News


Berenberg: NENT stands apart as European SVOD ‘champion’ as other broadcasters look to AVOD

Nordic Entertainment Group (NENT) stands apart as a ‘traditional’ broadcaster that has successfully captured a large share of the digital market in an environment where the COVID-19 pandemic has accelerated a permanent shift to digital video consumption, according to an analysis by Berenberg.

Assessing the overall video distribution market, Berenberg believes that “the shift away from linear television will be sustained”, citing the fact that SVOD viewing increased by 109% in the UK during the lockdown period in April 2020 compared with a 16% uplift for linear television.

According to the analysts, NENT Group stands out as “our top pick in the space and we see the stock as the best option for investors aiming to gain exposure to SVOD in Europe”.

Berenberg says that NENT Group-owned Viaplay has built a successful model based on “Nordic original content and its quality portfolio of sports rights to be a key differentiator that allows Viaplay to provide a credible alternative to the US platforms”

This, the analysts say, can be contrasted with the “relatively disappointing” performance of UK SVOD JV BritBox.

Viaplay, with its strong position in the Nordics and international expansion plans, starting with the Baltic states, is effectively becoming the ‘European streaming champion’ in the absence of other significant contenders, according to Berenberg.

“There are two key takeaways from our analysis of the OTT environment. The first is that SVOD is a massive opportunity, but in the absence of mammoth content budgets, platform operators need a USP in order to compete – such as Nordic originals and sports on NENT’s Viaplay platform. It is for this reason that we are pessimistic about the prospects for ITV’s Britbox platform, which does not have many differentiating characteristics to bridge the content budget gap between itself and peers such as Netflix,” said the analysts.

While Viaplay stands on its own as an example of a legacy media company successfully competing in the SVOD space with the likes of Netflix, other broadcasters would be better advised to leverage their free-to-air reach to focus on an advertising—funded VOD model, Berenberg believes.

“The second [takeaway] is that we believe that AdVOD is the best route for the other European broadcasters to be following in OTT, but it is not a complete panacea as broadcasters are losing share of online video revenues to other digital-focused players – such as YouTube,” said the analysts.

Broadcasters will face additional pressures as the shift away from linear viewing continues, and Berenberg also points to alternative ways to realise value, such as consolidation on the abortive MediaForEurope model of Mediaset and value release on the model of ProSiebenSat.1’s planned IPO of its ParshipMeet asset.