NENT Group, the Nordic entertainment provider, has reported Q2 sales of SEK 2,624 million (€256m) with organic growth of -13 per cent reflecting the impact of Covid-19.
Viaplay paying subscribers were up 206k QoQ and 605k YoY to 2,716k following high intake and low churn levels. FY20 intake target recently raised to 600k.
Viaplay sales were down 4 per cent due to proactive and temporary reduction in sports package prices.
Anders Jensen, President & CEO, commented: “Q2 was an unprecedented quarter in many ways. Not only have we been dealing with the effects of the Covid-19 pandemic but we have also closed the merger between Viasat Consumer and Canal Digital, launched Viaplay in Iceland, announced the expansion of Viaplay to the Baltics, teamed up with Elisa in Finland, raised our Viaplay subscriber intake target again, delivered on our cost cutting programme, partially refinanced ourselves and launched an updated reporting structure. We will come out of this crisis stronger and even better positioned. The credit for this goes to the fantastic dedication and focus of our teams during these challenging times.
Our organic sales were down 13 per cent due to the various impacts of Covid-19 on our subscription and advertising revenues. Viaplay’s exceptional subscriber intake continued into Q2 with 206k paying subscribers added (QoQ). Viaplay revenues were down 4 per cent due to the temporary price reductions that we proactively implemented at an early stage of the crisis for our sports customers. Now that the majority of sports have resumed, prices are back to normal and Viaplay is performing very well.
We ended the quarter with over 2.7 million Viaplay subscribers, up 605k or 29 per cent YoY. Streamed minutes, excluding sports, were up 42 per cent YoY in Q2, while streamed minutes of sport were up 10 per cent in June and 116 per cent so far in July. We recently raised our FY20 Viaplay subscriber intake target from 400k to 600k to reflect this very positive momentum.
Other subscription revenues were down 34 per cent due to the deconsolidation of Viasat Consumer, as well as the temporary sports package price reductions by third party distribution partners.
Advertising sales were down 30 per cent as expected, but we have seen a substantial improvement in July. While still early days, we expect our advertising sales to be down substantially less in Q3 than in Q2.
The sales process for the non-core part of our Studios business is proceeding according to plan. Revenues for the continuing studios businesses, which will primarily provide content for Viaplay, were down 57 per cent as all large-scale productions were postponed to H2 or early 2021. We still expect to premiere approximately 30 Viaplay originals in 2020, and up to 40 in 2021, if the gradual return to full production capacity continues.
Our EBIT before associated company income and IAC was down significantly, due to the lower advertising and sports subscription revenues, as well as the deconsolidation of Viasat Consumer. We have taken the remaining costs for the current football seasons that have restarted, while costs for other sports events that had not restarted in Q2 will be taken from Q3. The savings from the 2019 transformation and 2020 Covid-19 initiatives amounted to SEK 300 million in the quarter, and we continue to expect savings of over SEK 900 million for the full year.
The merger to create Allente gave rise to a number of effects in our results, including a substantial capital gain and our share of Allente’s net result after restructuring charges. On an underlying basis, the business continued to perform as expected, and is focused on delivering the SEK 650 million of cost synergies, as well as the upselling of Viaplay to the Canal Digital subscriber base.
Our overall performance in Q2 has demonstrated the resilience of both our products and people, as well as the relevance of our streaming strategy. While the impact of the pandemic is far from over, our priority is to deliver the best possible customer experience and this is reflected in our content being more popular than ever. Our technology platform has again proven its agility through this volatile period and, following the successful launch in Iceland and the announcement of our expansion to the Baltics, our vision is now to scale Viaplay even further, with the addition of 15+ markets in the next 5+ years.”