Good afternoon and welcome everyone to the 2022 Viaplay Group capital markets day. I think it's been more or less three years since we had a physical event like this, and that was just after our original listing. Great to see you all. We have a lot of people joining online as well. Welcome to those, and good morning to the U.S. We have a lot of people online, so that's great. We're gonna take all of your questions during the day. We've got a packed schedule. My name is Matthew Hooper. I'm gonna be your pilot for the day, and pilot because we have, in true Viaplay style, a series of episodes going on today. What we'll start with is obviously a suspenseful introduction to grip you.
We're gonna have a very entertaining middle, and then a twist in the tale at the end. There is some evening entertainment. Please don't leave at the end of the day. Do stay. We have some music acts, and we have some actors and actress and content creators who worked with us who will be interviewed during the course of the evening. We have a hard finish around 7:30 P.M. In terms of other things for today, I trust you've seen the press release that we put out around 12 noon and have seen all the announcements we made there, which we'll be talking a little bit more about during the course of today. The presentations are available from the website. They're also available on the event platform, so no paper wastage, nothing printed, but all available digitally.
Please do download those and have them available to look at. In terms of asking questions, we will have roving microphones in the room, so we'll have Q&A sessions after each presentation block. Please just put your hand up or find the person with a microphone who'll be on the corridor next door to you. For those of you who are online, there's a Submit Questions tab that you can use there, and I will then have an iPad and take those questions and relay them to the presenters for you. We also have panel discussions, so not only will you see the presenters listed on the screen here, but you'll also have guest panelists coming to discuss key issues for the industry, not just for the company. We will have a break in the middle.
It's only 15 minutes, but we're gonna get through this fast, and we hope it's gonna be very entertaining for you. The bathrooms are out on the left-hand side, so if you go out of the door up here. We will have coffee and tea available and refreshments at the back, and then when we finish, we'll be moving into the club room, where we'll have the evening's entertainment. Wi-Fi is a free open network. I hope you found it already. Just log in there, Space Network, if you, if you need that. I think that's it in terms of the housekeeping, and we'll move on to the main event now. For that gripping introduction I was talking about, who better to give that than our President and CEO? Please welcome on stage Anders Jensen.
Matthew. Hello, everybody. I know that Matthew said that the entertainment will come later, but I will do my best in the first 20 minutes or so. There is a bet going on out there among my colleagues whether I can actually keep this to 20 minutes, and the odds on me succeeding are not great. I have a lot to tell you today, but first and foremost, like Matthew said, it's so fantastic to see you here today and of course, all of you online as well. We've been doing two important CMDs, completely virtual, and standing like this with just a camera to talk to is not easy. Thank you very much for being here today.
The headline for what I would like to talk about for the next 20 minutes or so is how we are building a sustainable entertainment provider. Sustainable as a corporate citizen, of course, but also sustainable as an investment case, sustainable as an employer, sustainable as somebody who is driving innovation. There has been headwind. There is headwind in the short term. I think it's extremely important for all of us in the company and for you here as our guests to take that step back and look at what we actually have decided to do, how far we've come, and what the line of sight is to get to where we set out to go. We know that there are concerns, some key concerns, that came as a consequence of what we put out in Q3.
Not so much Q3 in itself, but more what we said about the outlook. Those key concerns will be addressed today. We will share as much granular information as we can, without giving too much. Nonetheless, my starting point here will be very much about talking about where we are going, why and how we will create value doing so. The journey so far is basically what we presented in 2020, a company born out of the Nordics deciding to expand into new markets. Now, I'll come back to the rationale, on why we did it and what the alternatives, that were available to us to build more value for our company in all aspects of the way. I'll come back to that a little bit later. So far, let's remember where we are today.
We started out in 2020 when we presented our new strategy with four markets. Today, we are in 11 markets. We started in 2020 with 3 million subscribers. We are today aiming at 7.3. We have full line of sight to 7.3 at the end of this year. The increase in sports, the increase in content, the increase in tech investments is what has taken us here, and to make sure that we can continue to invest in those three areas are extremely important. What we will show today is that there are synergies in all these areas. There are synergies in being one of the most significant providers of premium sports in the world. Peter will show that later. There are evident and significant synergies in content leverage, operational leverage in content to as many markets as possible. Filippa will show that.
Our cost of serving on the platform per subscriber has gone down significantly over the last years because we have expanded, and the operational leverage in going more and more platform-based and less and less local, that leverage still sits ahead of us. I can't present us as a sustainable entertainment provider without talking about sustainability at the core of what we do. At CMD last year, I started my presentation talking about the fight for talent. In front of the camera, behind the camera, in front of the keyboards, everywhere it is a fight for talent. Today, you do not attract the best people if you're not very clear on your purpose, where you're going, how you will do it, and why you will do it.
I'm very proud to say that we have come a really, really long way in these areas. We have reinvented ourselves not just one, but probably two or 3x since we've became an independent company in 2018, and that has allowed us to attract the best in the business. That has allowed us to grow our tech staff significantly. That has allowed us to open a new tech hub in Barcelona and get a lot of people who don't have access to the Viaplay product getting on board and saying, "This is really, really exciting. We wanna be part of this journey." This is who we are, and this is a fundamental part of our value proposition to our employees, but also to our investors. Subscriber growth, we are on track.
Our guidance on 12 million subscribers in 2025, that is firm. That is what we are aiming for, hopefully, and some. We aim to be at 7.3 at the end of this year. That is also something that I think we can be very proud of. We have not just met, we have actually beaten our subscriber targets, and we have upgraded, as you know, a number of times. The way to get there will be a bit different, and it will change the coming years as the markets mature, and I will show that in a couple of slides. It is this situation where we are right now that gives us the operational leverage to work with pricing, to work with package proliferation, to work with monetization of our content in different ways.
You need to have critical mass, and you need to be big enough. You don't have to be global, you don't have to have 200 million subscribers, but you have to be significant. That is a fundamental part on the consumer-driven journey in video entertainment from traditional broadcasting to streaming. That's a technology shift. At the end of the day, what we do is what we've always done. We enjoy great series, great movies. We watch our favorite sports. It's the same. It's the way you do it, how you package it, and how you create value for the consumers that makes the difference. To really, really unlock that value, you cannot be insignificant.
We think we have the right balance between size and value in this strategy, but we also have some wiggling room in how to get there, as you will see during the course of today. We are a growth company investing in profitable growth. We are a tech company by design because we invest a lot in tech, but we're not a tech company in the sense that we have an open-ended endgame on how much money we're gonna make. We know very well where we want to land when it comes to profitability, return on our capital employed, return on every investment that we're making. This journey that we're on, and that is now illustrated by these numbers, and we'll come into much more on the numbers when Enrique talks in just a while.
This journey sort of demonstrates where we are going. We are growing. The alternatives available to us back in 2018 when we started to craft what was then Nordic Entertainment Group into becoming Viaplay Group, the obvious alternative would have been, of course, to double down on the Nordics and stay only in the Nordics. Every single data point we had, every single idea that we could think of said that that would be an extremely short-sighted strategy. Sure, there would be some capital generation in the short term, which could be dividended out to shareholders, but it would be a runoff strategy with a crazy short runoff because we were subscale, and we were not technically advanced enough to move in a direction that would allow us to reinvent ourselves in these five small Nordic markets.
This is a squeeze that some of our colleagues and competitors in various markets around Europe in particular, where the scale of the markets are limited, they will feel that squeeze. Maybe not this year, maybe not next year, but it will come, and then you need to look at the risk balance and risk and reward balance in doing what we could have done or doing what we are doing today. We are, as I said, investing. Our Nordic home turf has stayed profitable. We continue to grow our profits. Yes, we have some headwind now that we have to deal with. We have some operational performance issues that I'll come back to exactly what it is in just a short while.
We have taken a strategic decision to exit one of our distribution agreements, which basically means that we have some short-term headwind, but it's the right decision for the long term, unless we find a way to revitalize that discussion. This is an investment in our future. What are we investing in? Well, obviously, I would like to claim that we are the busiest team in the industry, but I wouldn't do that. We stay very, very active. The team is coming with great new ideas, opportunities on a daily basis. If you look at the things we have on screen here, let's start with sports. Since we became an independent company in 2018, we have added 52 new sports rights. 52. We have extended 48. We have dropped seven.
Those seven, Champions League in Norway, Champions League in Sweden, and NFL in the Nordics. Everything else we have managed to extend or go into new partnerships based on the scale that we were building. You will see a lot more on what that actually means from Peter later, but this is the hardcore numbers of what we have done in sports, whatever you may hear. One key challenge from last year, and Filippa will talk more about it, was our access to Hollywood content. Because even if we invest a lot in original content, and the original content is what sets us apart, we need the libraries from the Hollywood partners, the volume, obviously the quality in many of the movies that we have on stream. I dare to say that outside the Hollywood stu dios themselves, we have the broadest and most diverse Hollywood portfolio.
We have extended everything that we have wanted to extend. We have more Hollywood content today, with one exception, and that's Disney, who are the only ones with a very clear strategy, which is of course, absolutely fine. That's a destination. We don't have to pay to be at par with anybody else. This has allowed us to monetize in a completely new way. Of course, all the originals that Filippa will talk about, the new markets, the acquisition of Premier Sports, which we saw as an obvious opportunity to take around SEK 450 million and invest in a company that will expedite our journey to profitability in the U.K. in a very, very attractive way.
We have continued to build our B2B partnerships, and they will continue to be not only important, but actually fundamental to how we see the ability to grow in the future. There is one example here, and I will come back to the distributors later. There is one example here on the slide, which is Pluto, so Paramount's AVOD product. One of the questions that I receive a lot these days is, "Shouldn't you also do advertising on Viaplay now that some of the globals are doing it?" First and foremost, I'm not so sure it's a thought-through strategy. It's a reaction to something. It's a reaction to a problem.
Secondly, in the Nordics, it would be immediately dilutive because we have TV where we have high premium prices, and we have this cooperation with Pluto TV, where we do AVOD and ad-supported HVOD in a very, very accretive way. Adding another layer with Viaplay would just dilute the market. Advertising is about reach. It's about reach and premium. In the Nordics, we can achieve both in the current situation. Just going with the pack and say, "Well, AVOD or HVOD is the new black," that's not how we see it. That is not how we see it. In our new markets where we don't have this footprint, we would probably look for an extended partnership like the one we have with Pluto TV rather than building an advertising product on an inferior reach, which even if we've grown a lot, we still can't compete with the local TV stations.
Will a local Swedish advertiser, Klas Olsson, will they prefer to pay a massive premium on Netflix, or will they get something that they know what they're gonna get from TV4 Play, from Pluto or others? U.S., it's a completely different discussion, but that's not really relevant for this discussion. New markets launched since we started. We completed our Nordic footprint with Iceland in 2020. We added the Baltics, Poland, and the US B2B, only B2B in 2021. March this year, we went live in the Netherlands, and just a few weeks ago, or a little bit more than a week, we started in the U.K. Viaplay Select, which you will probably hear quite a lot of the coming years, has been a contender to monetize on our content for quite some time.
In all fairness, the volume and the money has been attractive because it's extremely high margin, but too small to really talk about. That is changing now. This is something that over time will be a SEK 1 billion business and more. It's our ability to monetize because for every year that goes, our library of content gets bigger. For every new production we do, we have a new opportunity to monetize in markets where we are not direct to consumer. We get our brand, we get our boots on the ground through strong local partners. That is an alternative to do everything yourself in all markets around the world. The margins is significantly higher, the risk is significantly lower. Streaming is continued to grow.
Whenever I hear say, "Well, now streaming it has topped out," it's like going back to the '50s and saying, "Well, oof, now every second household have a TV set. That's probably as far as we're gonna get." It is the same situation now, but maturity has just come so much faster. We started this journey with some 30-35% in the Nordics. We're getting close to 60%. Norway way ahead. Way ahead versus the market. That will just continue to grow. If you look at the value of the markets, that has also continued to grow, and obviously the U.S. is the global leader when it comes to streaming. These numbers are just streaming, and that is typically how we and others tend to see our industry, in these kind of verticals.
The way we see it, when I look at the numbers, I look, okay, so this is what is called the traditional pay TV market, and this is the streaming market. That is actually one market because it's the same share of wallet that we will be fighting for. It's the same money. It's the same user benefits that we are aiming for. In the U.S., the average household still spend, in addition to streaming, EUR 55 per month on traditional TV. In Europe, in our markets, including the U.K., it's EUR 20. Then you have some markets, especially in the Baltics, that are extremely low. The number in the U.K. is EUR 30. That's the share of wallet that we and other streamers are fighting for.
That is the share of wallet that distributors need to look for, how to reinvent themselves from selling channels over a set-top box to provide an open platform that can source the content that you love through various streaming companies to your carriage consumers. That is what we're seeing. Tele2 here in Sweden, YouSee in Denmark, Verizon in the U.S., taking completely different, new approach to distribution. That is also a natural hedge against the obvious clash that has been sort of a theme for some years now when it comes to content between telcos, cablecos, and media companies. If you find this new model, that clash is irrelevant, unnecessary, value destructive. As I said initially, I will not keep this to 20 minutes. The number of competitors is of course growing.
People are talking about the streaming wars, which I think is a very, very tired way of describing things. I think it's better to talk about the streaming celebration, 'cause this is extremely consumer friendly. How relevant is the picture that I have behind me? The number of competitors. How many of them are actually doing what we're doing? How many of them are in the corner of the market where we would like to position ourselves? There are very few. The fact is that this market picture is also tilting more and more to our advantage. Netflix is the global market leader with some 200 countries covered. 33% of their subs still sit in one country, the U.S. HBO Max, both fantastic companies, they're in 61 countries as per their latest reports and have indicated further growth.
64% of their subs sit in the U.S. They are pulling back on local productions now. Where they started not that long ago talking about the importance of local content, they still do, but in HBO's case, they have openly said, "We're pulling back." We see it every day. It strengthens our position here. There is basically, in this way of describing it, there is one that is getting, at least in the Nordics, a bit closer to what we're doing on a pan-Nordic basis, and that is Discovery+. They're doing less and less sports, and what will happen when they merge with HBO Max is of course, to be seen. But this gives us a position where we are fighting on a part of the market, not with the market. Positive subscriber growth. We are growing our base.
In the Nordics, we say 4.6, and yes, we know that lift from Q3 is a high one, but it's on the back of very solid agreements made. We expect to get to 4.6 at the end of this year. One of the key indicators, especially in these tougher times, is of course churn, because the organic growth in the markets, in the light of everything that we see in the macro financial reality around us, will go down short-term. The churn is what is really important. Our churn is going down, and the usage on our platform is going up. The one thing where there is both improvement potential and a need to improve is our average revenue per user.
'Cause we can see now that with the penetration that we're now hitting, especially, in the Nordics getting to 60%, the longer tail of the market will be covered by distributors. In the B2B agreements that we are really, really fond of, and Kim will talk about them later, the RPU is lower, and it takes longer to get a flow-through of price increases. That need to be balanced better. As you can see here, B2B is flat during this year. We're growing our D2C because of price increases and package proliferation, and we don't get enough uplift on RPU. That is a very, very clear indicator of something we have to address, but it's something we can work with.
This is any subscription or FMCG business that can see how much you can get out of every single buyer if you work with your pricing power in a clever way. As long as you have critical mass of subs, the revenues will come. Right now, we just have to be mindful that when all of us get crazy high electricity bills and food goes through the roof, of course, we have to balance how much price increases we are putting out there, so we navigate through in a clever way. On a blended RPU level, as a group, all markets, we are roughly SEK 4-SEK 5 behind on blended RPU where we would have liked to be right now. That is driving, combined with the macro headwind that we're seeing, some of the revisions downwards in the short term that we're seeing.
The flip side to that is something that is very, very clearly something we can address and work with. Shouldn't we have seen it coming? Well, yes and no. It depends on the market dynamics and who is successful in their campaigns, especially on the B2B side. If there is a chance to do a very accretive agreement like the ones with Tele2 and Telenor recently, and you know that it's gonna be a bit RPU dilutive in the short term, but really strong in the long term, the right decision is to make those deals. That is something we just have to balance. Our international expansion is on track.
We have gone from zero to top two in streaming market share in both Poland and the Netherlands, probably in the Baltics as well, if you look at the size of the markets. Baltics are a bit more of a headache, not because of our product and the performance, but because of both the macro impact, but more importantly, the horrible war in Ukraine and what that has led to in terms of limitations in Russian language content, which is important in the Baltics. That has basically meant that our total addressable market in those three countries has been reduced, and we're gonna have to address that in various ways. That is not a massive problem because of the limited size, but it's a reality. Poland on track, Netherlands clearly ahead of track.
Positive for RPU development because the prices and the CLVs are higher in the Netherlands. This gives you a little bit of an illustration what we have ahead of ourselves. The minutes viewed per user in the Nordics is of course, significantly higher than these less mature and less penetrated markets, and the behavior moving from traditional TV over to streaming is still building up. We're investing in future opportunity. I don't think the price points in these markets will hit the Nordics, the Nordic levels. We are quite expensive here in the Nordics, and so is both content and especially sports rights, but there is pricing power. There is pricing proliferation, there is package proliferation in these very low points that we come from, and that will be manifested in the next couple of years. U.K. just launched, very positive. A lot of positive media.
People think it's very exciting that we're coming. It's an affordable product. Yes, it's difficult times right now, everywhere, definitely also in the U.K. I've been told so many times that it's a crowded market. Yes, it's a crowded market. Which market isn't? Who in the U.K. is doing what we're gonna do? Well, nobody. Great, so it's not so crowded in the part of the market where we want to play. We come to the U.K. to innovate, not to disrupt and to change for those existing players who are making good progress in the market. We're coming to the U.K. to give something new to the market where there has been decline, especially in the smaller or more mid-tier sports rights.
