Nordic Entertainment Group’s (NENT Group) Viaplay streaming service saw an impressive jump of 102,000 subscribers in first quarter, with numbers up 314,000 in the year to March, taking Viaplay’s total base to 1.671 million.
The success led the company to set a new subscriber growth target of 400,000 for this year.
Elsewhere however, the group felt the impact of the coronavirus crisis, with revenues for Q1 down 2% to SEK3.657 billion (€336 million). NENT Group withdrew its previous outlook for profitable growth this year.
Operating income was SEK219 million, flat year-on-year.
“The strong momentum we had built up in 2019 continued into the start of 2020, but the spread of the Coronavirus has had a material impact on our operations from March and onwards. Our organic sales were down 2%, with the very healthy growth in the number of Viaplay subscribers almost fully offsetting the adverse effects on our advertising and studios businesses. Our operating profits before IAC were down compared to last year and, given the uncertainty caused by the current circumstances, we are withdrawing our profitable growth outlook for 2020,” said CEO Anders Jensen.
Jensen said that subscription revenues were up 5% and accounted for over two thirds of Q1 revenues, with sub numbers likely boosted by people staying at home.
NENT Group dropped the price of Viaplay sports packages – a major differentiator for the group in a crowded local streaming market – on March 13 due to the postponement or cancellation of sports events. Jensen said this had led to “significantly lower churn than would have otherwise been the case”.
The CEO also said that NENT Group would not make further payments of amortise previous payments for sports rights until revents resume. He said that the group had already received compensation for the cancellation of this year’ ice hockey world championship.
Ad revenues were predictably hit by the coronavirus, falling 13% year-on-year, with March ad revenues down 17%. The group expects April revenues to be down 25%.
Jensen said that he expected the crisis to have a long-term negative impact on the ad market and that “reducing our exposure to advertising remains a key focus”.
NENT Group was also hit by the freeze in production activity in the quarter, with studio sales down 17%.
The group has also set a goal of cutting costs by SEK700 million this year via a series of measures including reductions in programming and production spend for linear TV, the deferral or cancellation of any non-core or non-essential development projects, lower sales and marketing spend, and the cancellation of all executive incentive plans. The group has also said it will not propose a dividend this year.