While Netflix is reaping the first benefits of a rigorous password-sharing policy, Scandinavian streaming service Viaplay is pulling the plug on a large part of the international market. Only the Netherlands is spared.
The Swedish-Norwegian media company behind Viaplay, which mainly gained market share in the Netherlands by taking over the broadcasting rights for Formula 1 from Ziggo in 2021, announced that it would consider selling the streaming service. This was stated by CEO Jørgen Madsen Lindemann at the presentation of the second quarter figures. Last month, its predecessor was replaced due to disappointing results. On Thursday, the company announced that it would withdraw from the US and UK and the Baltic States, among others, with a quarter of Viaplay’s jobs disappearing.
Viaplay’s quarterly turnover for 2022 was 400 million euros. Although turnover is still growing, the result (operating loss of 42 million euros) from the international activities continues to be disappointing due to, among other things, the high costs of acquiring sports broadcasting rights, Viaplay said. The operating result, including one-off write-off of content and reorganization costs, amounted to more than half a billion euros negative in the second quarter.
Suspended productions
A number of Dutch productions have been suspended, as it turned out last week. It is unknown whether they will be resumed. The number of Dutch subscribers fell in the second quarter, but by how much is unknown. At the end of 2022, Viaplay reported 1.2 million subscribers (total of 2.7 million internationally), making the Netherlands the largest market outside Scandinavia. A subscription costs 13.99 per month, making it one of the more expensive in the video streaming market.
The presentation of the second-quarter results on Wednesday was good news for Netflix, although the global leader in the streaming market could not fully meet expectations for revenue growth. The strategy of limiting password sharing to one subscription has contributed to almost 6 million more subscribers, now 238 million in total. This measure is in force in more than a hundred countries, including the US and the Netherlands. The average revenue per subscription was lower. Also, the curtailment of single subscription sharing had been announced on May 23, so related growth did not occur until the final weeks of the quarter.
Actors strike
Ted Sandaros, CEO of Netflix, reflected in an interview for shareholders on the strike that has largely shut down the production side of the American entertainment industry. Actors have joined the scriptwriters in the weeks-long battle for better working conditions. Netflix is also accused of paying people insufficiently and irregularly.
Sandaros did not elaborate on the problems and spoke of a “handful of complicated issues” in negotiations with unions. He stated that hard work is being done on an agreement that is “just and helps us together as an industry and everyone in it to the future”. Netflix is not affected by the work disruption due to an extensive range and many foreign-produced titles, Sandaros said. “But that is not relevant at the moment. We all have to figure it out together.”
In terms of content spending, financing Netflix series and films from the cash flow, 2023 promises to be a relatively economical year. Content spending in the second quarter is slightly higher than in the first quarter. Then Netflix reached its lowest level since 2017. Even in the second quarter of 2020, which was plagued by corona lockdowns, spending was not that low.
Netflix explained in a statement to its shareholders that the most intensive period of production of its own ‘original’ series and films is behind us. This is partly due to the flattened revenue growth at the beginning of 2022, which has led to restraint, explained the financial chief Spencer Neumann. However, Netflix expects to reach 17 billion dollars (15.3 billion euros) in content spending again in 2024, as in 2022.
A version of this article also appeared in the newspaper on July 21, 2023.