Nordic Entertainment Group (Nent) is billing its Viaplay service as the “international streaming challenger” but its overseas growth strategy certainly comes with a heavy dose of home.
In his presentation at Nent’s annual Capital Markets Day in late September, chief executive Anders Jensen made it clear that the company’s Nordic roots will form a major part of Viaplay’s identity overseas. It seems a smart move as there are a lot worse jumping off points when it comes to geographical branding than Scandinavia.
In the last 20 years Sweden has been the birthplace for one of the world’s most successful innovations in Spotify, whilst more recently its fintech scene has produced the likes of Klarna and iZettle. Culturally the region also punches well above its weight, with the demand for ‘Nordic noir’ stretching well beyond northern Europe.
Already active in Sweden, Norway, Denmark, Finland and Iceland, Viaplay recently expanded into Latvia, Lithuania, Estonia and Poland. Canada, the UK, Germany, Austria and Switzerland are all now being added to the service’s expansion territories on top of previously announced moves into the US and the Netherlands. If current targets are met, it will be available in at least 16 countries by the end of 2023.
For the majority of these new territories the offering will be a direct-to-consumer (DTC) streaming proposition built on entertainment content. However, while Scandi drama is certainly attractive, Jensen openly admitted that a key driver for Viaplay’s more ambitious territorial expansion markets is live sport.
In Scandinavia, Nent is already a major player in the pay-TV sports sector. An expanded broadcast partnership signed with the Premier League in 2020 not only secured one of the region’s most popular sports properties under a landmark six-year term until 2028, but will also see the company shell out a reported UK£2 billion over the course of the contract. Clearly, this is no shrinking violet.
In Latvia, Lithuania and Estonia, Viaplay launched with a live sports offering that included the National Hockey League (NHL), one of the most popular properties in the Baltic region. In Poland, the marquee initial offering was German soccer’s Bundesliga, while in the Netherlands it is the acquisition of Formula One rights that has caused the biggest splash thanks to the clamour that surrounds Dutch driver Max Verstappen. The global motorsport series, it should be said, has been an underpinning element of many of Viaplay’s new market launches.
Building the portfolio
The man driving this part of Nent’s expansion strategy is chief sports officer Peter Nørrelund, who took up his current position in August 2020 and has an association with the company stretching back nearly 20 years. Since his appointment, Nent has signed more than 25 sports rights deals, with a significant number of those being tier one international properties in new territories.
“Given that it is a field where long-term planning is required, and we are not the only [sports broadcaster] on the planet interested in these properties, it has been a good year,” Nørrelund tells SportsPro as he reflects on the last 12 months.
As of Q2 2021, Viaplay’s subscriber total stood at more than 3.28 million. The subscriber target for the streaming service is 12 million by the end of 2025, with Nent looking for an even split between the Nordic region and overseas. According to Nørrelund, Viaplay is “ahead of our plans”.
Peter Nørrelund, Nordic Entertainment Group’s chief sports officer, has masterminded its rights acquisition strategy
The platform’s expansion into the Baltics was already announced prior to Nørrelund’s current appointment and he admits, upon reflection, that the initial offering of NHL, Formula One and Bundesliga was still a little “slim”. However, lessons were learned quickly and, in the Netherlands in particular, no such accusations could be levelled in Nent’s direction.
Formula One, buoyed by a new home Grand Prix and the rising star of Verstappen, is joined in a rights portfolio that includes two of European soccer’s biggest properties, the Premier League and the Bundesliga. A deal with Matchroom for PDC darts also looks shrewd with Michael van Gerwen’s home appeal not likely to waver anytime soon.
“I will try to be humble, but I think we have never seen a new entry into a market with such a strong sport portfolio at the same time,” says Nørrelund.
The Premier League will also be added to Viaplay in Poland, Estonia, Latvia and Lithuania from the start of the 2022/23 season, with the Baltic services also having recently started broadcasting the Uefa Champions League. The second-tier Europa League, which regularly features a handful of Ekstraklasa clubs, was also picked up in Poland and is now live.
“It is complicated to launch in new markets with sports,” Nørrelund says, “because all properties are tied up with others and if a property in sports is not held by anyone, then it’s not an attractive property. So therefore, of course, you need timing.”
We have never seen a new entry into a market with such a strong sport portfolio at the same time.Peter Nørrelund, Chief Sports Officer, Nent
The Nent approach
The traditional three-year rights cycle for the European sports broadcast market has certainly played a part in Viaplay’s rapid expansion. Major soccer rights holders such as Uefa, the Premier League and the Bundesliga go to market in such timely order that it allows a new entrant to snap up an array of content in a short space of time.
In 2018, when DAZN was pushing into Italy and Spain, it seemed as if rights deals were being signed daily as the new entrant hoovered up content to build out its offerings. As a consequence of the pandemic, the UK-based media company has since become more selective about where it spends its money.
Nent’s own expansion has always been more studied, following Nørrelund’s three-pillared approach for building a sports portfolio.