They've been linked to very high price points for such a long time so that they're actually declining in viewing and attractiveness. By taking them out, you take out exposure from some of the incumbents, and you provide the users with a new opportunity at a much lower price. The Brits love Nordic content. That's an obvious opportunity for us to just continue to build on the kind of content that we have and partnerships from day one. The expansion journey is continuing. Next up, in February, the United States, and then in March, Canada, direct to consumer. Viaplay Select will close this year with 18 markets. We announced a new cooperation today. We will not do Germany, Austria, and Switzerland in 2023.
In the numbers Enrique will present in just a while, we have assumed not to launch in that region during this strategy period for all the macro financial reasons you can think of. We can scale up, and we can change very, very quickly. We have taken capital allocation precautions not to be that aggressive in how we spend our money and take a step back. The key drivers for us to get from here to there, from today to 13% EBIT margin on a group level, is that the market will continue to grow. There is no doubt about it. Will it be a bit slower the coming couple of years? Probably. Not necessarily, but probably. We started the pandemic believing that we're gonna go into a downturn. It turned out to be the opposite.
Our products are extremely cost efficient if you wanna stay entertained also when you have less money to spend. We've taken the prudent approach to say markets will come under pressure, the advertising markets will come under pressure. We continue to build our content. We continue to work with pricing and packaging. We believe in the power of B2B partnerships. We believe there is joint and shared value to be created, and we'll continue our international rollout as per the plan that I just showed you. The changes in the world around us, of course, means we have to rethink a few of the aspects of how we spend our money, where we spend it, and how we create sustainable value. These are just some examples. Of course, the horrible tragedy in Ukraine, everything that it has led to is the main theme here.
There has also been disrupted supply chain over a couple of years, still is, driven by COVID when it comes to Hollywood movies that we make good money on, not just in the streaming subscriptions but also through our rental video on demand part of Viaplay. That is picking up, but it has dragged on for some time. We are now adapting our strategy to these new circumstances, this new reality. Pricing power was always part of the plan, and we're gonna continue to pursue exactly that. Operational excellence is something that I think we have always delivered. We'll continue to do exactly that, and we're today announcing the next step in how to achieve operational excellence.
We will double down on our core markets where we have proved that we can become significant in a very short period of time, and we have proved here in the Nordics that we can continue to be a player for many, many years. We just do it more cost efficiently in our new markets. For this reason, I'm today presenting a slightly adjusted organization for the group. In 2019, we built a full matrix to be able to quickly ramp up and to make sure that decisions came as top-down as possible to make sure that things went really, really fast. That was a necessity in the build-up.
Now we've come far enough to say that, "Okay, these 13 direct-to-consumer markets, these, whatever the number will be, 30+ Viaplay Select markets, they need full focus, and they need full line of sight on profitability, and we need to decentralize decision-making so we can pull out as much value as possible while retaining the benefits of the matrix." It is for this purpose that we have split commercial into regions that will have full line of sight on everything that has to do with our EBIT and our profit generation when it comes to EBIT minus fixed cost. The fixed cost will sit in the central functions, content, sports, product and tech, and of course, marketing and brand, which we'll roll out in a unified way through the markets. Two new members of the executive team has been announced today.
I think they are here. Alexander Bastin. Alexander, can you stand up? This is Alexander. He has been with us for a long time in various roles. He knows our business in and out. Alexander will move to Amsterdam with his family and take on the responsibility of Central Europe and the Baltics. Continental Europe and the Baltics. We move that operation to sit in Amsterdam, which we will now become our European hub. The other is that North America and the Viaplay Select opportunity is very closely tied in various ways in how we monetize our content. While not being very substantial right now, it will grow fast. One of our best deal makers in the group and in the industry, Vanda, who I think sits up there. Vanda, can you please stand up?
She's been with us for a long time. Vanda will take that responsibility, and this part of the operation will be operated out of London. Matthew Hooper, who is still Matthew Hooper, and he was here earlier, he is now taking on a very different task in the group. Matthew will lead the operations in the U.K., and over time, hand over the IR responsibility, and his other responsibilities in the group. This is a new way of thinking of how we operate, but it's also something that will basically unlock opportunities and energy in the company, especially during this phase that we are in. We have a unique tailored content offering, tailored to each market. We are not one size fits all. We are tailoring based on the benefits that we have.
We use a world-class scalable tech platform that serves all markets and gradually brings down the cost for each and every served household. I'm extremely privileged. I'm proud to be part of a team that has taken us from a split from MTG to a new company through a pandemic and now in a situation where we are and we continue to deliver. Very, very robust, very, very passionate. The distribution partnerships, they are such a crucial part of what we're doing, and they will become the majority of the growth in the coming years. To unlock that value together with the partners is extremely important. I started talking about sustainability. Sustainability stays at the core of everything that we're doing.
Investing in the company that we are equals investing in sustainable entertainment and a strong voice in the industry, to both fix what is broken and need to be fixed and unlock the potential in what has not been addressed, especially in diverse and broader content. These numbers were put out today. I will leave it to Enrique to go through it. We now have a very strong line of sight to what we want to achieve in 2023. Every number you will see has a backdrop of thorough work on how to get there, fallbacks on where things could potentially go wrong. This takes us to the ambitions we have, and remember that we are dealing with some dollar FX that if it wasn't there, the margin situation would look different. The long-term outlook that we are reaffirming that came out on the back of Q3.
Full line of sight to those results. The key takeaways from my way too long starting here, we're well on track. Yes, bumps in the road, headwind, we're dealing with it. We're adapting to the macro environment, we're taking precautions where they're necessary. The international expansion is on schedule or ahead in some cases. The Nordic opportunity is intact. You shall not believe anything else because we have a slightly weaker growth in the Q4 that is impacted by a few things. Two of them are more of a one-off character, and one is something that we know how to address. The power in the team is significant. With that, I would like to introduce you to our new CFO, who joined in August.
He has had his baptism of fire, now for some months, and he's more than ready to take the next step in today's presentation. Over to Enrique.
Thank you so much, Anders. Good afternoon, all. I was the newest member of this leadership team up until just a moment ago, so I guess I can't hide behind that now any longer. I will take you now to episode two of this kind of binge-watching that you are up to for this afternoon. I think Anders outlined some really important things around how do we build this sustainable entertainment provider, and I think it will be a theme across this day. In that pursuit, we are kind of looking at how do we delight and entertain 12 million homes by the end of 2025.
That's a lot of people, but there is much more around our linear channels as well as radio as well to entertain. Not surprising, I will be focusing on the financials. What types of cost savings do we need to achieve in order to reach our goals? It means what types of constraints we have on what types of prices we need to look at, and what type of returns that we should be achieving them. To have a sustainable strategy really means as well that from a financial standpoint, that our operating cash flows, I mean, that we spend in international cannot be higher than what we generate in the Nordics.
It means as well that we have a very strict approach to kind of cost control to looking at business cases in a very kind of disciplined way. Okay, let's. By the way, as well, that our international markets as well have a clear path to profitability. I think that's a very important one in order to have a sustainable business. Okay, let's go, and let me then tell you the things that I'll be focusing on then in the coming 20 minutes or so. We have a very good funding level. I mean, it is fully capable of delivering for what we have set for ourselves to achieve in this strategy period. We have a very good line of sight on our costs.
I'll talk to that in a moment. We have streamlined our company quite a bit, allowing us to invest really in content, tech, and international expansion. That gives us as well a very good visibility and progress in terms of the goals that we have set for ourselves. As a reminder, in terms of the position that we have, and especially around streaming, looking at this chart here. Almost half of our business in the third quarter came from streaming products. Two years ago, that number was a third, so it's really a significant growth. On a year-to-date basis, we have a growth of 18%. About half of that growth came from the Nordics, the other half came from international.
International was really SEK 800 million, about that in top line in the first nine months, and essentially versus nothing a year ago. For the dotted box that you see here, we're looking at sales of around SEK 4.5 billion-SEK 4.7 billion in sales in the fourth quarter. That's quite a meaningful growth that we're looking at. That's in spite of the downward revision that we discussed a couple of weeks ago in our Q3 report. That shows you a bit of the resilience of our business model. That number includes about SEK 60 million of sales from Premier Sports as well that we consolidate now.
I find it very interesting as a business case. I would say fascinating, as a leadership team, that we got this mandate from the board to essentially say, "Go and get capital and take cash flows from the Nordic operation and start building this new business. Use the same tech platform, create as many synergies as possible, and start building it." Now it is actually up and running. It has its costs.
It is very much a line, you know, on the plan that we have set for ourselves, but we are now looking at ways to tweak the plan as a way to kind of mitigate some of the losses that we are seeing. Some of the mitigation actions Anders mentioned here, where we're kind of adapting our plans, and that is in relation to DACH markets, it's in relation to the Baltics. The good thing is that we are actually getting very good traction in a number of markets, and you will see that our losses in the coming year will be kind of reduced quarter after quarter.
For next year, we actually estimate that two of our international markets will be EBIT positive, and that's even after charging all our central costs. I think an important question out there is why did we adjust down our Nordic outlook for 2022? As a reminder, I should say that we did upgrade actually our outlook for 2022 at the beginning of the year. I will say that it is a very strong performance that we are delivering on in a very challenging year. First factor here, I think it's the exit of the Telia deal was a must. There is no way that we can kind of be providing our content at below cost.
Essentially, we have guided for that this is an impact of about SEK 150 million-SEK 170 million in the quarter. It's a combination of carriage fees, subscriptions, and ad reach, and this will put pressure as well on us in the beginning of next year. I mean, we could say that we would hope, I mean, or we, that, you know, we could essentially, we could mitigate this actually by have continued, but I think as a long-term strategy, we essentially have to take these important steps. We could have essentially delivered a surely better numbers in the short term. None of our numbers here that we'll talk about for next year assumes that there is a deal. We're looking at an organic recovery of this.
Secondly, the ad markets here have been quite tougher. In the third quarter, it was down by about mid-single-digit percentage points, and we see that continuing into Q4 and also into next year. That will clearly have an impact for the full year. It has an impact of about SEK 200 million. Thirdly, here, that's the D2C premium pickup that has been slower. Consumers are getting more anxious about what is coming through their mailboxes in terms of electricity bills, mortgage payments, and so on, and we see that impact.
We see also a bit more impact of growth on the B2B side, and here I think it's also that we should talk about that Premier League Norway has gone slower than what we originally anticipated. We are getting good traction with Premier League in Norway. All the core fans are on board. However, the bold plan that we had at the beginning of the year, we're not really delivering on that, and we are about 100,000 subs at the end of this year versus where we originally intended. That's a combination of D2C picking up slower, as well as that we have had an upgrade within our existing customer base that is giving us less of a pickup in terms of ARPU.
It is still a very good investment. Norway is becoming our second-largest market in the Nordics. It is a profitable, quite a profitable market for us, and we will continue to build that market relentlessly, getting more distribution deals and reaching out to a wider audience of Premier League fans that are out there in our neighboring country. During the second half, our teams have been working really hard in terms of offsetting a number of these kind of sales shortfalls that we've had, and that is around cost savings. We've had that on many P&L lines, but marketing savings, we have had also the first of content savings that we have created, as well as other general expenses. We will continue to do that much more forcefully.
Overall, this will take us for the full year to about SEK 14.2 billion-SEK 14.3 billion of sales for the full year with an EBIT of about SEK 1 billion. I would say it's quite an achievement of this team to get into this number. It's a lot of savings that we have worked on and a lot of kind of mitigation actions. We have no plans to stop there because we know that we, even if we have these kind of adverse impacts that you see here on the left-hand side of this page, we have some tools to offset these negatives. Let me first mention one important one that we have in front of us, and that is currencies.
Essentially, we buy about $300 million worth of content from the U.S. We expect to have an adverse currency effect for next year on the EBIT line of about SEK 350 million . We talked about that one as well. We did mention it in connection with our Q3 report. What other tools then do we have in order to mitigate? First, the Netherlands is performing clearly ahead of our plans. It will overshoot our targets. We're taking the learnings there in terms of how do we keep fueling that machine and also copying that to other markets. Secondly, Premier Sports. The acquisition of Premier Sports will clearly accelerate our entry into the U.K., and we will reach target profitability earlier than originally planned.
The UK market is also quite open to Nordic noir, so probably the most open outside of the Nordics. Thirdly, very important here now, pricing, and I will come back to that one. We have implemented price increases in a number of markets, and we will be doing more of that. Sweden, Norway, and Finland have had price increases quite recently, and we have higher quality content, and we see churn rates being quite good. It is proving, and I will show you some data points on that. Lastly, we will go for a savings program that I will talk to in a moment. What does this mean then for 2023?
If we start then with the Nordics, we expect to have a growth rate of around 12%-15% for the full year. You will say, "But hold on, didn't we just talk about 2022 growing at 10%, and that was also quite in a challenging environment?" Yes, that is true, but we know that we have a number of factors that can actually offset this and can, you know, tell us that we can actually continue to grow. One is we have richer content, we have an underlying subs growth, we have price increases, we have a full year impact of more premium sports content, and we will be looking to recover majority of that lost Telia customer base.
Adding that international sales should get into the level of around SEK 3.5 billion for next year. That translates to 25% growth for next year. That's a significant growth, as a total company in quite a challenging environment, 20% for this year, 25% for next year. That translates to about 9 million subscribers. With a combination of headwinds and tailwinds that we're talking of, the operating expenses that we have, it means that for the Nordic EBIT, we should be landing at around SEK 1.2 billion-SEK 1.35 billion in EBIT. Let me remind you that this is after taking quite some currency headwinds that I was just talking about just a moment ago.
If it wasn't for that, we would be operating at around 10% EBIT in the Nordics. For international, as we ramp up the operations there and we get a better cruising altitude, we kind of tweak how we do market entries there, we should be at an operating loss of around in the tune of SEK 1 billion-SEK 1.1 billion for next year. It will take some hard work to get there. It's not a walk in the park. It takes getting traction with consumers, getting new distribution deals. In other words, actually our EBIT then for next year for the Nordics will be right on plan actually for what we should have been compared to our previous plan if it wasn't for currencies, and for international, we will be ahead of plan.
We expect our working capital to continue to increase for next year. We expect SEK 2 billion. This is on the back of further investments on original content on one side and sports, but we also have some adverse impacts like FX. We have a shift of customer mix with more B2B, but then also accelerating the U.K. as well, consumes as well more working capital. In terms of quarterly phasing, we're seeing Q1 and Q3 having more working capital needs versus the other quarters. If you put this into your financial models, you will kind of factor in that we're probably ending the year with a net debt for this year of around SEK 1.3 billion-SEK 1.5 billion. If you add all this, the numbers, then you will probably land at around SEK 3 billion.
We'll talk more about that as well. Another way to illustrate this, the journey then for next year is that we have a number of kind of the factors that I was just mentioning around currencies, sport and markets, and so on, but we do have a number of factors that are then pointing to that we can do better for the Nordics. I also want to show you this chart for the trajectory where we expect to be at the lower margin in the first part of the year, and then when our mitigation actions kick in, we should be kind of trending at a clearly significantly higher EBIT level for the second half of the year.
Turning to something very important for us to deliver on this, on the targets that we have for next year. That is on cost. Cost inflation will come very uninvited to us. We're putting in place a cost mitigation plan that we have communicated internally. It's SEK 1 billion that we are looking to offset, and that's against the long-term plan that we communicated at the CMD of last year. Let me then give you you know, unpack this a bit for you. First, content savings. We're looking at savings in content that we have in the pipeline. We are looking at existing productions as well, and we will be looking to sub-license more. This is a bit more than 50% of the total savings that we're looking at.
Secondly, we will reprioritize the market entries, especially DACH. Postponement has a very meaningful impact. We're looking at ways to mitigate our losses and go slower in the Baltics. That market is about a quarter of the total savings. We will ramp up our FTEs much slower than what we originally planned in our long-term plan. That will. Essentially, we will be protecting the tech investments, where we are in a very important transition phase. That's it. That will be the third one.
The last one will be really a number of planned initiatives that we have at corporate level, expenses on studios and sports productions that we'll be holding back on. That in addition to adding much more rigor around a number of areas on cost control such as procurement. In total, this is a SEK 1 billion program that we should be essentially will be very fundamental for us to deliver on our targets in 2023. We have very good line of sight of delivering on this plan. Just then on cost, let me just show you this one as a reminder of the 70% that is of our cost base that is content.
For content, we really have fixed prices where we have a very good line of sight of that cost, and that is for originals and, well, acquired content and sports. For scripted originals, we essentially expense this over a six-year period. A key takeaway from this is that we have a very kind of good way to predict our cost base, and should it be needed, we can be looking at sub-licensing more or deferring for when to air content. I would say the other one even more important factor to deliver on this strategy is on pricing.
Let me show you some data points here on the very strong pricing power that we have had, that we both have and that we will have to continue to execute on. In our own home turf in the Nordics, you see here that we have been able to increase prices with anything between 5% and 25%. In the case of Norway, we have essentially doubled the price for the premium sports package. The good thing is that kinda we see more consumers still signing up for us. The economics now between customer acquisition cost, price, and churn are kind of looking quite in. I mean, they're pointing in all of those arrows are pointing in the right direction.
The key takeaway is really that we have a strong pricing power, and we will continue to execute on prices in 2023. On pricing, let me just give you some additional data points on the value for money that we have. This is for the Swedish market, not too different from other Scandinavian markets. Our packages cost anything between SEK 129 and SEK 549. That's for a one-month, no-binding period. You compare it with other types of entertainment that is for a single occasion.
I mean, if I would take my kids to a football game, it would cost me 1,000 SEK, and then I wouldn't be able to not to spend some money on the stadium, and I wouldn't know if it was a good game after all. I think then taking it on a more macro level, we haven't seen the recession yet that we all think that is coming. I think I'm very convinced that consumers will be looking for a way to kind of retain their kind of favorite streaming provider. We've seen from previous recessions as well, that you kind of prefer the in-home entertainment versus out-of-home entertainment in downturn situations.
Now, another way to kind of create value for stakeholders is to focus on the core and where we reduce distractions and free up resources. We created a joint venture with Telenor back in 2020, and Allente was created. It has a very good financial profile. It generates good cash conversion, EBITDA of SEK 1.3 billion. We expect them to continue to generate good dividends for us in the future, or we may find other ways to monetize that asset. For 2023, we expect approximately SEK 300 million-SEK 350 million of profit contribution and SEK 400 million in dividends from Allente.
