Viaplay: Scandi noir fails to build a profits bridge

Nordic crime dramas are bleak but sophisticated, often with surprising plot twists. A profit warning from Swedish streaming group Viaplay on Monday felt more like a Hollywood slasher movie. Viaplay cut its short-term profit outlook, replaced its chief executive and abandoned its long-term guidance.

Spun out of Swedish media group MTG in 2019, Viaplay is a minnow with revenues of SKr15.7bn ($1.4bn) in 2022 compared with $31.6bn at Netflix. The Scandi group tried to persuade viewers outside its core Nordic market of the worth of its added streaming choices.

Viaplay uniquely offers original Scandinavian crime series. It also holds rights to stream sports, including Formula One and Premier League football in certain countries.

A rapid international expansion since 2020 was costly, adding operations in Poland, the UK, the US and Canada among other places. Losses at the international division rose to SKr1.4bn in 2022 from SKr505mn in 2021. This dwarfed the SKr1bn of operating profit from the core Nordic business last year.

This picture is not expected to improve. Viaplay said on Monday that losses at its international business could widen this year to SKr1.5bn compared with a previously forecast loss of SKr1bn to SKr1.1bn.

Viaplay had hoped its offering would prove “very resilient” to wider problems in the streaming market. Not so. Bigger rivals have reported consumers dropping one or more services. On Monday, it too warned of lower subscriber demand.

An accelerated downturn in the Scandinavian advertising market has added to its problems. Viaplay also blamed a “slower delivery” of cost-saving programmes. Then again, new chief executive Jørgen Madsen Lindemann formerly ran MTG. He will know the streaming group well and which cost savings could be stepped up.

At under 1 times forward revenues, compared with Netflix at more than 4 times, Viaplay might look like a cheap bet on European streaming services. But the grim conclusion of this Scandi noir drama is that its service is too specialised to have wide appeal.