Viaplay Plans Ad Tier, Password Sharing Crackdown

Revenues rose to SEK4.76 billion ($439.5 million) at Viaplay Group in Q1, with the company emerging from a year-ago loss to deliver a profit of SEK605 million ($55.9 million).

Streaming subscription revenues slipped in the period by 3.7 percent, and ad revenues were down by more than 4 percent, but the company reported a slight gain in linear channel subscriptions and doubled its sub-licensing revenues. The overall number of Viaplay subscribers fell by almost 20 percent to 4.85 million.

“The completion of the recapitalization program was an important step in setting the foundation for our retransformation into a profitably growing and cash generative business,” said Jørgen Madsen Lindemann, president and CEO. “We are now fully focused on the many operational improvements that need to be made across the group. Our Q1 results are in line with expectations, and we have reiterated our outlook for the year.”

Lindemann noted that the group has raised prices in recent months “in order to ensure that we can continue to invest in our content offering,” leading to an increase in churn levels. He went on to note that “content costs have risen faster than our revenues over the past few years,” amid stiff competition, inflation and adverse foreign currency conditions. “We cannot expect our direct customers and distribution partners to carry these cost increases 100 percent alone, which is why we have sub-licensed selected sports and non-sports content to other broadcasters and streamers.”

The company is planning to launch a new sports news channel and is set to introduce, this summer, an ad-supported streaming tier. It is also looking to crack down on password sharing, Lindemann said. “We estimate that approximately a third of premium subscribers have been sharing the account details for their Viaplay subscriptions. This is not fair. We have implemented changes in some markets to limit the number of concurrent streams for live events, which have proved successful and have encouraged new customers to join and pay for the entertainment they watch. We will implement more far-reaching initiatives this summer, in order to get more to pay for what they watch. We are also working with our industry peers to combat piracy, but we do need much more help from politicians and regulators to prevent and police all forms of illegal content distribution.”

Viaplay Group is continuing to focus on its core markets of the Nordics, Netherlands and Viaplay Select following the sale of its U.K. operations and the Paprika content business and its exit from the Baltics. It will exit Poland by the middle of 2025.

Subs growth is expected to return, Lindemann said, “once we feel the full effect of the price increases and launch the new product offerings, and as we work to reduce account sharing and improve the terms of our partnership agreements. These actions will also boost our linear channel sales. We have continued to build our digital advertising inventory, which helped offset some of the effects of the continued decline in the linear TV advertising markets, and the launch of the new HVOD tier should further support this transition.”

He concluded: “Our commitment to restore profitability, enhance our product offering and rebuild sustainable stakeholder value is unwavering. It will take time and will be done with a laser focus on consistent operational improvements, mutually beneficial partnerships turning account sharers into customers, innovative revenue streams, the right content mix at the right price and strict cost control.”