During 2021, we as well sold our majority of our studio business, and a couple of weeks ago, we closed the deal to acquire Premier Sports, and that journey will continue around focusing on the core. On that, looking at the middle part of this slide, those select deals that Anders was mentioning, we'll talk more about that actually in a moment. We will continue. I hope that you saw the deal with the Australian broadcaster last week and the announcement earlier today for East Europe. We essentially capitalize on already produced content. It's already paid for, and we become an exporter of Scandinavian drama and culture to new territories and monetize that asset.
In the Baltics, with the war at the doorstep, the circumstances have changed. We will be looking at ways of mitigating our losses there. For DACH, we will be looking for more of that being more select deal-led at this time. In a nutshell, we will continue to build our long-term strategy on own content, on strong reliable tech platform, and then in a very well-executed international strategy. This all will result in additional working capital, I mean, both in 2022 and 2023 before we turn the page in 2024 and become cash flow positive. Now, we are fully funded for the strategy and for what we have set for ourselves to do. A few important points on this is that we did raise capital.
In addition, we won a court case early this year in Denmark. We have also the yearly dividends from Allente, and actually a profitable operation right here in the Nordics. We will essentially continue to deploy capital into those investment areas that I was mentioning. We expect actually our EBITDA to continue to grow and get into quite healthy levels in 2024, where we then get into this positive cash flow situation for that year. In terms of our financing profile, we had at the end of September net debt of SEK 550 million in that area, and we expect this number, as I was mentioning before, to get into the 1.3-1.5 level at the end of 2022.
That will mean that we will be above our leverage policy of 2.5 x. With net debt then getting into the SEK 3 billion territory for the end of 2023, it would mean around 3x-3.5 x. However, very important, I think this very important point is that we're well within our debt covenants here, and that is 3.5 x against the EBITDA for the Nordics, so excluding the international losses. That's also for just a minor part of our debt. What I want to leave you with is also that we have a very good funding situation for what we have set for ourselves to do. We're not shying away from that.
We will be at 2.5 x leverage investment-grade company in the long term. Now, we could not navigate this without having a strong culture, purpose, and values. Actually, as a CFO, I think a prerequisite for strong value creation is to have strong values. To create an international streaming challenger that will operate in 13 countries and entertaining millions of homes, it requires a lot of what we call BEAT. Bravery, equality, appreciation, and trust. This comes to life actually in lots of daily situations in our company, from budget discussions around savings, around pricing, contract negotiations, and also in business review meetings where, you know, all the way from Anders wants us to hear opinions from colleagues a few notches down the organization about their opinions.
For me as well, meeting with new teams like the Premier Sports team or the Barcelona Tech Hub team and getting them to tell me about the good openness that they see is a very important testimony for me on that. I would say that as we kind of reorganize ourselves and decentralize the organization, we essentially build really on that trust element. That's very important for me as a CFO, because I think there is a lot of hidden costs of that opportunity cost where we can actually run much faster with this new setup. In summary for the numbers, we will grow at about 20% for this year.
For next year, we have a number of factors pointing out to that we can do better, we can grow at 25%. On the profit side, we will see the Nordic EBIT growing and where our international losses will be coming down to the SEK 1 billion-SEK 1.1 billion level. These two years will result in relatively low cash flow, we will turn into cash flow positive in 2024. For our long-term plans, they remain unchanged versus the Q3 report. We're looking at strong growth for strong, you know, sales growth momentum, although at a bit lower level versus before. In terms of profitability, we're right there in terms of those plans.
We're well on track to deliver on an EBIT level north of SEK 3 billion in 2025. In summary, we are fully funded for our growth plans. We're taking tough actions on cost and price. We have great visibility on our cost base. We're taking a very kind of conscious portfolio approach regardless if it is expansion countries, content rights, different parts of our business. For 2025, our targets remain largely, you know, largely unchanged. It's essentially the trajectory of how we get there that has changed.
This team has demonstrated lots of what we call BEAT, and I'm convinced that we have actually all the right ingredients in terms of commercial acumen, tech platform, content, funding, culture, and so on to go and deliver on this very important mission that we are on to fuel this machine and, you know, to get there and to reach the mission of delighting and entertaining 12 million households by the end of 2025 in a sustainable way. Thank you so much.
Thank you very much, Enrique. Good. We're gonna take some questions now. We have now I think around 360 people online, so you can post your questions there. I've got two so far, so I'm hoping you can be a bit more active than that. Please do put some questions there. If anyone in the audience has questions, we'll have the microphones. Who would like to start in the audience? Martin, down here. Can we come to the front? Just introduce yourself if you could. Same for people online, actually. If you could put your name and company name in the Menti box, I'd be grateful.
Thank you, Matthew. Martin Arnell here with DNB Markets. My first question is actually if we could go back to the thing in Norway, where you didn't see that uptick as you expected. You had a good uptick, but not as high as you expected. It feels a little bit like we're missing something here in terms of the explanations. I think you mentioned that you know how to address it in your presentation, if you could give some more flavor on that.
Sure. Hi, Martin. Norway it's a combination of two things that has led us to feel not entirely happy with the development. One is an ARPU uplift on the entire base, the new base that became a bit lower. Around 50,000 subs upgraded from the existing base, suggesting that they paid for two packages, and we simply underestimated that number. The other is once we hit sort of kind of number that the previous rights holder had, which we have done now, we anticipated that you know massive campaigns, Erling Haaland, all of those things, because we had and you remember you and I talked in August when it was early days, and it was selling like hotcakes.
Once all the fans were on board, the projection to close around 100,000 subs higher than we are currently anticipating, that's the delta. 50,000 worth of half ARPU uplift and 100,000 subs too low, basically. Which means we have a run rate into next year that is lower than anticipated. The fan base is growing. We're bigger now in Premier League than it has been in the past, but of course, we wanted more.
The way to deal with it could be a combination of repackaging and package proliferation. We have a massively interesting content base in Norway. That's one way. It's not gonna happen overnight. The other one, more obvious one is to work with the price. And we came in a bit lower than the previous rights holder. First thing is, of course, to go back to that level and maybe some. Then we are quite quickly in the first half of next year, coming back to Enrique's point on the uplift in the second half of the year, then we're back to the kind of run rate that we anticipate.
This is in everything that we have talked about that has led to the revision and the outlook, this is the one most sort of obvious operational myth that we've met. That's just the way to see it. We underestimated upgrades, and we anticipated the market to grow faster than we managed to do.
Just briefly on. You mentioned also that you expect markets to come out of pressure eventually, and at the same time you have your guidance for 2023, 2025. If you could just elaborate a little bit on the timing for such a scenario, in the context of your guidance.
Yeah, we have assumed that markets will go into recession and the pressure on inflation based on every insight we have. I mean, we don't know more obviously than you. We have assumed that 2023 and 2024 will be tough. That's what we've built into these numbers. We can give you two firm examples. We have pulled down the expectations on ad sales more next year than what the market sort of media agencies are suggesting. They're talking about 3%-4% down next year. We think 5%-10% is maybe realistic, and we've taken sort of that into account.
The organic growth to come to the 80% or so penetration in the Nordics on streaming would assume that on the back of 2022, that will grow by 10%-12%. We've taken that down to half for at least 2023 and 2024. Do we believe that this means that penetration of streaming services will just stay at 65%? No, of course not. It's gonna take a bit longer, hence the need for austerity measures and ways of working with our cost.
Just one final before I let the others in. On Enrique, the cost saving program, you mentioned SEK 1 billion as you did in relation to Q3 results. Do you expect a full impact from that in 2023?
Yeah. Yeah, I mean, when you are growing at these levels, I think it's not possible to kind of get that full impact to be just a one-year impact. It's against the previous plan that we have. You can estimate around 20%-25% is really kind of, I would say, these are cost outs that we are having already in our 2022 P&L. It's essentially things that we will not do that we had set ourselves to do.
Just to add to that, 'cause I read in one of the notes from one of the more prominent analysts in addition to you, Martin, saying that, "So, they saved SEK 700 million during COVID. Can they really save another SEK 1 billion?" This is not really how we operate. We are stopping investments when the markets are soft, especially on linear TV, protecting tech and original content investment. That has been reinvested after COVID. Now we will stop again. That is those 50% that Enrique talked about. Then there is another bucket of things that we can do a bit differently. Then there is the classic sort of haircut on a few things that we're doing to make sure we navigate.
The run rate from the savings program is not SEK 1 billion. It is SEK 1 billion until we say differently, if the market gets more sort of benign sooner than anticipated. It's deferrals, non-investments, and savings, just to make that very, very clear.
Thank you.
Okay. We can take one online now, if I may. It's probably for you, Anders. Streaming is benefiting from structural growth. Still, your D2C subscri-
Streaming is.
Benefiting from structural growth.
Benefiting, yes.
Still, your D2C subscriber base in the Nordics is declining. Why is that, and how do you think about the long-term split between B2B and D2C?
Well, it's not declining, it's sort of shifting in mix. The growth is coming from B2B, and some of the D2C customers are now doing what I think is quite natural to expect. Instead of buying piece by piece, you find a good aggregator, and you put sort of the services on that aggregation platform, and that's where the growth comes. There is both those who haven't had streaming services before. Remembering, that's 45% of the households in the Nordics. There are some previous D2C customers that has moved over to this, especially in the Tele2 scenario. We have taken a lot of D2C customers and made a deal with Tele2 that obviously cannibalizes to some extent, but it's a very conscious decision because it's user-friendly, it's future-proof, and you move things.
That is structural growth. I think one have to sort of look at the whole picture on how you develop the market in the best possible way.
Good. Okay. Who's next? Yeah. Here we go.
Klas Danielsson from Nordea. Just starting off on the B2B ARPU side. That was, as you said, it was quite unchanged during the recent period. I was just trying to kind of unpack that. When should we actually start to see that following the growth in the direct-to-consumer ARPUs as well?
Yeah. Yeah. Hi, Klas. Thanks. Now, the key in any B2B agreement is how you get sort of price increases and price adjustments to flow through. This differs between different providers because of the lock-in periods that you have in these kind of contracts. What we have done now, which is basically completed now, with the exception of one, then all of this has been renegotiated, which means what would otherwise take six-12 months should now take three-six months to get sort of price increases to flow through. That is something that has taken quite some time and hard work from Kim and team to get into a new way of getting price increases to flow through.
That's why the uplift has been lower than it should have been. That's one very key component. To transfer the ability to sign up quickly in B2B is something that has been developed and has actually taken a lot of investment from our partners, Tele2, Telenor, YouSee in Denmark, if you talk about the Nordics. It's a very different game when it comes to B2B outside the Nordics 'cause there is no legacy. There are no TV channels. There are no big carriage agreements. It's a streaming service. You download the app. We keep around 90% of the revenues. Off we go. It's accretive from day one. In the Nordics, we have to reshape the market. It's in everybody's interest that we reshape the market, but it's taking a bit longer.
By Q4, Q1, we should expect those ARPU levels to have come up.
Come again? Which quarter?
What is it?
What quarter did you say?
By Q4, Q1.
By Q4, Q1.
We should expect it to go up again.
Yes, correct.
Okay. Okay.
Correct.
Very good.
Just making sure I don't give you the wrong quarter there. No, that's correct.
Another one, Klas. All right, go on. One more.
One more.
One more.
I think it's a bit easier to understand the kind of growth levers and subscribers internationally for some of the sports-led markets, Netherlands and the U.K. and so forth, and where you're getting those numbers from. I guess looking at the U.S., Canada, and so forth, how are you actually getting to the kind of target numbers that you're aiming for, and what are you deriving that off? How much visibility can we actually be sure that you have on these markets?
U.S. and Canada are very opportunistic because our exposure on cost to those huge markets is the lowest among all markets. It's less than 20% of our entire investment in the expansion outside the Nordics. Because as Enrique mentioned before, similar to the Select agreements, most of it is paid for already. I talked about 19% penetration in the households in our European footprint, excluding the U.K. In the U.S., we need 0.5%-1% penetration to start to make meaningful money, and the journey between 0% and 20+% margin in those markets is very short. But if we wouldn't get there, it doesn't mean that much for the overall international case. But indications are very positive.
You will hear Kim talk later about a new distribution agreement in the U.S. that will go live very soon. We're going direct to consumer with some very interesting agreements with a few providers. We can get to volume quite quickly because it's so big. I wouldn't ascribe too much risk to those markets as part of the international. It is about Netherlands and Poland in that order. Then you get U.K. from 2023 and onwards. That's basically what we've achieved. Netherlands ahead of plan. Poland in line with plan. U.K. de-risked. We've added some risk now with the new head of U.K. Apart from that, we're on track.
Very cheap risk. Right. We'll go back online now. This is a question from one of our shareholders in New York, Jan Lager from Franklin Templeton, and this is one for you, Enrique, probably. If we can just talk about the working capital change on guidance in 2023, how much of that is FX? How much is extra UK content investments? And how much is other content investments?
Oh, yeah. I wish I could kind of give a very decent answer, but I mean, FX is about 10% of the total, so say about SEK 200 million of that total. In terms of the change, because we had 1.5 before, so FX has a very meaningful impact in terms of that change. I would say the customer mix shift as well is probably, I mean, clearly less than that. It's essentially that we are accelerating. I mean, as we kind of expand in the U.K., it will also consume more working capital. It's essentially accelerating in some international markets as well that generates more working capital, and that is essentially original content sports for that.
Good. Another question from the room. If we move over to the left-hand side. There we go.
Rasmus is there with a mic. We should probably.
Oh, you've got a mic already. All right, Rasmus, go on.
Hi. Rasmus, Handelsbanken. Two questions, really. Select, is that an investment, or how soon is it accretive?
Select is an addition to the returns on every single production. It is accretive from day one. Basically, just how it works to explain it, we take all of our originals that we have the rights for, we curate some content from other partners around the Nordics at a very low cost, and then we sell it as a package. Which means we take this much extra cost, and it's paid for up front immediately on this level, and then there are growth levels on top of it.
It's the Hollywood model in essence, with the difference that we require a Viaplay branding on it, so we get sort of insight, and we require data from the markets.
All right. Thanks. Secondly, when it comes to the margin potential in Poland relative to the Netherlands, is that also tilted towards the Netherlands?
Yeah.
Right. Just-
At least. Sorry, Rasmus. Just to say, yes, if we talk about the current strategy period up to 2025. There are 6 million households more in Poland, which means that the operational leverage as that markets mature is higher because the costs are also lower. Costs of marketing, cost of sports rights, everything is on a different level in Poland. For the benefit of the strategy period, yes. Just a final question on the savings. Thanks for that. Did I understand it correctly that it 25% hard savings, the rest is foregone investment or cost increases?
Yeah. Roughly.
Okay.
Roughly, yes. Yeah. That's it. You can put it in that way, yes.
Okay. We're just gonna take two questions online. I know there's a lot in the room here. We're gonna run out of time here in this section, but we will add more later to deal with it, so don't worry. Just on the two others that are coming online, one for you, one for you, Anders. The first one for you, Enrique, is: Is it correct that of the SEK 1 billion of cost savings, slightly to Rasmus' point, is three-quarters of that in the Nordic region and 25% from the international, non-launching?
I will say that it is roughly correct, right? I mean, us kind of deferring the investments in international markets is about 25% of that. I mean, we haven't really broken up that kind of deferral of content investment, so to speak. At some point, we will make that allocation between the markets. Probably a bit more than a quarter, but ballpark, it's correct.
Sure.
Roughly.
Okay. The one for you, Anders.
Yep.
This is London calling here. Can you provide some more color on the Telia deal negotiations? This is from Towerhouse Partners. I think that's probably in two contexts. One, in terms of what happened, and then in terms of what the status is now.
Well, I think we talked a lot about what happened. I don't wanna overcomplicate it. I mean, we have had a very sort of successful partnerships with all of our distribution partners for a long time, including Telia. When you sit down and then compare numbers and say what we want to get paid and what somebody's ready to pay, you simply can't make it work, then it's not value accretive for any of the parties. You have to have a win-win, otherwise it's not a good way. Because there is always an element of growing bases and growing numbers, and you have to believe in that.
Among all of our partners, and we're talking about the Nordics here alone, Telia is the one who has decided to invest in sports rights and to buy media assets and those kind of things, which means their cost exposure to content is very different, and they've chosen a different route, and that's just something that we have to respect and accept in the same way they have to respect and accept that we cannot sell our content in a way that is dilutive in less than six-12 months just to make a deal. That's as easy as it is. Enrique said it very clearly, we have assumed no deal in the guidance that we're putting out now. Is there a discussion to be had?
I hope so, but we'll see.
Very clear. Kim's gonna talk about win-win partnerships in an actual concrete example. We'll be sitting in the room with us later.
Yeah.
I think we've got time for one more. Up here. Is that? I can't actually see. Is that Derek or?
Is it?
No, next door. Sorry. Okay. Either one of you. Go ahead.
Why don't I do one and-
Okay. Sure.
Over.
Oh, Tom.
Tom here from Citi. I'll ask a question on FX. $300 million headwind. What happens when you reach the end of the current contracts with Hollywood studios? Is there a chance to recoup some of that FX loss? Because, you know, ultimately the currency move is just the currency move. Or is the negotiating position as such that the US studios can keep that as a permanent sort of increasing cost for content being sold in the Nordic region?
Do you wanna answer? Well, I mean, this is content that is acquired in US dollars, right? We have taken the position that, I mean, it is a cost coming in the US dollar. So essentially we're kind of taking the cost, but as well we're kind of I mean, what we need to do is both work on our hedging and look at mitigation actions and where pricing is a very important lever then to offset that. I don't know if that answers your.
Yeah. Sorry. At the end of the contract, I mean, okay, the last contract was priced in US dollars.
Yeah.
If the dollar SEK rate has fundamentally changed.
