Netflix vs Viaplay

Two multinational streamers reported their half-year results yesterday with diverging fortunes.

𝗡𝗲𝘁𝗳𝗹𝗶𝘅: 𝗚𝗹𝗼𝗯𝗮𝗹 𝗣𝗼𝘄𝗲𝗿𝗵𝗼𝘂𝘀𝗲
Netflix continues to demonstrate remarkable profitability and a massive subscriber base, now 278m. Growth is slowing, and ARPU falling (possibly due to the impact of the ad tier, which is growing but slowly), but with $7Bn cash in the bank, I’m thinking they’re going to be fine. Ted Sarandos spoke about the significant amount of quality local content Netflix is producing, which is key to their success. It’s a privileged position to be in.

𝗩𝗶𝗮𝗽𝗹𝗮𝘆: 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗮 𝗧𝗶𝗴𝗵𝘁𝗲𝗿 𝗣𝗮𝘁𝗵
Viaplay, fresh from a recent retreat and refocus into their core Nordic and Dutch markets, has a rockier path. They aim to carve more profitable path within a concentrated footprint focusing on local content and sports. Interestingly, Viaplay ARPU is much higher ($20.78) than Netflix ($10.87 in EMEA), I assume driven by premium sports being a core part of their mix. But without the economies of scale that 278m subs offer, profitability remains challenging. However, they are making progress.

𝗧𝗵𝗲 𝗖𝗼𝗺𝗺𝗼𝗻 𝗙𝗮𝗰𝗲𝘁: 𝗟𝗼𝗰𝗮𝗹 𝗖𝗼𝗻𝘁𝗲𝗻𝘁
Key to both strategies is local content. Other major ‘global’ streamers (read: major US streamers) face challenges fully engaging diverse local audiences (without Netflix’s deep pockets). I’m not even convinced Disney has enough content to stand alone internationally (I recently churned off myself) nor do I think a bundled Paramount and Peacock (e.g.) would stand up.

Perhaps more innovative structures are needed, pushing these mega (‘global’) studio brands back a touch (if they’re able to swallow that much pride) and relying on local streamers with longstanding customer relationships and deep local understanding. In many EMEA markets, free-to-air broadcasters lead in local content provision, perhaps there are opportunities like Paramount falling behind Channel 5 in the UK (e.g.) – Netflix did speak of how important the ad tier was for new subscriber growth (engagement at a much lower price).

With US capital markets and the bargain basement price of some of these assets, partnering or purchasing more international brands could be an opportunity rather than these studios who are seemingly only intent on swallowing up each other. Though if treading this path perhaps don’t take a typical US approach. Ellison apparently wants his merged Paramount/Skydance business to come up with a new relationship with tech, perhaps he has the vision to come up with a new relationship with how they deal with International too!

By the Numbers

𝗡𝗲𝘁𝗳𝗹𝗶𝘅 𝗛1 2024:
Revenue: $18,929m
Net Income: $4,479m (24%)
Subscribers: 278m
ARPU: $11.36
Mar Cap: $277.09B
Mar Cap per Sub: $988

𝗩𝗶𝗮𝗽𝗹𝗮𝘆 𝗛1 2024:
Revenue: 9,241m SEK | $869m
Net Income: 485m SEK | $45m (5%)
Subscribers: 6.9m
ARPU: 222 SEK | $20.89
Mar Cap: 4.76B SEK | $448m
Mar Cap per Sub: 687 SEK | $64