Viaplay, a streaming group in Sweden, cut its short-term profit outlook, replaced its CEO and relinquished its long-term leadership. It has been trying to convince viewers outside its core Nordic market of the value of its additional streaming choices. Viaplay only offers original Scandinavian crime series and streams sports, including Formula 1 and Premier League football in certain countries. Rapid international expansion since 2020 has been costly, adding operations in Poland, the UK, the US, and Canada, among other places. Losses in the international division rose to SEK 1.4 billion in 2022 from SEK 505 million in 2021. This dwarfed the SEK 1 billion operating profit of the Nordic core business last year.
Small Revenue and Struggling Growth
With less than 1x revenues up front, compared to Netflix at more than 4x, Viaplay could look like a cheap bet on European streaming services. However, the service has faced declining subscriber demand. Adding to these problems is an accelerating downturn in the Scandinavian advertising market. Viaplay also blamed “slower delivery” of low-budget programs. In addition, the new managing director Jørgen Madsen Lindemann ran MTG. He will be familiar with the streaming group and what cost savings could be increased.
Specialized Service
The sad conclusion of Scandi’s noir drama is that his service is too specialized to have much appeal. Bigger rivals reported consumers who abandon one or more services. Viaplay had hoped its offer would pay off as “very resistant” to broader issues in the streaming market.
An Additional Piece
Netflix and Amazon may have expanded globally for some viewers, but they were able to do so by catering to local tastes. In comparison, Viaplay only offers Scandinavian content, notably crime dramas. They may have success within that niche, but it limits their overall appeal as they cannot offer a variety of content for users.
Streaming services need a lot of capital to be successful. They are in direct competition for both audiences and contracts with traditional studios, free-to-air-broadcasters, cable networks, and other streaming brands. This high competition means that successful streaming services need a lot of resources to secure the content necessary to keep and expand their user bases.
As well, smaller streaming services have to grapple with the realities of the bigger companies dominating the field. Apple, Amazon, Disney, and Netflix all have the financial capital to compete in the marketplace and offer multiple genres of content. In contrast, smaller services have to narrow themselves to have any success, although that then limits their potential for growth.
Overall, while they may have an opportunity for success within their niche, the article notes that as a specialized service, Viaplay cannot easily attract and retain users. To succeed in the future, they will have to pivot to a focus on more varied content offerings.
Summary
Swedish streaming group, Viaplay, recently cut its short-term profit outlook, replaced its CEO, and surrendered its long-term leadership. Despite having revenue of SEK15.7 billion ($1.4 billion) in 2022, they are relatively small compared to giants like Netflix. Rapid international expansion since 2020 has been costly, adding operations in Poland, the UK, the US, and Canada, among other places, resulting in losses in the international division dwarfing the operating profit of their Nordic core business. The service is too specialized to have much appeal, and the company has struggled with declining subscriber demand and a downturn in the Scandinavian advertising market. To succeed in the future, Viaplay will have to pivot focus to offer more varied content offerings.
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Nordic crime dramas are dark yet sophisticated, often with surprising twists. A profit alert from Swedish streaming group Viaplay on Monday looked more like a Hollywood slasher film. Viaplay has cut its short-term profit outlook, replaced its CEO and relinquished its long-term leadership.
Spinoffed from Swedish media group MTG in 2019, Viaplay is a minnow with revenue of SEK15.7 billion ($1.4 billion) in 2022 compared to Netflix’s $31.6 billion. The Scandi Group has been trying to convince viewers outside its core Nordic market of the value of its additional streaming choices.
Viaplay only offers original Scandinavian crime series. It also holds the rights to stream sports, including Formula 1 and Premier League football in certain countries.
Rapid international expansion since 2020 has been costly, adding operations in Poland, the UK, the US and Canada, among other places. Losses in the international division rose to SEK 1.4 billion in 2022 from SEK 505 million in 2021. This dwarfed the SEK 1 billion operating profit of the Nordic core business last year.
This picture is it shouldn’t get better. Viaplay said on Monday that losses in its international business could rise this year to SEK 1.5 billion from a previously forecast loss of SEK 1 billion to SEK 1.1 billion.
Viaplay had hoped its offer would pay off “very resistant” to broader issues in the streaming market. Not like that. Bigger rivals reported consumers who abandon one or more services. On Monday, it too warned of lower subscriber demand.
Adding to these problems is an accelerating downturn in the Scandinavian advertising market. Viaplay also blamed “slower delivery” of low-budget programs. In addition, the new managing director Jørgen Madsen Lindemann ran MTG. He will be familiar with the streaming group and what cost savings could be increased.
With less than 1x revenues up front, compared to Netflix at more than 4x, Viaplay could look like a cheap bet on European streaming services. But the sad conclusion of Scandi’s noir drama is that his service is too specialized to have much appeal.
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