We've done. I can just jump in, Enrique. Speaking from history, the way we've seen this, and we've dealt with, as you know, dollar headwinds in the past for many years. Then there is a decision to be struck whether you want to renew the contract and re-hedge and de-risk, or if you actually see the markets going in a different directions, you can actually reduce your cost. We have done both in the past. We now expect a run rate that we build into our guidance so that we can deal with it. Of course, it can turn in the other direction quite quickly as we have seen in the past.
I think the way the markets and the macro situation and geopolitical situation is changing, things can go very quickly here. Yes, it can get worse before it gets better, which we have assumed. It can also get better sooner than we anticipate.
Okay, thanks, Tom. Derek?
Yes. Thank you. Derek from ABG. I was wondering how big of an issue would you say that account sharing is for you, and are you doing anything or planning to take any measures to reduce this? Is this in any way a part of the sort of slower uptake in Norway, given the sort of slightly elevated price point?
Well, yes. In Norway, no, because there is only one concurrent stream on Premier League. There are some loopholes sometimes that we haven't been able to close completely. I wouldn't subscribe that. We just have to look at how we grow the market independent of that. To your core question, is account sharing an issue? Yes, it is an issue, but it's a trade-off between sort of building new and different ways of charging your customers into your proposition early or later, depending on the maturity of the market.
I would put that into the sort of bucket of pricing opportunities in the future, where you can bring some prices even down with less concurrent streams and then up with some other additional concurrent streams. Right now, we just wanna keep it very, very simple. We see that as a great opportunity also. If there's only one concurrent stream in the Netherlands, as an example, on F1, but there is a lot of account sharing still. So, that is something that we and others will have to crack. Right now, I'm more concerned about getting into as many households as possible and become sticky. Then we can work with that material. But of course, it's something that the industry will have to deal with.
Good. Okay. We're gonna have two more questions, and then we'll move on. First one I think again for you, Anders. Your full year 2022 guidance to reach 4.6 million subscribers in the Nordics suggests about 371,000 net adds in Q4, and obviously a lot more than that if you exclude Telia, so 200 more if you. Can you explain why you expect such a strong end to this year, in fact, a record quarter?
It is B2B driven, and Kim and his team has inked or will soon ink the majority of that volume, which means we can sort of afford to say we're gonna deliver on that. The ARPU will not grow as a consequence of that. It will be flat, which we've said over the quarters, but it allows us to go into next year with more households, more addressable, a bigger addressable base to work with in line with our expectation. Remember that we started the year saying 4.3.
Even if we would get 300 out of those 600 that we need to get to 4.6, even those 300 were for just SEK 1 ARPU, it will still be accretive versus what we said in the beginning of the year. To get there is well within our line of sight. We wouldn't guide for such a big number otherwise.
Great. The final question. I understand you've made some personal capital allocation decisions in the last day or so, in terms of-
You mean the dinner last night?
Not the dinner or hiring me for a new role, actually. Something far more interesting.
Yes.
Yes. Maybe you could just tell us a little bit about that?
No, I'm fully invested from a private point of view in our company. Today on the back of our releases, I've bought another 15,000 + shares for slightly north of SEK 3 million. I think it's a fantastic investment and opportunity, it's maybe not tomorrow or maybe not the day after tomorrow, that's the company we build. We have a policy in our group management team that there is a shareholder requirement, as it should be. I've gone way above and beyond that. It's a good investment opportunity.
Great. Skin in the game.
Skin in the game.
Good.
All the skin, I think.
Yeah. I have to have more and more IR meetings with him.
Yeah.
One of our larger shareholders now. Good. Okay, I think that's it, gentlemen. Thank you very much indeed. We'll have opportunities later in the day to take other questions, but really appreciate that. Okay? Thank you.
Thank you.
Thank you.
Okay. Now we're gonna shift gear a bit. We're a little bit behind schedule, I'm afraid, but time well spent, I hope you'll agree. We're moving into a phase now which is gonna be a little bit more like podcasts or TED Talks. We're doing 50-minute sections and then 50-minute panel and Q&A discussions. Next up is our second debutant of the day. We're gonna be talking tech now. I'd like to welcome on stage our Chief Technology and Product Officer, Philip Wågnert. Come on, Philip.
Thank you. Thank you, Matthew. Great to be on stage here. Usually I get, you know, the blame when tech is late and things like that, but it wasn't the case today. I have the privilege to be CTO & CPO for Viaplay. What we try to do is really take all of this content that you'll also hear more about this afternoon and really package that into a platform and a product that people really enjoy using. What we'll go through here today is a little bit about the history, where we've been as a platform, where we're taking that platform, how we're remaining competitive in this ever-increasing competitive market, and also what we're looking ahead. Let's dig straight into it.
Just a few years ago, it's quite interesting with, you know, Viaplay's ambitions have grown and been upgraded basically on an annual level. First, we were the Nordic streaming champion, then we became the European streaming champion, and now we're obviously at the place where we're the international streaming challenger. That's also how our platform development has developed because we started off with this journey, and we'll also get more into kind of the platform side of that, being a Nordic platform. Then we need to break the boundaries into the European stage. We did that just last week when we entered into the UK market, which is our first actually non-EU market as well that we've gone into. Now we're then going into the U.S. and Canada, in the beginning of next year.
This means that we need to also break down the borders and even the continental borders as well for our platform, so that we can serve any customer anywhere with the great content that we have. Of course, what we want to do ultimately with our platform is to ensure that it's so flexible and capable that we can serve any customer anywhere with the content that we have, depending on where those commercial opportunities may lie at a very, very quick pace. Speaking of the different content types, I think that this is also something worth mentioning here, that this is something unique and a big strength with Viaplay.
While many other global competitors are focusing on the first pillar that you see here with the SVOD content, on top of that, we don't only have that, we also have the live sports, we have rental content, we have content available for purchase, pay-per-view, et cetera, and also linear TV channels on our platform. This of course brings a lot of opportunities to bring customers in with one content type, and then we cross-promote with the other content that we have to ensure that they consume the big breadth of the Viaplay offering, so that they will stay loyal to Viaplay for a long time, for their whole families as well. Of course, this also puts a pressure on the platform and how we build a platform so that it can cope with all of these different content types.
As an example, I'll just show what a typical Sunday can look like. On the left hand side here, you can actually see how VOD users come in and consume content on our platform. Quite an even distribution across the day. Of course, a little bit more in the evenings, and when people have time off to actually sit down and relax and watch the Viaplay content. With sports, it's very different. The sports customers, they want to see Verstappen when the lights go off in the Formula One race, they want to see Haaland straight when the Manchester City game starts. They want to see the live action when it actually happens, and that puts a completely different pressure on our platform.
As you can see on the right hand side here in the slide, then you can actually see that just over the course of a very short time, the amount of traffic on our platform actually multiplies by more than 11x . We need to ensure that we have the capacity to actually get all of these customers in during the same time. Over the past year, with all of these new sports rights that we've acquired and the expansion that we've done into new markets, we've actually increased the concurrent users on our platform this year versus previous years by 3.5 x. This platform, we've really scaled it up over the past year to be able to cope to deliver a really stellar experience with all of this traffic coming on board.
Anders talked about the increase in competition in the market, and it's also a more fragmented marketplace with even more SVOD players out there. How do we then remain competitive? There's a lot of talk about one key currency being money, which is of course an important one. No matter how much inflation there is or exchange rate pressures, macroeconomic turmoil even potentially, there is one thing that stays constant, and that's the number of hours available during a day. The day will still only have 24 hours. I think that one key currency for us and that where we need to be really competitive versus others is how do people want to invest their disposable time? We always want the customer to choose to invest that their disposable time into Viaplay.
That means that we need to have the content and the service that actually gives some value for that investment. We can see here on the left hand side is actually some external market data as well around how people in the Nordics are investing their time. We see that while global giants are actually losing share of viewing amongst SVOD players, we see that Viaplay is going in the opposite direction. We're actually increasing the share of viewing in the Nordics. It means that in churn, if we're looking at the churn numbers here, that if we get customers to come in more frequently to the product, start more streams, have more active days, it also translates into a lower churn.
We're very actually happy to see double-digit reduction in churn across both film and series customers, also sports customers and the total customer base in itself. We're seeing double-digit reductions in churn. More than 11% on the total customer base. Why are they doing this? Why do they want to come back and invest their time in Viaplay? Well, we believe it's also thanks to our great content that we have. We see over the past two years that the share of viewing of our sports viewing has increased by 150%. Viaplay Originals consumption has gone up by 75% in share.
That means that we have the content then available, and we're putting it at the fingertips of the customers, making it relevant and so on, so that they're finding this content and they want to consume their disposable time with Viaplay. I'll also go into three areas that we've been focusing on so that we can remain even more competitive in this market. The first one that I'll get into in just a few seconds is how we're increasing personalization and relevance, because we need to address the paradox of choice. There is so much content out there. There's so much both series, movies and sports content that we need to ensure that the right content finds the right customer.
Because now we have such a broad customer base, different tastes, and we therefore need to find the right content for each of these different customer types. We'll get into that. The second piece is how we are now when we're transferring over all of these great sports rights from the linear broadcast feeds into the streaming world, how are we enhancing that viewing experience? How can we make it even more engaging so that people actually prefer to view it on streaming versus the linear broadcast? Finally, we'll get into how we're using partnerships, both B2B partnerships that Kim will also get into in a second or later on this afternoon, and also device partnerships to increase the reach of our products. Starting then with personalization. This is actually some data from a recent multivariate test that we did on our platform.
Here we actually tested different algorithms for how we're recommending things in our so-called feature box, which is the hero at the front when you're starting Viaplay up. Here we did different algorithms to see how we could actually increase the viewing and adoption of our different titles. The top one here versus the control group actually increased the conversion of the feature box by 48%. Ensuring that we hit the right content to the right user at the same time that we have here can really have a big impact in terms of the conversion and overall conversion then increased by 1.4%. We will continue to invest in this.
We'll also have one of our colleagues working with the data science side exactly with this, because it's with the data that we have that we can exploit that and put the right recommendations at the hands of our customers. Looking at the sports engagement then, of course, we've been in linear broadcasting for decades and decades in the company. So we have great broadcasts, we have great commentary, great studio productions. But with the streaming technology, we have a lot more opportunities to actually enrich it. There are some basic things, of course, that you can start up whenever you want, so you have catch up. But one thing that we've worked on over the past years and really excelled in is with our highlight clips.
We're doing advanced machine learning-based highlight clips actually that's available just within seconds after the game is finished. The adoption of that has just been through the roof with 1.7 million users actually consuming these. Why are we doing that then? Well, first of all, it's again giving value for that time that you're actually investing into having Viaplay, so you can consume those games in the morning, potentially after the games have been during the night, because we have it on Premier League, we have it on NHL, a lot of different sports rights, but we're seeing also that it's increasing the number of days that you're spending with Viaplay. These customers that have consumed the highlight clips are also spending 4.7% increased number of days sports days on our platform.
Again, another example of this is what we've done both with our winter sports. We've now done it latest also with our Formula One, where we're really adding additional value also in the product. You can have exclusive interviews, you can have stats, we have a lot of interactive aspects into it and analyses. This has also been really successful. Now latest with Formula One, we've put in results, stats, rankings, results, and so on. There we actually see already in the first season 18% adoption of these enhancements in the Viaplay product. This is how we can really enrich what has previously been a very static, linear broadcast in the traditional space. Now, when it's coming into Viaplay and where we're enriching it's making it even more engaging, and the customers are engaging more with that right as well.
When it comes to our partnerships, Kim will, of course, talk more about our B2B partnerships later on this afternoon. From a product side, we really also want to enrich this experience so that when customers enter into the universes of our partners, we also want them to have a really great experience so that they can search for, they can find all of our different content within the universe of that operator. When customers actually want to view all of the Viaplay content, they're getting sent to the Viaplay application, which means that we've also spent a lot of effort and time to actually also integrate into set-top boxes for these different partners so that we get that end-to-end experience for all users.
Even though they're a Viaplay user through an operator, they should get that really high quality user experience. Here we're also continuing to develop this so that we can make that experience even more personal also if they're in the universe of the partner. Speaking of increasing reach and so on, we know that the device coverage that we have is really important to drive this usage and get into even more households as well, around in our markets. If we're looking at the usage, for those that have been covering Viaplay for a very long time, you know that we're basically on all devices where customers want to consume content. We're seeing that that's shifting as well in terms of how they choose to consume Viaplay.
More than two-thirds of our customers right now are actually consuming Viaplay on the big screen. They're shifting, they're cord-cutting and cord-shaving and so on, getting into Viaplay on the big screen devices, the in-home entertainment devices. Two-thirds, 70% actually, are on now big screen devices and in-home entertainment devices, which is also why we're focused on getting out onto even more devices. Here, actually, we're happy to also announce that we have a new partnership also with Roku. We will be on Roku devices with our application in the beginning of next year in the markets where Roku is offering their service. Also, we announced yesterday that Hisense, the second-largest TV manufacturer, we're also on their devices.
In the Nordics, we'll even have a Viaplay remote control button so that the entertainment that we're actually providing with Viaplay is at the fingertips of your homes. We've also deepened our relationships with Google, on top of Android TV. We're now also Google TV certified, and we've done a number of different set-top box integrations as well, so that we're getting out with our application into even more households throughout Europe. This, of course, also puts a pressure on how we're developing our platform. When we started off, you know, and looking back 10 years, we're seeing that we built a lot on our devices and relied a lot on third parties, of course, because we needed to get going and get this product out.
As time has evolved, we've brought a lot of these key competencies also into the in-house development. Now we're developing both in terms of our own platform and also working with the best in breed. That's also where we're going even more in the future, so that we're choosing the right partners to partner up with and where we also see an opportunity to be different and unique and where we need to have even more control of that development, then we're bringing that in-house so that we actually have that expertise internally. This gives us even more flexibility in our platform. Of course, we're also continuing to invest even more in the cloud, so that we can actually have even more resilient platform.
Going into that even more here, we've obviously been cloud-based for many, many years, but here we're also looking at how we can move even more of our live streaming into the cloud as well, so that we can get even more resilience and even more capacity when we're needing it. It can be much more global so that we can serve any kind of content anywhere in the world in the future. We're also looking into serverless hosting so that we can become even more elastic. Today we're using quite traditional methods in terms of how we're scaling up, pre-warming, et cetera. From a sustainability perspective, it's also very good to actually go into new technologies so that we can scale up and down within milliseconds, making our platform even more elastic, and thereby also even more cost efficient.
Finally, also cell-based architecture. As we're now growing both in terms of users and also regions, we really need to become even more robust when it comes to this. This gives us even more resilience and reducing the blast radius if something were to happen with our platform. Just to sum up then, what we've done to date is really to scale up our current platform to where it is today, to manage all of that traffic that we have, 3.5 x as much concurrent this year than previous years. We've reduced churn by more than 11% year-over-year by increasing the engagement on our platform. We've also invested a lot in increasing the relevancy and desirability of Viaplay, both in our own platform with our sports and also how we're working with our partners.
Finally, we're continuing to invest in our tech so that we can have a really resilient and strong product for our current customers and also tomorrow's customers. Thank you.
Great. Thank you, Philip. Come in there. There we go.
Yeah.
We're gonna combine this Q&A.
Yes
panel session. We're welcoming on stage, Jeff Chen, who's one of the most important people in the organization. He's our VP of Data Science. Jeff, maybe you could just introduce yourself a little because I gather you've worked in some quite interesting places before you came here.
Sure. I'm a statistician and data scientist by trade, but I've worked in various settings like NASA and the Obama White House, New York City Fire Department. I've advised the United Nations on various issues, soccer teams. The overall story is that I've worked with data and used data science to drive outcomes.
Great. People talk about data science as a little bit like drinking from a fire hose in terms of the stream that's flying at you. Maybe you could just give a little bit of context around that because it's a lot to deal with and a lot to process.
Absolutely. For fire hoses, well, having worked at a fire department, fire hoses refers to the volume of data that's coming through the house, the door. We're trying to capture that data and use it for something useful. Historically, when you look at data technologies, it's been batch. You take this data in daily, and then you have a long feedback cycle. Now we've made many investments at Viaplay to ensure that this data is real time. For a recommendation engine, some of them can actually update rather than 24 hours, just a couple seconds. This is a really, really rapid change. We've also seen dramatic changes in our data quality. That means that we can actually have even more confidence in our decisions.
Now with real time, we have resolution that allows us to investigate and analyze our customers' behavior in ways that we couldn't do before. That means customer experience is just going up.
Good. Okay. If you think about the sort of wide range and fragmentation of audiences and customer bases.
Mm-hmm
How do we know that we're hitting the right customers with the right products at the right time and sort of tailoring that experience in the right way?
That's a very good question. I think one thing to keep in mind with our customer base is that they're not a monolith. There are many different types of customers. To tell that story, I wanna first take a look at the tech side of the house, and then I'll turn my attention to the content side. The tech side, one of the key pillars that Philip has mentioned is personalization. We want to make sure that when people are coming in the door, we're connecting them to the content that they're interested in as fast as possible. That personalization experiment that yielded a 50% conversion in our feature box viewing is really good. Let's dig into the numbers.
When we look at our age generations, so let's say the digital natives, we're talking about Gen Z, millennials, they were 70% more likely to start watching from the feature box. We look at their more mature audiences, it's in the range of 30%-50%. These are market increases that mean that we're able to get people's attention as they're coming in the door. Let's look at content. Content has a different model, but the key thing to know is that for every single original, there is a target audience. If we're able to get the target audience to really engage with that content, then we're hitting the mark. Let's take the example of Delete Me and Thunder in My Heart.
Now, those folks, the digital natives, once again, they were 60% more likely to watch that than any other content on the service. That's really good news. We take those two pieces together, the tech, content, and sports, and we're able to produce an experience where we're driving traffic onto the service, we're getting people's attention, we're connecting them to the content, and the content is fit for them.
Great. Okay. Good. I think I've got various questions here, and I'll take a couple from the audience in a minute. I think, first of all, Philip, you talked about the Roku deal. You can't get away with that superficial description of a deal of that size and importance. Maybe you could just unpack it a little bit more.
