Why Viaplay’s Losses Show the Complexity of Streaming Services
In the world of streaming services, Viaplay has always been a niche player. Offering only original Scandinavian crime series and certain sports events, the company has never had the vast range of content that competitors like Netflix or Amazon Prime boast. Despite this difference, Viaplay saw expansion as the key to its success. Unfortunately, as it expanded into new regions, the company’s losses grew, and its ability to sustain itself has come into question. In this article, we’ll look at why Viaplay’s expansion didn’t lead to the expected growth and how this indicates the role that expanding and diversifying play in the streaming industry.
Problems with Viaplay’s Expansion
Viaplay is owned by Scandinavian media group MTG, and it was spun off from the parent company in 2019. Initially, Viaplay had operated solely in the Nordic countries, but it began expanding into new territories starting in 2020. As it did so, it added significant operating costs, which contributed to enormous losses, particularly in its international division. In 2022, losses in the division grew to SEK1.4 billion from SEK505 million the previous year. The contrast between the divisions is striking; Viaplay’s Nordic business saw SEK1 billion in operating profit in 2021, which pales significantly compared to the losses.
The reason behind the loss
Viaplay’s struggles in the international market are the main cause of the company’s overall losses. The company has tried to sell viewers outside the Nordic countries on its crime dramas, which are popular in the region but unknown elsewhere. The efforts have been met with limited success, as Viaplay’s rivals continue to dominate the international market. Netflix, for example, had revenue of $31.6 billion in 2022, compared to Viaplay’s $1.4 billion.
Viaplay’s poor performance in the international market has led it to cut its short-term profit outlook, replace its CEO, and relinquish its long-term leadership. The company has also warned that losses in its international business could rise to SEK1.5 billion this year from a previously forecast loss of SEK1 billion to SEK1.1 billion.
Trouble in the Streaming Industry
Viaplay’s situation raises important questions about the streaming industry as a whole. The company has always been a niche player with a specific focus, and as it expanded into new territories, it encountered difficulties in selling its content beyond the Nordics. Viaplay’s case shows that even established players like MTG can struggle to compete with the dominant players in the industry.
Expanding vs. Diversifying
The challenges faced by Viaplay indicate the importance of expanding vs. diversifying when it comes to streaming services. Expanding refers to companies’ efforts to bring their content to new markets, while diversifying refers to providing a broader range of content for existing markets. Both strategies have advantages and disadvantages, and companies must choose which approach is most relevant to them.
In Viaplay’s case, expansion has brought significant losses to the company. The company’s crime dramas are appreciated in Nordic countries where the service has a substantial market share, but outside the region, it is hard to sell them as an attractive alternative to Netflix’s and Amazon’s libraries. Viaplay’s focus on crime dramas limited its appeal, and as it expanded into new regions, its inability to offer a wide range of content became evident.
Conclusion
Viaplay’s struggles highlight the challenges that face streaming services in an industry dominated by fierce competition. The company’s limited focus on Scandinavian crime dramas and specific sports events makes it an excellent service for customers interested in such content, but it has proven difficult to increase its relevance to a wider audience.
Viaplay’s failure to expand into new markets successfully shows the importance of diversifying content offerings to attract new viewers. If companies like Viaplay hope to compete with industry giants like Netflix, they need to broaden their content base, as streaming services continue to take the world by storm.
Summary
Viaplay, a Scandinavian streaming service that offers only original crime series and certain sports events, struggled to expand beyond the Nordic countries into new territories, contributing to significant losses, particularly in its international division. While expanding into new markets is one approach to increase revenue, Viaplay’s struggles indicate the importance of diversifying content offerings to attract new viewers to the platform. To effectively compete with industry giants like Netflix and Amazon, companies must broaden their range of content to appeal to a wider audience.
—————————————————-
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
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.
If you are a subscriber and would like to receive alerts when Lex articles are published, click the “Add to myFT” button, which appears at the top of this page above the title
https://www.ft.com/content/a148bade-3364-43ac-a450-39203919261d
—————————————————-