seasons, including the return of the UEFA Champions League in Sweden. Looking ahead, Viaplay has new seasons of Danish Superliga and Premier League football kicking off this summer, and Formula 1 arriving at World Champion Max Verstappen’s home circuit in the Netherlands in August.
The entertainment slate includes new seasons of local productions like Paradise Hotel Sweden, Charter Fever in Norway and even a reality classic, Expedition Robinson, in Denmark.
“Our films and series content are also performing better, with the top titles including Norwegian original crime series Wisting, Swedish soap opera The Beach Hotel and the new season of popular reality format Paradise Hotel Denmark,” Madsen Lindemann said, offering very few remarks on scripted projects.
With one-third of Viaplay’s subscribers sharing accounts, the group plans to accelerate action to prevent account sharing and piracy, which is now a key strategy on the road to profitability after significant downsizing in 2023.
“The encouraging news is that 90% of households who once shared accounts are still subscribers. It is a positive insight that people understand that you can’t watch for free,” Madsen Lindeman said.
Viaplay will work directly with subscribers, and with B2B distribution partners, to reduce out-of-home account sharing by limiting the number of concurrent streams possible on Viaplay. The goal is to convert more account sharers into paying subscribers.
“We have made good progress so far, but much remains to be done for us to retransform back into the successful, competitive, profitable, cash-flow-positive, and shareholder-value-creating company that we were,” Madsen Lindemann added.
Viaplay’s exit from non-core international markets is ongoing. The group completed the sale of the Viaplay UK operation in Q2, having exited the Baltic markets in Q1.