Hot off the press.
Yeah.
Hot off the press, of course. No, it's actually a two-part deal. Of course, we'll both have our application on Roku devices in the markets where we're in. Another part of it is that we'll also be a Roku channel in the U.S. and Canada, launching very soon. More details about it will of course come as well shortly. This is of course a very big market for us. Roku, I think around 64-65 million customers out there. We're very proud to be partnering up with them, of course.
Good. Okay. I'll open up to the floor now. Does anyone have any questions for Jeff or Philip? Any hands going up? I'm relying on the people with the microphones to find you.
All crystal clear.
Yeah. You can't wait for the coffee break, can you?
Exactly.
Okay.
We're standing behind you and the coffee, right?
I think I've got another one here. How do you deal with technology-related issues that are outside of your control, such as third parties' capacity, hardware, or technology limitations?
I think it's a brilliant question. With a little bit time constraints, we had to cut down a little bit on it. It's quite interesting because we've been in linear for a very long time, and there you control a very big chunk of the whole value chain and, you know, getting that content out to the customer. With streaming over the open internet, that brings in a whole set of different challenges. Of course, you know, it's where the bandwidth that's available in that area to that house, how many others are actually streaming at the same time? How have you built up your Wi-Fi at home? How are you connecting it, et cetera. We've seen some challenges with that now as well when we've gone out into new markets.
I think that we can see also in the Nordics we're very far ahead when it comes to some of these aspects. What we're working with is bringing, you know, the point of that delivery closer to the customer all the time, so that we can ensure that we have the best potential quality at the closest single drop-off point to that customer. That's what we need to do all the time. Also educate to a certain extent, how can customers actually set up their gear to get the best kind of quality at home. Here is also, you know, a maturity in the market, and when we have the kind of content that we have, there's also bigger demand and need for this. I think it's also something with time.
We are investing also in technologies, again, to bring that final drop-off point closer to each user.
Okay. Great. Thank you, Philip. Yes, Martin. Can we bring a microphone down here?
Hi. Yeah. I want to ask you, when you look at your main competitors, among the local players, streaming player, what do you see, when you compare your own tech, versus theirs? If you could give any comments.
Don't necessarily want to review the others, so to say, per se, but what I do see is that we, given what we've done also now over the past year and so, when we've drastically really increased the capacity for entering into Poland, Netherlands, whole different. You saw also there the peak with live sports and so on. It's put a lot of pressure on how we're optimizing our platform each and every second. Don't know exactly, you know, how the others are doing that, but what we can see is that we're getting a lot in return for having done all of that work, scale-up work. We're also seeing, you know, the kind of technologies that we're adopting with our close partners are really at the forefront.
That means that we believe that we are very far ahead when it comes to the technologies that we are adopting to ensure that we always have high resilience and a good coverage also now on a global footprint. Because we've also seen that now, you know, very different ballgame playing Nordics only versus going into more global marketplace.
One more. I noted that you had some negative press in the Netherlands. If you could just comment when that was and if it was only external factors or if there was something from your end as well.
Good question. We've had a few incidents. I mean, again, we're at SLA numbers at, you know, 99.98% and so on. When that incident happens, we do see, you know, that it has a big impact. What we can now see, which is very different from where we've been also in the past, is that now when we have an incident, it's actually reduced to a lot fewer customers. A lot of customers are still actually viewing it, being able to enjoy the race or the football game or whatever it may be, and we can contain it to fewer customers. They can return also to the service without any challenges.
We've constantly worked on also improving on that technology, and we're seeing, you know, now that it's been really good results here also in the Formula One's, where we've also now reached new records as well. Of course, doing that shift up to 3.5 x has had some hiccups in the early days, but where we're now seeing a big return on those investments.
Thanks.
Thank you.
I mean, I guess maybe underlying that question a little bit is there an education job here to be done in some markets where effectively streaming is still at a more, at an earlier stage, and we're comparing this with 4K fixed cable infrastructure, you know, viewing experiences?
What's actually interesting is that I think that, you know, we've been in this business for such a long time, and a lot of the users that we've had early on are early adopters. They know the technology, they know how to set this up, and they know how to optimize it, and they know also what to expect. Whether they're booking a, I heard this morning, you know, a train ticket for Christmas and the whole service goes down. They kind of got accustomed to that. The users that we're now getting onto our platform, they're used to watching linear. They're used to having, you know, that when we're controlling the end-to-end chain and it's very uninterrupted. With that comes a new set of expectations that there shouldn't be any kind of buffering, no interruptions or anything.
That means that we need to be on our toes to ensure, you know, that we're building a service that can live up to those linear expectations. That's actually what we're also doing now and what we're aiming for in the future is really to get into that linear expectation and being able to reach those, kind of deliveries, because that's what customers are now expecting. Now we're not just with the early adopters, now we're actually with the mainstream. Now we're in all of the households, and that puts additional pressure on us.
Good. I never thought we were gonna get away with someone who'd worked in the White House for NASA, for the fire department and for soccer teams not getting more questions. You should grab him during the break, coffee break now and ask any more questions you have. We're gonna take a 15-minute break now. Please could we stick to that? We are running behind schedule. We've got a lot to get through. Do grab these gentlemen during the break and ask any other questions you have. Fifteen minutes. Thank you very much.
Thank you.
Coffee at the top. We're up to over 400 people with us now online, and I think we have around 100 in the room. Thank you again for your time and your attention and for your questions. I'm not getting through all of the questions, but I'm asking you as many of them as I can. Apologies to some of you, but if the question has already been answered through the slides, then I'm tending to ignore that. I hope you'll forgive me for that. Now we're gonna shift up a gear again, and we're moving on to talk all things content. First on stage to talk about our content offering and the changes and developments we've had, is our Chief Content Officer, Filippa Wallestam. Filippa.
Thank you very, very much. It's fantastic to see you here actually in person this time. Since we met last year, a lot has happened, both in the world around us and more specifically in our streaming markets. The streaming market in the Nordics is still growing, and so is competition. We welcome new competitors such as HBO Max and SkyShowtime. It is very important to remember that there is still no other player like Viaplay. Our combination of a superior portfolio of sports rights, very strong acquired content, and of course, our very own Viaplay originals, makes our offering and our position unique. This is also the reason why we continue to gain share. Last year, I explained that our own originals is what makes people sign up to Viaplay. This, together with sports, is what drives the sales on the platform.
What we're starting to see now as we're building our inventory on originals, is that now our own shows is also starting to have a real impact also on consumption. Here, I would like to share with you one example. This is series in the Nordics, and the red is our own original content, the gray is acquired series. If we look at sort of the performance, we can see that our own shows are clearly overperforming, representing around 12% of volume, but 60% of sales. Maybe even more encouragingly, is that when we look at consumption, our own shows is now up to nearly 30%. This is a clear proof that our strategy of focusing on returning series and building our inventory really is working. When it comes to retention, I've said before, it is important to have a mix.
Our own shows are extremely important, but we also still need strong acquired content. As you can see, when it comes to series, acquired content is still the majority of the consumption on Viaplay. How are we then making sure that we are securing enough strong acquired content? This was, I think, probably one of your main questions last year at Capital Markets Day, given that so many of the US studios are now having their own D2C platforms. I'm very pleased to say that over the last year, we've managed to secure a lot more strong acquired content than we had originally planned. The two largest deals we've closed during the year is a multi-year extension on our existing agreements with both Sony and NBCUniversal.
These deals are covering both series and movies and giving us really strong brands such as Outlander, Spider-Man, and the Chicago franchise. In addition to this, we have also secured a lot of cherry-pick deals with pretty much all other studios. This gives us both a combination of the volume that we need and also the new must-see series and movies. One example of this is one of our most successful acquired series this year, Gaslit, starring both Julia Roberts and Sean Penn, and it is sort of a proof that we are getting the best, most talked about shows, even on the acquired side. Today, as a result of all of these extensions and new deal, our acquired offering is very, very strong.
I would also like to share an example on the movie side, and here we are looking at new movies in the Nordics. In 2021, we premiered 115 new movies on Viaplay. The same number for 2022 is 200, meaning that we are actually increasing the number of new movies with 75%. Of course, the question is, what about the quantity? About the quality. It's not all about the quantity, but do we have the right movies? Again, I'm very pleased to say that our extensions with Sony and NBCUniversal, as well as a new deal with Nordisk Film and some smaller deals, gives us the right combination of both the big blockbusters such as Spider-Man, Fast & Furious, and Boss Baby, as well as the more targeted movies that is more specific to certain audiences.
This is exactly what we need now when our base is so broad. Today, we have an offering that is reaching a much broader audience. I would also just like to mention that our definition here of a new movie is a movie that is less than two years old and exclusive on Viaplay. In addition to this, we also have a very strong library of library movies, and they're also extremely important for our customers, but they tend to be on more of a non-exclusive basis. As you can see, our acquired offering really is just getting stronger. Moving on from acquired to the very heart of our offering, our own Viaplay originals. When we say Viaplay to many people, this is, in most cases, what they think of besides sports.
We have ramped up our original content significantly and become a major player in this area in a relatively short time. 2022 is no exception. We are planning to premiere 70 Viaplay Originals. Around half of them are documentaries, and half of them are scripted shows. Each one of them is delivering something unique to our customers, and I'm extremely proud of all of them. If we're looking at 2023, our goal is to maintain our current position in the Nordics, but ramp up in our new markets, more specifically in Netherlands and Poland. Our strong focus on original local content really is our strategic advantage, especially now, as many of the global players are actually starting to pull back from their ambitions to produce locally, HBO Max being one example.
If we look at our competitive situation, it is of course possible for the global competitors to compete with us on our strong acquired offering, and they can very well match and compete with our Spider-Man. When it comes to our original content, they are nowhere near us. They don't have the experience, and they don't have the same ambitions. This truly is our key differentiator. The good news is that our original content is constantly getting better and better. When we take a step back and reflect and look at what we've achieved, it is actually quite astonishing.
No one is producing as much content as we do in the Nordics, and our team is starting to get some significant experience, both when it comes to what our customers want, but also how we can make each and every show just a little bit better. It's very much starting to pay off. In fact, we now have an international reputation for what we do. We can also see that international talents are increasingly wanting to come and work with us.
Last week, when we announced that we are doing our very first U.K. Viaplay original, Rebus, written by the Scottish author Sir Ian Rankin, I was so happy to hear him explaining of how it was quite natural for him to move his baby project from BBC to this new player, Viaplay, because he felt that our editorial team shared more of his vision for what we wanted the series to be. To me, that is fantastic quality stamp and made me very, very proud. Today, our shows have been sold in more than 130 markets. They've received numerous nominations and awards, and they are constantly being remade, most recently in Australia and in the U.K.
The strength of our own shows and their potential to gain audiences way beyond the Nordics is really the fundamental driver behind our international expansion. How are we going to raise the bar further in 2023? There are four main areas where we are strengthening our position. Firstly, we have been working on the big Nordic stories that can travel for quite some time. This year's highlights include The Dreamer about Karen Blixen and Lasse Hallström's movie, Hilma, about the Swedish artist Hilma af Klint. Next year, we are finally bringing our adaptation of Astrid Lindgren's Ronja the Robber's Daughter to all of our markets. All I can say, it's looking simply fantastic, and it's way more ambitious than anything we have previously done. We're also gonna continue to build on our international shows.
This year, we've been very successful with Billy the Kid, especially in the Netherlands and Poland. Next year, we are bringing the ecological thriller, The Swarm, to our markets. The Swarm is created by some of the very best talents in the industry, and it's produced by one of the producers from the Game of Thrones, and the topic just couldn't be more current. 2023 is also going to be the year of the unique sports documentaries. This is an area that is extremely exciting and where my team is working very closely with the sports team to make the most of all of the fantastic sports rights and connection to talents in the sports world that we have through those rights. I'm not gonna talk a lot about that because Peter will get into it in his presentation.
Of course, I have to say that we are extremely excited about our three-part documentary about Max Verstappen. Lastly, as mentioned before, next year, we're also really ramping up our ambitions when it comes to local productions in the Netherlands and Poland. The aim is to premiere eight-10 shows in each market, and it's going to be a combination between scripted and unscripted shows, as well as documentaries. This is clearly a proof that we are serious about producing local content in these markets and entertain our large audience base with non-sports content. When it comes to financing, we work with three main models. We have pre-buys, which is a cost-efficient way of securing high-quality content by getting involved early and securing it before it reaches their market. The second is co-productions, which is our chance to be part of the really big productions.
This is the model used for Billy the Kid and The Swarm, as mentioned earlier. Here, we work together with a co-production partner, but we're also very much involved in the editorial process. Thirdly, we have the area that we are increasing the most at the moment. It is where we take the global rights for the shows, and hence we finance the majority of the show. We have the control. We then work with partners and content sales to maximize the return while retaining the long-term value. One effective way of maximizing the value of our originals inventory is through Viaplay Select. This year, we've launched this innovative branded content concept, leveraging our industry knowledge and building Viaplay's brand in every corner of the world.
The offering comprises hundreds of hours of both our own and third-party curated content, and we always have the opportunity to scale up genres and volume depending on the partner preference. Our very first deal with Viaplay Select was Wowow in Japan, and since then, we've signed deals with CINDIE in Latin America, SBS in Australia, and now most recently also with Pickbox, covering seven markets in the Balkan region, launching later this year. I know that you are very interested in how much each of these deals are worth and how many more deals of this kind we want to make. Anders hinted on some ambitions earlier, but in the beginning of this year, we said that we would be present in five markets with Viaplay Select by the end of this year.
So far, we have secured deals for 18 new markets, and the ambition for next year is to launch in an additional 10 new markets. We are clearly on the right track. Another point I would like to make is by increasing our ambitions for originals and securing more and more global rights, we are clearly also building value for the future. When we amortize our costs, we take the full cost up front for non-scripted over three years for documentaries and over six years for scripted shows. We always secure the license periods for much longer. This means that as we build our library of shows, we will have more and more content for free as the years pass. As we're entering into new markets, a lot of this content will also be new to the market.
That is, of course, a great upside for the future. Producing as much content as we do comes with a large responsibility of producing sustainably and raise awareness with our storytelling. This is an area extremely close to our heart and where we very much are at the forefront. Since last year, we stepped up our game when it comes to climate-conscious productions. We now offer green production trainings to our partners, and we've set the goal of start measuring emissions in all of our productions by 2026. We've also implemented a short pulse survey on our productions to be able to check in on the working environment while the production is still ongoing and we still have an ability to make changes and impact. Lastly, we have crowned the first winners of the Viaplay Original Talent Awards.
This is a pan-Scandinavian initiative to support new creators and find new local storytelling, and we've already started with the next year's edition. I would like to point out that finding these new stories, working with new creators, and producing sustainably and raising sort of uncovered topics is really delivering value. Last year, we had a great success with our movie, Sweaty, which is a comedy, but raising some very important topics on belonging and exclusion. As a result, it was a real commercial success. Another great example is our series, Honour, that we're gonna talk a little bit more about shortly. These type of stories are important, and they reach very large audiences, which is the ultimate proof that sustainable content, responsible content, really is good content. To sum up, despite the challenging market conditions, Viaplay's content is better than ever.
Our acquired offering is strengthening by the day, and I'm expecting this to continue as we see more and more studios now starting to sell their content despite their own D2C services. Our originals are constantly getting better. As they are gaining global recognition, we are raising our storytelling ambitions and finding new ways of monetizing them. When we do this, we create an even bigger opportunity to reach more viewers, tell more important stories, and share the values that we believe in. That is content that travels. Thank you very much.
Thank you very much, Filippa. We're just gonna do a quick Q&A now, and then we have a second special guest panelist. Does anyone have any questions from the audience initially? Yeah, Klas. Can we bring a microphone down here to the middle?
Thank you very much. Just a quick one from my side. Kind of how much of the viewership in the local content series and your originals is basically within the backlog of the series and how much is on new titles? Is it kind of required for you to keep ramping the reinvestment rates in new series all the time to increase that viewership? How should we think about this as a long-term strategy?
Yeah. It is, it's a very good question, and it depends on a lot of factors as you can imagine. It is of course, when we're premiering a new series and we have a big marketing campaign around that, and we make a big push of that, then we of course see a peak. We also see a strong peak on previous seasons when we launch a returning season. Now if we take Honour, we're gonna talk more about Honour soon, but if we take Honour now that we've just premiered the third season, we see a clear uplift on the first and the second season as we are launching the third. Then since our base is still growing, there is still a lot of customers that may not have seen some of our earlier originals.
It is a little bit depending on how much we're pushing them, how we're packaging them, and if we are making them sort of stand out more. Of course, this is the Nordics. If we then look at now the U.K., where we launched last week, there we have sort of definitely a second bump on all of our shows because most of them are new to the market.
Thank you very much.
Okay. Yeah. As a Brit who loves Nordic drama, along with many others, I can certainly testify to that. There'll be a lot of interest around that. Martin, you go next.
Hi, Filippa. My question is first, could you describe your typical target customer with these originals?
The target customer for originals or just in general?
For originals.
For originals, yeah. That's also. Now it's a little bit tricky now because we're in so many markets. It's a little bit different if we're looking at the Nordics compared to if I look at Netherlands and Poland. If we start with the Nordics, here we have a very broad offering, so we want to be broad. We will continue to do sort of the broad genres such as crime and drama that is targeting sort of broad. Here we also have quite a lot of the younger audience, so we need enough content to target for those. Also some of the little bit older. In the Nordics, we're pretty much covering across the base in terms of the customers.
In the Netherlands and Poland, where we are a bit newer, there we're going in, sort of safer in a way because there we are more focusing on the broad shows that will appeal to, of course, our sports customers, but also preferably to their sort of other members of the household, if that makes sense.
Yeah. In those different genres, like the youngs and the olds and where do you have the best traction?
