Viaplay Group today announced its Q2 2023 interim report January-June, announcing a change in its strategy which will include the exit from the Polish and Baltic markets among others as well as a 25% cut in the workforce which currently stands at around 1500 people.

Jørgen Madsen Lindemann, President & CEO, commented: "We are today announcing a new strategy and plan, which includes, but is not limited to, focusing on our core Nordic, Netherlands and Viaplay Select operations; implementing a new operational model; downsizing, partnering or exiting our other international markets; rightsizing and pricing our product offering in the Nordics; undertaking a major cost reduction programme; and conducting an immediate strategic review of the entire business to consider all options including content sublicensing, asset disposals, equity injections or the sale of the whole Group. The content investments that have been made are not all paying off, and are committed in the short and medium term. Furthermore, the pursuit of subscriber volume growth has been at the cost of value, especially when it comes to our partner agreements. The weakness in the advertising markets and currency exchange rates are additional factors that we must live with. The international expansion assumptions, including the timelines to profitability, have also been pushed materially into the future since the expansion started. We are moving quickly to address all of these challenges.

Going forward, our focus will be on the Nordic markets with the new operating model in place, on the right content mix, on the development of our soon to be profitable Dutch operations, and on the sale of our content internationally through Viaplay Select. We are focusing our attention and resources on those markets where we can compete for the long term, and ensuring that our products are relevant, popular and generate healthy returns.

We have had to take a number of immediate decisions for the sake of the future of our business. This regrettably means letting go of more than 25% of our people. Due to the material change in the international business plans, and the fact that not all of the content investments that we have made are paying off, we have SEK 6.3bn of items affecting comparability included in this report, which include a minor part of the redundancy programme costs, as well as writing down the value of content where we are not seeing sufficient return on investment, and exiting the Baltic markets. We are also discontinuing our low tier non-sports offering in each of our international markets, in order to focus on our sports offering and the sale of non-sports content through our profitable Viaplay Select business.

The future payment commitments for our content, when combined with the revenue trajectory that we see, means that we will need to reach agreement with our lenders on how best to navigate the period ahead. We are addressing covenant and funding challenges through discussions with lenders while exploring capital raising alternatives."

"Looking forward into the second half of the year, we will continue to feel the pressure of the macro environment and rising content costs, due to higher original content costs, built-in sports rights inflation, and adverse currency effects. We now expect full year Group operating losses before ACI and IAC to be approximately SEK 850-1,050 million for 2023, which include approximately SEK 600 million of lower cost of sales following the provisions and write-downs that we have made. Our 2024 guidance is based on our continuing business being the Nordics, Netherlands and Viaplay Select, which will mean that SG&A costs will be borne by a smaller organization. We expect to deliver between a loss of SEK 150 million and a profit of SEK 150 million in 2024, which includes approximately SEK 700 million of lower cost of sales. Margins are then expected to gradually rise in the following years towards the long-term objective of double digit EBIT margins. It is clear that we have much to do and much to gain, which is exactly what we are focused on!"