Jørgen Madsen Lindemann
Viaplay Group announced a new strategy and plan, which includes – but is not limited to – focusing on its core Nordic, Netherlands and Viaplay Select operations; implementing a new operational model; downsizing, partnering or exiting its other international markets; rightsizing and pricing its product offering in the Nordics; undertaking a major cost reduction programme; and conducting an immediate strategic review of the entire business to consider all options including content sublicensing, asset disposals, equity injections or the sale of the whole group.
“The content investments that have been made are not all paying off, and are committed in the short and medium term. Furthermore, the pursuit of subscriber volume growth has been at the cost of value, especially when it comes to our partner agreements. The weakness in the advertising markets and currency exchange rates are additional factors that we must live with. The international expansion assumptions, including the timelines to profitability, have also been pushed materially into the future since the expansion started. We are moving quickly to address all of these challenges,” commented Jørgen Madsen Lindemann, President & CEO at Viaplay Group.
Going forward, Viaplay Group’s focus will be on the Nordic markets with the new operating model in place, on the right content mix, on the development of its soon to be profitable Dutch operations, and on the sale of its content internationally through Viaplay Select. The company is focusing its attention and resources on those markets where it can compete for the long term, and ensuring that its products are relevant, popular and generate healthy returns.
As part of this change in strategy, the company is letting go more than 25% of its workforce. “Due to the material change in the international business plans, and the fact that not all of the content investments that we have made are paying off, we have SEK 6.3 billion of items affecting comparability, which include a minor part of the redundancy programme costs, as well as writing down the value of content where we are not seeing sufficient return on investment, and exiting the Baltic markets. We are also discontinuing our low tier non-sports offering in each of our international markets, in order to focus on our sports offering and the sale of non-sports content through our profitable Viaplay Select business,” Madsen Lindemann said.
According to the company, the Q2 results were in line with guidance on revenues and EBIT. The group delivered 16% organic revenue growth and Viaplay was the primary driver with 42% revenue growth. Viaplay subscriber volumes were substantially lower than at the end of Q1, and than previously guided for, as the company decided not to prolong or launch additional B2B partner campaigns that would not drive revenue and profitability. Viaplay Group now expects the Viaplay subscriber base to grow to 7.2 million by the end of the year, with ARPU rising given the price adjustments that the company has introduced.