The broadest genres is always sort of crime, thrillers, and big dramas based on true stories, based on true events, et cetera. Young adult is per definition a little bit more narrow. For young adult shows, they also are typically smaller shows, lower production budgets, and they don't need to reach the same reach to sort of make the return back. I think personally, I think that's an area where we can really gain internationally, not as the first priority. First priority, we'll always go for crime. Sort of broaden out from there.
Finally, the size of the average budgets, if you compare it like three years ago, if you compare it today.
Yeah
how much has it changed? I mean, I guess it has increased quite a bit.
Yes and no. It's sort of yes, we have seen a bit of an increase, and of course then we have the pandemic to make things a little bit more complicated, where the most of our production got a little bit more expensive to manage all of the security measures and everything around that and to be able to continue to shoot. We also learned a lot during that process. Now I think it's more kind of coming back to healthy, sustainable levels. It is a little bit less demand in the market as many of the globals that were very aggressive a few years ago and sort of hoovering the market for anything local they could find, they've now taken a step back, which helps in that sense.
Thank you.
Great. I mean, I guess, again, underlying that a little bit is the sort of arms race we've seen in U.S. content of late. I mean, it isn't the case that budget equals success, right? That you can often find the most successful shows are the ones that come from left field and are a great surprise.
Definitely. If it was sort of the most expensive shows wins, in a way it would be relatively easy to just take in a lot of money.
Not for Enrique.
For Enrique, then you sort of, you know that if you have the right talents and you have. You can have everything right, all the ingredients right, the very best talents, the biggest budgets, and still there's no kind of, nothing special with the show. We've seen that some of our best shows, like take Pørni as an example, our biggest hit in Norway. It is a very reasonable budget, and it's just hitting exactly on the right sort of nail, so it's even traveling beyond Norway. Yes, Pørni's a good example because when we did the case for Pørni, it didn't have to be successful outside of Norway. The budget was sort of small enough, so a smash hit in Norway would be good enough.
Now what we've seen is that since that is so right, it is really traveling, and it's now starting to work very well here in Sweden. It's already been on in the Netherlands, et cetera. Sometimes that happens, and then we just try and cling on for as many seasons as possible.
Okay. Yeah, Carl, go ahead.
Yeah. Carl Cederschiöld. Just comparing this to retail and sort of the behavior where you go to shop and watch a pair of pink running shorts, and then you buy a black pair. I mean, the data on having Hilma, then actually they're moving below watching Below Deck. I mean, what is the kind of consumer behavior and over time what does that mean with the value of the back-end catalog?
Yeah, I'm not 100% sure I understand the question.
Well, I guess the point is that when you go into a retail store you buy.
Yeah
A specific product, and you want to buy that. The question is how we people move around between the different content types we have, and specifically when you look at the back catalog, when someone comes in how much usage then do you get through.
Yeah. Okay. Good. Sorry. Good question. That is really also where Philip and his teams comes into the question, because the beauty of streaming, if we compare it to the linear world, is that content continues to live. We can be sort of if we lift things again, or if you have watched a series and then the product can tell that then actually this other series that we produced five years ago but is still a really good series may also be suitable for you. The better we can get at sort of personalization and recommendation, the more value we're also gonna be able to get out of our library.
I think that is an amazing opportunity, and I'm very excited about building sort of the library of our shows, because sometimes we tend to be a little bit too focused on the new ones. The ones that we produced a few years ago, some of them are extremely good, and they deserve to be lifted again. Also if you know, pick something in the store, if Viaplay is working the way it should, you should be recommended the other shows that are sort of similar to that.
Okay. I wanna leave some time for an important discussion, which is a beautiful segue toward actually. I'd like to ask on stage our next guest panelist, Eva Röse. Eva, can I welcome you up? Thank you. There we go.
You're more on brand than me.
What's that?
You're more on brand than me.
Yeah.
Yeah. There we go.
I need something to light you up after a long day.
Good. Okay. We wanna focus a little bit now on sustainability, because it's something you raised during your presentation, and it is a very important part of what we're doing. I wanted to ask you, given the involvement you've had in Honour and over a number of seasons, your role as a very prominent and outspoken exponent of diversity, equality, inclusion in all aspects of those subjects. Maybe you can just help us think a little bit about how important those areas are for the industry and the development of content creation?
As you can guess, my opinion is that it's very important because culture and entertainment, I mean, it's a reflection of our time, and it also has the power to shape our world and to determine who has a voice and who is voiceless, who is unseen, who is powerless, and also, I mean, whose stories do we tell, who gets our support. If you can see her, you can be her, if you remember the Kamala Harris quote. I think that's the environment that I'm working in. That's what I'm focusing on. What we actually can put on display for the viewers, for the audience, we decide what is the norm, what's the standard. Are we upholding a cultural canon?
Is it traditional or are we breaking new ground? It's extremely important that also culture and entertainment can show a brighter, a broader perspective and include, I mean, different stories, different worlds, different shapes of people, colors and yeah. Yes.
Just unpacking that a little bit. I mean, during COVID, we saw a massive consumption.
Mm.
... of content and arguably a move into consuming different types of content, more international, different subject matters. Is that something where you noticed more of a proliferation of interesting ideas and thoughts around these type of subjects? Or do you think people just kind of return to stereotypical norms? I mean, how do you think that evolved?
No, I don't think it can never return to, I mean, to the old, I mean, the old ways.
Let's hope not.
No, I mean, it cannot because now we open the windows, we open the curtains, and we have seen, I mean, what's out there. We are still looking for new stories. I mean, that's how I really believe that. We are no longer interested in what we had. We also want to break new grounds, as I said.
Yeah.
Yes, the power of the entertainment industry talking about these issues is enormous.
Yeah.
We need to know also that we need to be aware of the power that we have telling the stories. I mean, what is the thought behind a story? If we are the storytellers and we are the creators, we really need the support to tell the stories, and also have to include people with different perspectives.
Yeah.
I mean, I think we cannot go back because people are looking for new things.
It's being driven by the audiences. I think I mean, when you come to editorial decision-making, Filippa, I mean, do you see more and more projects coming through with interesting storylines that are much more challenging in terms of what we expect from the audiences?
Yes, for sure. We are also very actively searching for it. But definitely, it is as Eva says, sort of it is very important. We have a wide reach with our platform, and what we are deciding to show to our audiences is also setting the new norms. If we are just telling the same stories with the same type of characters, we are not really helping changing stereotypes, and that's something we're trying to do all the time. It can be the stories that we pick, but also within the stories that we pick, make sure that we don't have sort of stereotypical roles in the roles that you expect them to be. Those kind of things are also very important.
Yeah
... both in the selection of the shows and then sort of how we are then working with them.
I mean, Eva, if we look at Honour specifically, we have three seasons now. I mean, it's been enormously successful, fantastic sort of feedback from the audiences. What aspects do you think lay behind the success of the format, and what do you think it is driving through successive seasons here?
I think if we talk just about Honour, I do think the success behind the series is of course the, I mean, the storyline, and it's interesting with the morals, these four lawyers fighting for justice for women and justice, I mean, human rights and blah, blah. But they have a great lack of morals themselves, which is interesting, I mean, when it comes to cracking into people's superegos with a dark past and so on. But I think just for this specific series, the fact that we, the four talents, also had a voice of talking about the issues that we were addressing with the series.
Yeah
... that actually made the series, we got some credibility in actually the knowledge of the topics that we wanted to address. We were really into using our platforms for change as private persons and as creators. When we said, "This is important for me as a person," but when I put myself up on stage and use my platform, say, "This is the content we create by these issues that we really believe is super important for people right now in the society." We had already people listening, and then we said, "Let's make this super political, interesting, extremely important issues, and make it into content, make it into drama, thriller. Can we do that?
Yes, we can because we know what we are talking about." We lived it. We see it. We have our audience. We have a really close contact with our viewers. They're sending letters. They're sending DMs on social media platforms that's exploding. I never ever imagined anything like this. We have, I think, the trust that the audience showed us and they relied on us, that we know what we are talking about, and when we don't know, we do our homework. We do our research. We keep close contact with them, our sources, with the knowledge that we lack.
Mm-hmm.
When we were actually creating something, it wasn't only fiction. It was actually fiction coming from fire that will never, ever stop, that I can promise you. I do think actually that this, and I mean, you know that, Filippa, because we are like every time we meet, we're like we have this and this and this and this. Unfortunately, I mean, the topic is extremely wide, talking about oppression of women or, you know, human rights and blah, blah. But it's not as political, as we say in Sweden, PK, politically correct, blah, blah.
Mm-hmm.
Assuming that should be boring. It's not. Because we have this fire and we have the humor and we have the knowledge, we can actually and we get the trust from Viaplay to actually use this, use us. We have this. We are storytellers, and that's actually been amazing.
Yeah.
Because you need people to actually trust you and to believe in you, say, "Okay, let's go." Maybe this is a very narrow topic, or maybe this is too political. When we show, I mean, people would like to see it because we also can turn it into fiction.
Yeah
to drama. Even though when you turn off the telly, maybe you had something more, and you can talk with your friends or your boyfriend or your father. That's what we notice with the contact with the viewers.
Great.
Can I say something what I
Of course, yeah.
What I think on the success? I think you're kind of saying all of the things that is important. I think with the topic itself, you really found a story that should have been told a lot earlier. It is a little bit of an untapped potential, and you could see, like, it's not just the four of you sort of on fire. There are so many people out there that were just waiting for these type of stories to be brought up to the surface, and that's what I mean with when you find the untold stories that deserves to be told, then they also gain a very broad audience. That's, I think, one important aspect, and then of course, the passion.
Mm-hmm.
Like, you have four creators here that are extremely passionate, and coming back to sort of production budgets and all of that, if you don't have the passion, it doesn't matter how much money you have. That, if we can find one common denominator for all of our most successful shows, it always comes down to passion. It's sort of is someone gonna put themselves sort of at the forefront for this? Is someone gonna drive this? Here we have four.
Mm-hmm.
That's of course extremely valuable.
Yeah. A beautiful connection back to the values, to bravery, to trust.
Yeah
to all the things we talked about earlier.
One more thing, if I can say one more thing.
Yeah, of course.
It is also that, you know, when you do something like this, Honour is bringing some very heavy topics. You can do that in a quite sort of, I don't know, hard way, so you don't even wanna watch. It's really, really kind of nerve-wracking. You're sitting like this. It is really sort of entertaining. That's, of course, also important.
Good. Well, listen, I think we've got time for some questions from the audience. Does anyone have anything they would like to ask Eva or Filippa? Or our online audience? Question here. Tom.
Yeah, I'm Tom from Citi. The question is around whether the type of content that you make has changed as a function of people watching it in a non-linear environment. Does the fact that you don't have advertisers to keep on board make you more bold? Does it change the format of the content?
Yeah. There is quite a big difference between the content on linear and Viaplay in some cases, but I wouldn't say it's so much depending on the advertisers. It's more sort of the way you consume different type of content. Sort of in a way, a lot of the shows that we show on Viaplay, they require a bit more from the viewers, and that they don't always work very well on linear. Because linear, you're kind of leaning back and you're expecting to see something that is relatively easy to digest. Some of our shows work on both, but when you come into more sort of, I don't know, focused or harder topics, it is a bit different between streaming and linear, but I...
It's not so much it's due to the advertisers, but more sort of how people are consuming content differently on linear and on streaming.
Good. Any other questions? No, I don't think anything else from the audience. Maybe just closing, Eva, with you. I mean, this is a subject I think we could all talk about for a long time.
Mm-hmm.
There's a lot of things to discuss. When you look forward now and think about, you know, what lies ahead in terms of storytelling more generally, you've highlighted some areas where you think more can be done. Do you think the industry is moving fast enough? Do you think enough is being done?
No.
To accelerate this? What do you think could be done to do more?
No, no. Not at all.
What stimulates that?
Oh my God.
More can be done?
I know people are tired. How long time do we have?
Yeah, yeah. Well, you wanna do this quickly, so.
No, no, it's not. I mean, it's all about. I mean, people are getting woke, that we know. Also, it's has a lot to do about, I mean, getting your whole team into the issues that people has. You know, you have to educate your team. You have to educate the people that you are working with in companies. I mean, all of our companies have production companies. You really need. And it's not just talking about, I mean, some polish on the surface. You really need your the people that you're working with, they really need to be educated in these topics to actually feel that this is important. It's not just something we do that because it looks good.
I mean, if you ask me, "Are we doing enough?" I say no. You also need, as we and the creators for Honour, when we get from Viaplay this absolute trust and this support that we actually I mean, for us it's been unique because we have been working with a lot of production companies, of course, to get this artistic freedom to actually be able to create what we want to create and say, "No, it has to be done this way. No, we cannot. I'm sorry, we cannot compromise. We cannot because this is too important." To get the trust from Viaplay has been very important for us to be able to continue.
I mean, we've done three seasons and so have to have the right people that actually are brave enough and have know how to listen. Are you with me?
Completely.
Are you?
Yeah.
I mean, because.
I am.
Because I mean, that's the most important. I'm sorry. I mean, it was not.
No.
No offense, but I mean, that's so important.
Yeah
that we have something important to say. Please, are you with me?
And with-
I was there once. Are you with me?
The problem is I'm with 400 people who aren't asking enough questions.
Are you with me?
Yeah.
Yes, I.
Actually.
I think you're absolutely right. When it comes to, it's different aspects of this also.
Mm-hmm.
Like, I think when it comes to sort of, gender balance and those kind of things, I think we're pretty good. Like, we've worked a lot now with female creators. We've seen a lot of fantastic women creators. Also, I don't think it's a coincidence that some of our most successful shows have been created by women with women in the lead roles. We've come very far there, both as an industry and we've of course worked very hard on it. There are a lot of fantastic strong voices out there that were just waiting for someone to let them, to give them a platform, pretty much.
Where I think we're struggling, both Viaplay and as an industry, is kind of leave gender aside a little bit, but finding the other sort of minority cultures, the other stories that we are not really getting enough sort of pitches in around sort of. It's almost hard because it's kind of the most interesting stories is the ones that I never get pitched, that they don't even reach me. There we are going out and trying to find them ourselves and trying to find creators that are credible in different fields. I think that sort of portraying different cultures, different parts of our society, there we have a lot more work to do.
Good. There's a few more questions coming through online now, but I think we're gonna have to take those separately. Thank you both so much. We're gonna move on now, but please show your appreciation.
Yay. Thank you.
Thank you.
Thank you. Good. Okay, we're moving apace again. Now we're gonna enter the world of sports. We have our very own Mr. Sports, Mr. Peter Nørrelund, who's gonna come on stage. Fast & Furious 10 is what is now required, Peter. Here we go. Over to you. Thank you.
Thank you, Matthew. Buckle up and fasten your seatbelts. Partly because of Mr. Hooper, who has been harassing me for the past hour, pushing my time, but mainly because I'm going to speak a lot about Formula One. I will reveal some amazing viewing numbers on Viaplay on sports, and then there is a couple of interesting insights from some of the most influential persons in the world of sports. If we start with what we discussed last year at the virtual CMD, what does it take to have a good sports offering? Obviously, good rights, AAA rights, which have the characteristics you know, but then also production. Production, curation, how we treat the properties are super important, and we have some great advantages by being in multiple countries.
Looking at the portfolio, we also discussed last year our three-pillar strategy. We want to have AAA rights within three categories of rights. Football in any given country, if you want to run a subscription service, you need strong football. Motorsports, and Formula One in particular, is also a very, very interesting sports right when it comes to acquisition of subscribers. Formula One, motorsports attracts a bit of different audience than football, hence the importance. Then we have what we call local rights. We need local rights like NHL, FIS, Sweden, Finland, handball Norway, Darts Netherlands. We have a good example from the past year on how we work with this. If we look at Poland, Bundesliga, Premier League, Europa League, Conference League, big, fat, thick tick in the box of football. Formula One coming next year, tick in that box.
We needed some local content. In Poland, there's an MMA operator called KSW, actually the second largest in the world after UFC because of the amazing shows they do, primarily locally in Poland. They had an event-by-event deal with Polsat being on pay-per-view, four-five events a year. We approached them and said, "Can't we work a little with your product? If you can do 12 events instead of four or five, we can do a five-year deal." We work with different tiers of events, but we need an event every month in order to avoid churn. The results have been amazing. Biggest D2C sales driver, and KSW is responsible for 1/3 of the sales D2C in Poland. Pretty strong. I want to speak primarily today about our core properties. Premier League, which we have in nine countries, six-year deal done early 2020.
The first six-year deal Premier League did in Nordics was with us and Formula One, which we from next year will have in 10 countries. If we start with Premier League, I don't have the slide down here, so I need to talk about the production and the advantage of scale. Obviously, as we are broadcasting the matches in nine countries, we can do a lot of shared content. We get interviews with all the best players. On top it's Casemiro from Manchester United. We have had Kevin De Bruyne, Mohamed Salah, everyone. We can actually have a reporter outside the stadium that you would never do if you were only broadcasting into one territory. As we are broadcasting into nine territories, it makes sense to give a bit of the atmosphere outside the stadium. We are in the locker rooms.
We are on the pitch before the game. We have pitchside studios. We have camera at our commentary positions. A very, very comprehensive coverage, but where we take advantage of shared content done centrally and then curated locally in the local studios. The results so far have been amazing. For the first 12 rounds this season, more than 1.4 million have watched Premier League on Viaplay alone, and they have watched almost 2 billion minutes. To put that into perspective, if we take Norway, which is a very important Premier League country, a strong Premier League country, each viewer have on average watched almost 3,000 minutes, 32 matches, or almost three matches per round. In a world where the most scarce resource is time, that's a lot of time spent on a product.
If we dig a little bit more into the Norwegian numbers, as Anders mentioned in his presentation, we got all the Premier League diehard fans immediately. That we also see in the viewing numbers. Manchester United, Liverpool on top, traditional very, very popular clubs in Norway. Now we see the Haaland effect, Manchester City picking up almost as big in viewing as the two big clubs. That is, of course, because some people who would not think they will buy a high premium Premier League subscription a year ago now need to follow this adventure with Erling Haaland. 18 goals in 12 games. I can tell a lot about how good we are, but I would rather have someone else do it. Paul Molnar has been with Premier League for the past two decades. He's Chief Media Officer, so responsible for all rights sales.
He has been a part of the journey of Premier League becoming, I would say, the most valuable global product. I know NFL gets more money in license fees, but 95% + of that money comes out of one market. Paul's revenues comes 45% from U.K. and the rest from international markets, and it goes like this. I asked him how he see Viaplay as a partner and what defines a good partner for him.
The partnership with Viaplay encompasses many different markets, principally obviously in the kind of European region. That partnership had its kind of anchor in the Nordic markets, which are strategically important to the Premier League. We built an incredibly good and strong partnership with Viaplay across all of those Nordic markets. That, of course, has given us the confidence to expand that partnership into other European territories. We've seen that from the start of this season across Poland, across Netherlands, across the Baltics. We're seeing in those territories or experiencing a relationship in those territories that we've enjoyed across the Nordic markets previously before now.
That's all around promotion of the competition, engagement with local fan base, commitment to storytelling, how effectively they elevate the Premier League in their broader portfolio of content, so that we make sure that we are kind of front and center of their offering in the market, talking locally week in, week out across the course of the season. We believe that where it's the right partner, effectively going longer is a better arrangement on both sides. We see commercial upside. We see that actually incentivizes the right approach to the partnership on the buying side. We were incredibly comfortable in approaching the Nordic market on a six-year basis. It's strategically, again, important to the Premier League. We wanted to make sure we established the right partnerships. As I said previously, it's historically been a good relationship with Viaplay.
They wanted us to look or consider an alternative approach in the Nordics. We were receptive to that. At the outcome of the process, we found an excellent six-year deal. Our reality is that we find the right partner, and we place our trust in that partner as to how do they best commercialize in the market. They're buying those commercial freedoms, and we trust them to execute the product in the way that they feel is best for that market. Sometimes you have a broad distribution that encompasses traditional media platforms, and in some instances, you have a narrower offering that takes in just D2C or OTT services. I think our position in the first instance is find the right partnership.
Once we've found the right partnership, actually placing our trust in that entity to make sure that they approach the market in the right way. Our view is that actually the media entity that's taking that bet in the first instance and buying the rights from the Premier League is much better suited to decide how they execute in the market rather than us come along and say, "Have you thought about X, Y, and Z?" That's not our competence and capability. That sits with the media buyer.
It's interesting how important it is to him how it is covered. That's of course, they will always get their license fees. When you have such a strong property, there will always be a company with a deep pocket or a man with a fat wallet who's able to buy the rights. But can they also deliver what is actually important for Premier League going forward in retaining the brand, in building the brand, building the popularity around the product? The same applies for Formula One, but that is even easier for us to produce that because with Formula One from next season, we are talking about 24 races, 24 circuits, 10 teams, 20 drivers, common language, English. There we are doing a lot of on-site productions, which we then can insert in our local productions.
We have Viaplay experts, Mika Häkkinen, two-time world champion from Finland, David Coulthard, 21 Grand Prix wins, I think it is, and Tom Kristensen, nine-time Le Mans winner. One of those will always be at the circuits reporting back to the countries. That is where we have the local curation in the countries from the studios securing a local touch. Nothing mentioned, but you could imagine a sports broadcaster who said, "Now we have a studio in English from a tennis court, and we just put that out in all the markets we can think of." That is not good curation of content. It is okay to have live interviews in English and then use it in the Danish dubs or Norwegian studio. Mika Häkkinen is also interesting the way he has never done broadcasting in Finland. He's one of the biggest heroes there.
He has never done Formula One broadcast. When we came with this proposition, he found it interesting to be out in nine markets this year, 10 markets next year. Looking at the Formula One viewing on Viaplay, so not on linear channels in any countries. During this season, almost 1.7 million unique users who have spent more than 4 billion minutes. If we put that to perspective, time spent in average per user for the different countries on the slide, 20 hours in Denmark, the lowest one, still a lot of time to spend on Formula One for one user, an astonishing 53 hours in Netherlands. Netherlands is also special with Formula One. They have the world champion. The biggest sponsor, Heineken, is from Netherlands.
It was quite brave of the person behind me, Ian Holmes, Director of Media Rights, Formula One, that he actually sold us the rights even before we had launched a product. I started asking Ian about his thought process around that.
It was a relatively straightforward process. Clearly, you didn't exist when we did the deal. We've, you know, we have history. We've seen what you've done in other markets, not just with Formula One, with other rights that you've acquired. You know, we clearly Formula One in the Dutch market today, and certainly when we did the negotiations, it's a very, very strong property. Thank you very much to Max. We didn't really fear too much that you might struggle to bring in subscribers for your new service. We felt that they would come. Now, I think we've been very pleasantly surprised at the numbers, the numbers of subscribers, that is. We were always confident that the product was gonna work on Viaplay in the Dutch market.
We always felt that you would do a good level of production. In fact, you've probably surpassed our hopes and expectations in terms of what you would commit to the rights around the coverage. It was pretty easy. We're at an event for three days. There's practice sessions on a Friday, qualifying on a Saturday, the race on a Sunday. It's someone that really sort of builds their coverage around the on-track sessions. I also think it's particularly important for viewers to see their presenter actually on-site. You know, studios back in whatever the territory is good, but to have someone on-site, I think adds another dimension to the coverage.
I'd say, you know, that's very characteristic of what Viaplay have done over the years since we've been partners in the Nordic region, and very evident in terms of what you've been doing this year in the Dutch market. We've been partners with one another for quite a number of years. I think you always do what you say you're gonna do. When you acquire the rights, I'm confident that you will present Formula One in the best way. I always think that your presenters and the people behind the camera, they have passion in what they do. I think that comes through in your coverage. You know, my job is selling the rights.
My job is obviously a commercial role in terms of, you know, obtaining the best fees possible for Formula One. It's also about making sure that the coverage of the sport is presented in a way that's gonna be most additive, hopefully build an audience, bring in new fans. That's something that I really feel that we get from Viaplay.
Ian Holmes, also an old-timer in the business, have been there for +20 years working for Formula One, is responsible for media sales in all markets. Actually, I forgot a number, and it's actually the most interesting number. You probably all saw it because you're numbers people. On the Premier League slide, there was a viewing number on Premier League in Netherlands, and that's a bit interesting because Premier League was last season on a linear channel called Ziggo Sport, 55% penetration. I think Anders Jensen have told you that we have 1.1 million subs in Netherlands, so that's around 15% penetration. I've taken an average of the 25 most viewed games on Ziggo Sport the entire last season and compared them with the 25 most viewed games on Viaplay this season on unique users.
There we are 20%, 18% to be precise, up compared to the viewing on the linear channel, Ziggo Sport. That is a fantastic story for me because I'm always met with the penetration of linear channels, and it's nice to be on linear channels. This shows actually that if you have an OTT platform, and if you have the right customers on that OTT platform, and if you have people like Jeff who are able to make sure that the customers, while they are on the platform, also get onto the other stuff, then that's much better than being on a linear channel which could have 55% penetration, but it's in a channel package with 60 channels or 70 channels or 40 channels. Super important to mention that. Sorry, Matthew, it took a bit of my time, but I think it was important.
Moving on, still being in the Formula One space, Max Verstappen just won the second world championship. 14 wins so far this season. One better than Sebastian Vettel and Michael Schumacher, who had the previous record. Still two races to go. Brazil this weekend, then Abu Dhabi, so he can end at 16 wins. We have a fantastic cooperation with him and a very extensive cooperation. As you can see, he's doing commercials for us. He's an ambassador. We have done programming Verstappen - Lion Unleashed about his world championship last season. 550,000 unique has watched that. Verstappen: Master of the Track, a day with him in a sim where he drove all circuits in Formula One, have had 300,000+ unique on Viaplay and has been used in our studio pre-shows in all countries.
He's of course doing a lot with us during the GP weekends, interviews, sit downs, et cetera. Three days after he won the championship in Japan, we had a day at Imola where we produced three programs. F1 Talk with Verstappen, Max's Machine, a comparison between the Formula One Red Bull racer we had there and a street car. A Lion Unleashed part two. As Philip has said, content has throughout the year been worked on a three -episode documentary, Anatomy of a Champion. Luckily, he won the championship once again. I think that will be dropped on Viaplay in the beginning of March or something like that. We are also working with them on a bigger movie to be released in three years' time. Not when he has retired, while he's still on top of his sports.
Then we also have Viaplay on his helmet, and we'll have it on his cap next year. You will see that, and we can use him for promotion in all markets, also select markets, which is attractive for partners there. This is a very, very comprehensive arrangement with an active sports star. I would say he will probably be main sports star of the year this year, and that will probably continue many years ahead. I asked Raymond Vermeulen, his manager, why they have entered such a partnership.
Max is doing a lot more than just driving quick laps on the track. It is for us important to have Viaplay as a partner to create great content and that we can give an insight of Max also his private life. For us, it's important that we get Max in as many households as possible. That's why Viaplay with the streaming platform, what they're running, expanding footprint, what they have in various countries, this is the perfect match to work together. We entered in the partnership with Viaplay, of course, after they were the rights holder in the Netherlands for broadcasting the Formula One. We start conversations how we could work together in the paddock, but also to work with Max outside the paddock.
Yeah, that was a natural fit, and the first conversations went well, and the partnership was basically closed in very rapid mode, and happy that everyone was on the same level and thinking of the same basics. We see Viaplay as a partner for the long term. Of course, we are both ambitious. That was the brand fit in the first place. We are ambitious with Max and build his worldwide brand. Viaplay is very ambitious in expanding in countries. Yes, we are working together, and we are working on a base that we both want to expand and that we both want to bring a lot of nice content.
Even I think with Viaplay as a streaming platform, expanding in many countries, that is the perfect fit for us.
I think we will see much more of those kinds of collaborations in the future. It really, really goes hand in hand also commercially for the athletes. Of course, if we can help Max and Raymond in opening up the US market for him, then he will turn into a totally different business in that market. We also have a deal, ambassador deal with Erling Haaland. The only problem with him is that he is not Danish. Fantastic striker. We did a documentary which I hope you have seen, Haaland – The Decision. He could have chosen any club in Europe. He chose Manchester City. 450,000 uniques have seen that so far. We can't do exactly the same amount of programming around him.
He's a part of a club, Manchester City, as you know, which also have restrictions that is easier with individual sports stars. But we are looking into doing much more of this in the future, combine the stars and the platform. Now I have 35 seconds left, and I keep my slot, Anders. Next up, U.K. Fantastic, fascinating. Anders spoke about it. The acquisition of Premier Sports have given us a good start and gives us a bit of time to set up exactly the right sports offer in that market. It is actually not so crowded when it comes to sports. If we take away two or three huge properties which are driving the big pay platform that there is in that country, then there is actually a lot of valuable sports content for reasonable money.
We have a good start with Premier Sports, Nations League games, home matches of Scotland, Wales, Northern Ireland. We have LaLiga. We have United Rugby Championship, which is the premier rugby league for Scotland, Ireland, Wales, Italy, and South Africa. We will build on that. We will build on the customer base that Premier Sports has today and the good distribution deals they have. Key takeaways. Wow, now I need to be quick. Our portfolio's in place. Matthew actually wanted me to run through our sports rights in all of the different countries we have. First of all, it would have taken 40 minutes, and it would have been super boring because you know our portfolios. They are super strong within football, motorsport, and local sports. I think we have unique partnerships with key partners.
I actually haven't paid them to say what they said about us, but those are probably the two most influential persons in the world of sports, and they like what we are doing. Massive viewing on Viaplay. Massive viewing. OTT outperforming linear. Really, really interesting takeaway. We are doing paid productions, we are getting synergies out of it, and we are doing it very well. We have the unique partnerships with ambassadors. Thank you.
Okay, thank you, Peter. You've got to love this guy 'cause he does his own panel discussions, but he records them first, so it makes it easier, right? Well done. You got it through in time. We must have lots of questions from the audience. I've got two online here to take quickly first. From Omar Sheikh at Morgan Stanley. How easy do you think it will be for new entrants like Netflix to acquire sports rights in your footprint?
Super difficult. I think when we hear Paul and Ian, we also get the answer on why it is difficult for a global platform to enter the world of sports. Let's not even talk about the value and that they perhaps have to change their packagings and things like that, but they need to have a local sports organization to do the productions, and that is super important. It is not easy, and we have met them. You know, Amazon, that has been public now, it wasn't last year. Amazon tried to get Formula One rights in Netherlands. You know, they are global, but am I afraid to meet them in the markets we're in? No, because we are going to do a good job. We have a great heritage with the rights owners, so.
Good. The second question from Omar. F1 has been hugely important for the success of Viaplay. Is it critical to your strategy to renew your contracts, and when is the next tender due?
It would be nice. We have the rights until 2024, 2025. I'm confident we will continue with the rights.
Good. Okay. Very clear. Let's here we go. Simon over here. Can you bring the microphone down to the front?
Simon from Berenberg. Just a quick one on Denmark, given that's the only country you have the National Football League rights in, and that's up for expiration, or renewal rather, quite soon. Is that a pretty key right for that country, or is that something you're willing to let go of if, you know, it doesn't reach the, you know, ROI you want on it?
That's a good local right, coming back to my football, motorsport, local rights. Superliga is a good local right for us in Denmark. It has been since 1998 when we acquired the rights, and I'm sure we also will see Superliga on our platform in the future in Denmark.
Good. Okay. Are we gonna continue Saturday Night Live with Martin Arnell? I think we are. Here we go. Okay, Martin.
I must ask you about the big near term elephant in the room, and that's the football World Cup coming up. It's a one month, and I think you mentioned that you need the big event every month in order to protect your churn. What do you really expect here? How worried are you?
Yeah, luckily, that is Kim Poder, who you can grill afterwards on that one, our Chief Commercial Officer for Nordics. I'm really happy that Premier League will start playing again the 26th of December. I don't think we will see a huge impact.
Okay. Thank you. Second question I have is actually, what do you think about UEFA structure of the biggest cross-border leagues and what's Viaplay's views on all of that?
Yeah, you know, we need to see, and I guess you're referring to the changes with the Champions League going forward. UEFA have challenged a bit with the excitement in the group phase of Champions League. Now they try to change that. Let's see how that works. It will be a long table of 32 clubs, so there will be a little bit of explanation in the studios. Let's see. I think it is fine that they try to innovate and develop the product.
Okay. Thank you.
Good. Any other questions from the audience? Yes.
Hi, Nizla from Deutsche Bank. I thought I'd ask a question with the women empowerment section, but here I am asking about sports instead.
Good.
Just a quick question on key person risks. There's a lot of content around Max Verstappen, et cetera, and we hope that his career flourishes from here on. What is the experience you have when sort of, you know, a world champion is no longer a world champion? I mean, is the traction in that market still as strong once you've had a footprint there, like the Netherlands going forward? That's question one. Question two would be, what other sports rights would you love to get your hands on, or you have in mind which would maybe be the next step of ARPU increases perhaps, that Viaplay can then generate? Question two. Thanks.
If I take your first question first, obviously, Max Verstappen in Netherlands gives a fantastic boost to Formula One, but he's also lifting Formula One as a sport and the interest for Formula One. I think we are never buying any rights because there's a local element in it, because you have wins and you have losses on that. Sometimes you have people who are performing from a country, sometimes not. The interesting part is if I talk about pick of Champions League matches, for example, in Denmark, where we have had Champions League many years, when I started, and that's also many years ago, 20 years ago, we always picked a Dane in action, then it didn't matter of the other clubs.
There have been a globalization of football, and if you see your kids today, they talk about the big European clubs. Today, we never pick matches for our main channels because of local presence in the matches. We pick them after the most interesting matches on a global basis. That is the globalization we have seen with football, which we are of course benefiting off there. Formula One has actually a globalization now also with a colleague in the business, Netflix, who have done the Drive to Survive, and of course increased the interest for that. You asked about what I would like to have and if there are things. You know, it would be wrong to say that because we have always also competitors.
The beauty with the launch in Netherlands was no one knew we would come in, so it was a shock. The same in Poland. No one knew we would be there. That I have a list, but that I would stick to myself, if that's okay.
Good. I think you probably remember those statistics that Anders quoted at the beginning of the day about the number of new sports rights we'd acquired and the number of renewals.
That was a lot.
Which is a lot. Only seven missing, I think, was the small number at the end. Any other questions from anyone? No? In which case, I think that was fast and furious, just over 10. But thank you very much indeed. Yeah, good to see you. Thank you. Right. We're changing gear again, so we're gonna start talking about the partnership structure now. This has been raised in questions throughout the day. We're gonna have our Chief Commercial Officer, Kim Poder, come on stage, who's gonna be joined by a guest in due course as well. Welcome, Kim.
Thank you, Matthew. Thank you all of you for still being here. You can start releasing your seatbelt again after 20 minutes with Peter, because now you're in a safe phase again with me, about to talk about how we strike and make certain agreements with distribution partners. This is my focus today. I'll mainly talk about Viaplay, but just be mindful about the fact that we also have linear channels, which is also part of our toolbox in the Nordics in particular. I'll try to explain to you the pros and cons when we consider entering these partnerships or when we consider renewing those partnerships. What is weighing against and what is weighing pro a certain partnership.
I'll give you three concrete examples today. It's about the new agreement with Tele2 in Sweden. It's about Canal+ in Poland. And it's about Ziggo in the Netherlands. I'm happy to take questions about all the partnerships if you find it relevant. I think it's important to say that D2C offering is always relevant for us, and that will be extremely important to our success in all markets. It's not either or. In all markets, I would say that we don't have to make agreements with the B2B distribution partner, but it is a great opportunity often. We would like to do it, but we don't have to do it.
That's why if you look at the markets, you often see that we have multiple partners because we have found many interesting opportunities, a way to grow our partnerships in these markets. I think if we start looking at how we weigh the pros and cons, obviously, the flip side of doing a partnership is that we have to share our revenues with a partner. That's the flip side. That's a downside. Obviously, a partner expect to get a little bit of the revenues in return for offering more sales. If you look at the opportunities, and they are quite enormous, actually, it's about reaching segments that wouldn't necessarily have chosen Viaplay without help from a distribution partner.
It's about, you know, growing faster in certain segments, and it's about often getting into a package where you can reach a higher penetration than what we would normally be able to do. Often you also see that these types of segments have a lower churn. It's not always about ARPU. We have discussed a little bit today the importance of ARPU, but it's also relevant to discuss what the lifetime of a customer when you bring them in after hard work and marketing, for how long would they stay until they decide for some reason to leave you again. ARPU is important, but also lifetime value is super, super important. We try to weigh all these factors in and try to see how can we find an interesting partnership with the relevant distribution operator in the various markets.
It's not always easy, but if we are willing to make individual partnerships, make sure that it fits the operator strategy, we can start find something which is a win-win to us and to the partners. That's important. If we look at our footprint, at least some of it, and this is where I will zoom in on, it's the Nordics, and it's the continental Europe. That's where I will give you a few examples. Obviously, in the Nordics, we have a more complex offering given the linear presence in those markets, but it's a little bit more simple structure in the markets outside the Nordics. Let me start by looking into the Nordics where you have a population of 12 million households of which the partners represent roughly 10 million households.
The potential partners in the Nordics represent almost 10 million households with, you know, TV and mobile and what have you not. We are working with all partners, not in all markets, but we're working with all relevant partners in the Nordics. They represent a value of around pay TV for pay TV, roughly, SEK 35 billion. They represent 10 million households and total value of nothing less than SEK 35 billion spent each and every year on great content, sports, movies, and local content as well. That's, of course, an interesting opportunity for us. If I can give you a few examples, and let me start here in Sweden. It's a well-known partner of us, of Tele2 here.
We recently renewed the partnership and luckily, we find a completely new way of distributing our content on Tele2's various products. I must say that Tele2 decided to completely change their proposition recently when they announced that a part of all their TV packages they now include Viaplay. Disregard whether deciding a cheap package at the price of SEK 299 or a more expensive premium package at the price of SEK 799, you get Viaplay included. That means 100% penetration within TV Tele2's universe within their segment. That's, of course, extremely interesting for us because even us being a super business, reaching 100% is a quite interesting penetration for Viaplay.
In that way, you reach families that have not necessarily considered buying Viaplay, but over time will start using the service and hopefully will really, really fall in love with Viaplay and enjoy our service, but also stay longer with Tele2, and hopefully more customers will join Tele2 because of Viaplay in the future. Super interesting. That was a bold move by Tele2, and I must say they migrated all their customers into new price point and new packages. That's a quite troublesome exercise. Of course, for new sales, they now have different types of packages which attracts more customers, already proven. They also have a universe outside the TV business, which is broadband and/or mobile. Hundreds of thousands of households who haven't bought a TV package but have mobile or broadband.
Before this agreement, they offered their own streaming service called Tele2 Play+, and since June, they have added Viaplay into the same streaming offers. That means if you buy a Tele2 Play+ service, you get all their streaming content plus Viaplay in a bundle at a low price point, which is SEK 149. It used to be SEK 89, but by increasing the price from SEK 89 - SEK 149, you get Viaplay included. It's a very attractive price point. It's a very new journey, and they only just begun, but I think it has amazing opportunity for Tele2 and also for Viaplay to be in such package when the consumers start to getting to know this product.
If we leave the Nordics until we return to the conclusions, I would like to talk about two of the bigger markets, which in size actually has a combined value which is higher than the Nordic markets. The pay TV market is roughly SEK 38 billion in Netherlands and in Poland. In size of several households, it's of course a fantastic opportunity for us being a new service in these markets. In Netherlands, we have four partnerships. We're basically represented in almost 100% of the households, technically. In Poland, we work with roughly 44% of the households via the partners we have in these markets. Let me just start looking at a new partner we just welcomed when we introduced our service in the Netherlands.
It was actually the former holder of the Formula One rights in that market. You can imagine that the first meeting was a little bit special since we took over the Formula One rights, but they are super professional, so we actually quite soon got into a constructive discussion about how could Viaplay service be a perfect fit into their offering. It is offered as an à la carte service where you buy it on top of a TV tier, which was proven to be an amazing success from the very beginning when we launched in March. What we did in Netherlands was on top of launching Viaplay because we knew that streaming on sports was relatively new in that market, we decided to launch Viaplay Extra, which is a linear channel.
Instead of just launching a streaming service without linear exposure, we decided to launch also a linear channel, which was a way you could argue to educate the viewers in the Netherlands trying to migrate them slowly from linear TV into the Viaplay service. What you get on this channel is the Formula One races, but you don't get all the movies or the local content, and you don't get Premier League. Obviously, the value of the service is much higher when you watch the Viaplay when you watch the content on Viaplay. Really, really interesting learning how you can use the linear channels to migrate customers from the linear world into the streaming world. That is something that we have really, really taken with us.
When we acquired Premier League and just before the start of the season here in August, we actually signed a very, very interesting and innovative agreement with a new partner in Poland, namely with Canal+. Canal+ is a bouquet of sports channels and movie channels, but it's also a service via satellite. They are a leading satellite provider in Poland. When we acquired Premier League, we were in discussion with Canal+ on trying to find and structure the deal which actually allow them to give access to Premier League, which was of course key to them because they have been the rights holder of Premier League for quite some time. For us it was interesting to tap into the territory and give them a chance to offer Viaplay to their customers.
What we decided and agreed was that they have the right to select two matches from Premier League from each round, and also they bundle Viaplay as a hot bundle into all the premium segments. Over time, all the premium sub-subscribers from Canal+, they will enjoy Viaplay. That's an amazing opportunity for us in a relatively new market to be able to get in contact with so many customers from Canal+. That is really a major opportunity for us and hopefully also for Canal+ and their customers. That is of course as important. If we leave Poland and actually the size of two other markets such as U.K. and also North America, it deserves full attention. But given the time constraint, I will not dwell too much on it.
It's a little bit unfair to the size of the market and also a little bit unfair due to the interest in and popularity of Nordic content in the U.K. and in the U.S. It's important to say with the acquisition of Premier Sports, we already have a footprint with access to customers. Our partner Sky, Virgin, and actually also Amazon, they are reaching roughly 84% of the households in the UK market. This is a new opportunity for us. We believe we can build the Premier Sports experience now with Viaplay and more sports rights. It's also a great opportunity for us to be able to offer the Nordic content to this huge population in the U.K. Really interesting.
If we focus on the North American market, which hasn't really started yet, we have not yet launched our app in this territory, but we will. Let me just comment a little bit on what Philip mentioned early on today. We have now signed a deal, an agreement with Roku, and as Philip explained, it's basically two types of agreement. One allowing us and them to, wherever we are present and wherever they are present with the Roku device, our app is integrated on their device. Just similar to when you use a Chromecast as a way to watch Viaplay on your big screen devices. I'm even more excited about the opportunity to work with Roku in the U.S. They represent almost 65 million households in the US markets.
They are, as far as I know, the most successful channel partner in that market. They really know what they're doing. Of course, we're super proud about our content and we have, you know, so much belief in our content, but these guys, they would not have done a deal with us if they didn't believe and know that there is a huge appetite for Nordic content. That's going to be really, really interesting to see how much value we can drive out of that deal with Roku in the U.S. I'm happy to talk more about that when we see each other next time after we have launched in the U.S. If I can summarize a few of the key takeaways.
We strongly believe that B2B agreements, distribution partnerships, is a very interesting complement to our D2C business. We are mindful about how we make them right so they fit the strategy of the partners. It's not a one fit all. We want to do it in a way so we are mindful about reducing the churn, increasing the lifetime, and creating value for the partner and for us and for the customers. We have proven we can do it in the Nordics, where we work with our linear channels and Viaplay. We can actually modernize the way that content is packaged in the Nordics, increasing the value for us and the partners. We are proving that we actually successfully can launch streaming service in new markets where streaming is a little bit less mature.
Customers will learn, with help from us, obviously, how to enjoy great content on Viaplay. That was all for now. I think I have to sit down now.
Great.
Yeah.
Thank you very much, Kim. Grab a seat. We have our final special guest in this organized part of the session anyway. Bjørn Ivar Moen who comes from as CEO of Telenor in Sweden, so one of our established partners. Before I get to your questions, I guess a couple for you, if I may.
Sure.
You've obviously decided to partner with us, with Viaplay Group, not to pursue acquiring content on your own rights, if you like. What drives that decision, and how do you think about the partnership moving forward?
Yeah. Thanks, and thank you for having me. Good to be here. A couple of reasons really. You know, we are a mobile operator. That is a massive task, right? You know, we're moving from 4G -5G. We're building out base stations all over the country. We need to abide by security rules. We need to comply with, you know, frequency regulations. There are a ton of things to do just on the network side. On top of that, we obviously need to provide a good service in itself to our customers. That's a massive undertaking. That's also what we really need to be best at. That's where we play. That's where we need to win.
We see that there are other players, for instance, Viaplay partnership that goes back a long time, that does content a lot better than we can do. They are good at what they do, we are good at what we do, and the combination we feel is really, really strong, and that enables us to then take out good offers into the market when, you know, building on both sides, on strong sides from both sides.
Okay. No, great. Now maybe just take that a step further. I mean, as we head into a period now where consumer spending is gonna be under more pressure, people are gonna be looking at their wallets, digital and otherwise, with more attention, how important is content for you in the mix of what you provide to your customers?
Yeah, you're right, of course. It is a demanding market, isn't it? It's a changing environment, and it's changed, and changed really fast. What we see is, of course, that, you know, communication is still going to be really important. Some people are not going to stop using their mobile phones. But their preferences might change a little bit. They're looking for that good deal. They're looking for good offers. And when they are consuming, you know, our services as well as content, great content, they were looking for that good deal. We need to adjust to that, make sure that we have the right packages available for our customers, and also promote that good, strong bundle that creates value for the customers, both with respect to great mobile services, great content, and that good deal, if you will.
Great. Okay. Well, listen, I'm gonna open it up to the audience now. Does anyone have any questions for Bjørn or for Kim? Again, you're gonna have to raise your hands. Anything here? Yes, down here. Sorry, same. Down at the bottom. Thank you.
Maybe if we just go back to the B2B ARPU graph from the beginning of the presentation where it was relatively flat over the course of the year. I remember Enrique mentioned that the previous times it took to renegotiate or get those price increases or those packages was six-12 months. I think about Q3. You know, if the finished price increase was in Q1, had that just not gone through your B2B subscribers packages by that point in Q3? Or is it more just a mix effect? That's just my first question.
Yeah, which I guess is for you.
There was no second?
Well, let's do the first one first.
I think, yeah. If I can just start by commenting on the six-12 months because it is, unfortunately, a bit more complex than so. If I can just try to explain that we have two types of deals. We have the hard bundles, where a certain operator know that the entire base will get access to Viaplay, let's say, for three years. In these types of deals, we have pre-agreed inflation already. We have agreed what will the inflation be year on year. Then you have the a la carte agreement, where the customer decides to buy Viaplay on top. In these types of agreements, we normally have a very short notice that we can work with price increase. Most agreements here, the price is related to the resale price.
When we increase the price by 10%, you would normally see an ARPU increase with no elasticity, which will go up with the same amount. The exception is, of course, new deals. When we do sign new agreements in this quarter or in any other quarter, obviously, there is an introductory offering which can affect the ARPU short-term, but over time, it should stabilize.
Okay, great. If we're thinking about Tele2 now, I remember on their earnings call, they said that a lot of the migration on their end had finished for that year. Of the remainder of their subscriber base, how much of a tailwind can we expect into next year? I mean, has the majority of it been done this year? Is there only a very small amount into next year?
End of this year, the majority of the Tele2 base is migrated. There will still be a few in 24 months binding, but obviously, they're trying to migrate them as well because it's also appealing for them to go to the new packaging structure with Viaplay. The majority of the subscribers they have migrated end of this year from Tele2. Obviously, we hope that the streaming proposition will be successful, so they can bring in new customers as well.
Great. Thank you.
Good. Any other questions in the audience?
There was a question about churn, if I can remind the person.
What? Sorry.
Sports churn.
Okay. I'm just having a look here to see if we have anything else online. Just one second.
Someone asked Peter about the sports churn. If I can answer that while you find the next question. Is that okay?
Yeah.
Is that okay with you?
Wait, you wanna bring him back, do you?
No. I'm not bringing him back. I would never bring Peter Nørlund back. I promise you. No, there was a question around if we are concerned about sports churn during the World Cup. I'm mindful. I'm not concerned. I'm mindful because I know, of course, it is a risk. It's a known risk and we can plan for the risk. We know exactly what these households enjoy to watch. We can plan what we will launch in Norway and Sweden and in Denmark, making sure that they still have a great service. In Norway's example, we are launching Gulltransporten, and we're launching the third season of Pørni. It doesn't have to be sport to retain them. It doesn't have to be sport. There's still a lot of sports we're yet to enjoy.
Also remember that we have a lot of learnings from the summer churn, which is actually quite low. I'm not concerned, but mindful.
Okay, good. Glad we covered that. A question from Omar Sheikh at Morgan Stanley again. How do you ensure that your B2B partners are incentivized to sell Viaplay packages as well as or instead of their own content packages?
Yeah. If they make a cut of the revenue, they are incentivized, of course. They're also incentivized because it's proven that churn is reduced. If you add Viaplay to a TV package, churn will be reduced because you enjoy Viaplay, so you watch it more, and you stay with the service. I strongly believe, and it's proven, that Tele2 will get a lower churn going forward after Viaplay is added to all the tiers.
Maybe I can ask you the same question. I mean, when you think about the soft versus hard bundle structure, how do you think about that from your perspective in terms of what you're offering customers and how you structure the arrangements?
You know, based on the agreement that we have, we're really building on what we have been doing so far, right? We have had this content in our packages earlier. Now we're basically taking it one step further with the new agreement. We also, we're bundling then Viaplay as a service into a lot of our packages. What we see is that when we engage our customers on that, when we have that bundle in place, people do engage in it. Engaged customers usually are also giving low return rates.
Okay, great. Maybe a slightly provocative question again from Morgan Stanley. Your B2B agreements are good for scaling the Viaplay platform now, but wouldn't it make more sense to wholly own the customer eventually? Guess it's for you, Björn.
Sorry, I didn't hear the last part.
Okay. I mean, basically he's saying the B2B agreements are good for scaling the platform now, but ultimately doesn't it make more sense to own the customer directly in a D2C environment?
No, I don't think so. First of all, you have to respect and it's proven that we reach customers that you wouldn't necessarily reach via the D2C offering. Secondly, it's very important for our decision-making, is that improving the duration of the lifetime is extremely important to us. It's not just the ARPU. If they stay two years, three years instead of one year, it has a major upside for us. It's very important.
Great. Okay. Any other questions from the audience? No? I think just one final one for you, Björn, if I may.
Sure.
The obvious one, your favorite Viaplay show.
Viaplay show.
Yes, please.
Yeah. Phew. I like a lot of the content. I'm a Bundesliga fan. I love the sports and the fact that you are distributing Bundesliga, and that right was actually without a taker in Norway for a little while. That was terribly frustrating. Very good that that is in place.
Okay.
On the original side, I love the show Fenris.
Okay.
I think that really, in my mind, is a little bit representative of what you do well, because it's a show that is depicted in a region of Norway. It's a small city. It really is a crime drama, but it tells a story also about the conflict in a small society about the opinions on the wolf, right? On this, you know, whole wolf topic where, you know, somebody wants to defend it, make sure it thrives, and somebody only sees it as a danger. It was really, you know, I and my wife come from that region where it was filmed, and it was spot on. I think it was really, really well made, and it's one of those shows that we just had to consume like that.
Brilliant.
Very good.
Okay, thank you very much. Great way to end. Thank you both very much indeed. Thanks.
Thank you.
Okay, we're now on to what we bill as the series finale. We're back to where we started. Anders is gonna come on stage to wrap up, and then I'll come back afterwards. Anders, welcome.
Thank you. Thank you very much. Is the sound on? No? No? No sound?
It's just coming, I think.
We'll just wait for sound. Okay.
Okay, his little assistant's coming.
Matthew, can you sing for us?
I don't think you really want me to sing.
No.
Not quite yet, anyway. Okay, is that working?
Now, now? Yes.
Yep, there you go.
Okay. Yep. I spent a little bit extra time in the beginning, so I will not spend much time at the end. I just wanna say thank you, first and foremost, to all of you here and all of you out there online. It's been a very well-attended CMD again. Thank you very much for your interest in our company. I started out saying that we hope to be able to demonstrate how we are building a sustainable entertainment provider. I hope that we have achieved that goal. I also hope that we have achieved the ambition to address some of the concerns in the short to midterm perspective to explain what it is we're building over time.
Mostly I'm proud of my team here today, for everything that they have put through and everything that they have told you, to sort of bring you on board on everything that we are doing. Thank you everybody, buddy, that has worked so hard today, and thank you to the organizers as well. I would like to, you know, stop by saying something positive about us, but I thought it better if I had somebody else saying something positive about us. I decided to ask a world champion to do it. Thank you very much for today.
Hi, my name is Max Verstappen, and I'm the reigning and double F1 world champion. I'm very happy with my cooperation with Viaplay and we'll create a lot more of great content together. They're fast, they're innovative, and they're winners. I hope you've enjoyed the CMD, and have a great evening.
Thank you very much for today.
Great. We've had a little name card upstairs all day with Max Verstappen written on it, and everyone's been saying, "But is he coming?" I've said, "Yes, he is." Well, he's come, but he hasn't come physically, but he's been here digitally. What we're gonna do now is move into the club lounge, which is literally just around here. We've got various people coming in there. Camilla Läckberg and Alexander Abdallah initially with Filippa just doing a short interview talking about some of the themes that we were exploring earlier on sustainability. We've got an exclusive performance by Eagle-Eye Cherry. I hope you will stay around for the next hour or so, have a drink and some food with us, and enjoy those performances. Please move through when you're ready. Thank you so much.