“You definitely need football,” he says plainly. “If you want to run a sports subscription business, football is the main thing in any country, in my opinion, and that will be even more clear in the future.
“So you need football leagues, you need seasonality – week in, week out – as it is subscription services. That is a box we need to tick and that we have done now for all our markets – in nine markets with the Premier League until 2028, and ten markets with Bundesliga until 2029.
“Then our learnings from the Nordics are also that motorsport in general, and Formula One in particular, is a very interesting driver for sports subscriptions because Formula One fans are a bit different from football fans. There’s not so much overlap, meaning we will get additional subscribers by having Formula One. That [property] we have also secured in all our markets.
“Then the last thing is what I call specialist content. So when we are talking about the football vertical and the motorsport vertical, we are talking about global premium sports rights. Then we have the last category that we need and that is locally relevant content.”
Premier League soccer is a key part of Nent’s rights portfolio across Viaplay’s expansion markets
In the Netherlands, Nørrelund says the popularity of Van Gerwen makes PDC darts “a very, very good local property”. In the Nordics the regional focus is on the FIS-sanctioned winter sports properties, which were snapped up on a five-year deal via Infront and are set to debut later in 2021.
In the Baltics, the NHL is a strong draw, albeit not local, while in Poland exclusive rights to the Bundesliga – where Robert Lewandowski, the country’s biggest soccer star, plies his trade – ticks that box.
When it comes to identifying the opportunity for an expansion market Nent conducts data-based research on the properties that are of interest locally.
“That is fairly easy to find out – we are talking about mass media here,” quips Nørrelund.
Where it gets more complicated, especially as it relates to a streaming service, is weighing up a market’s technological capability and assessing if it has the suitable conditions for growth.
Poland has 14 million households, making it Nent’s single biggest major market by that metric. According to ICT Markets, Poland’s per household subscription video on demand (SVOD) rate will reach two by 2026. By way of comparison, the Nordic region is already at 1.9 and is expected to hit three by 2025.
The Netherlands’ per household SVOD number is 1.6, according to Nent’s figures, and is projected to hit 1.9 by 2025. Ampere Analysis pegs the potential annual revenue from the sector at €845 million (US$1.03 billion). However, Jensen said he expects that figure to better those estimations as a result of Nent’s entry, describing Viaplay as a “market maker” for streaming services.
Nørrelund, too, is bullish on the opportunity for Viaplay in both markets.
“The Netherlands has a 99 per cent broadband penetration and 80 per cent pay-TV penetration, so that’s an advanced market in that respect,” he says. “Poland has really quickly grown its broadband. Of course, it is super important when you are launching an OTT-only service that you actually have the distribution landscape which makes it possible to go direct-to-consumer.”
You can say we have had a tough upbringing. The Nordics has been the most competitive place in Europe when it comes to sports acquisitions.
It may seem obvious, but other factors Nent considered upon its entry were potential competitors, the rights landscape, and how much exclusivity the market affords. While Formula One’s F1 TV Pro product is active in each of Viaplay’s new territories, Nørrelund does not see it as a competitor, saying that the over-the-top (OTT) service is only for “really, really hardcore fans”.
In the Netherlands the deal for Formula One rights, worth a reported €30 million (US$36.6 million) annually, caused a stir. Viaplay will air six races per season for free, including the Dutch Grand Prix, but much of the series’ large local fanbase had previously been able to watch Formula One at a subsidised rate as part of a basic package with telecommunications firm Ziggo.
Nent has not yet announced its pricing structure in the Netherlands, but will be aware that asking fans to start paying significantly more for the same product is hardly ever a successful strategy. In this area, Nørrelund feels Nent’s experiences closer to home have made it battle-hardened. In the Nordic region the media company has had to battle all types of rival broadcasters in the sports space to establish itself as a respected player.
“You can say we have had a tough upbringing, because being in the Nordics where I have done deals now for almost 25 years – and I think that everyone in the industry would agree with me – that has been the most competitive place in Europe when it comes to sports acquisitions,” he says.
“[The Nordics] have strong public-service players who have bought through EBU, we have strong local commercial channels which have acquired rights, we have had several telcos acquiring rights, we have had international pay-TV companies – there has been a huge competition.
“When you’re competing on rights, you have to pay pretty good sums for them and they have to be renewed every three years also – that demands great skills in terms of the monetisation. There, we think we’re quite good.
“If we look at our two big new markets, Poland and the Netherlands, they have not been subject to the same competition over the years. So that also means that in our opinion, it was attractive entry points to go in and acquire important rights.”
One area that Nent sees an advantage is its ability to acquire a similar set of rights across its territories. With Formula One, for example, when the rights go live in Finland, Poland and the Netherlands, Viaplay will be airing the series in ten countries, making Nent its second-biggest broadcast partner after Sky Sports. That carries certain privileges, such as a prime studio location in the paddock, reporters on the grid and local commentary teams on location.
“We can produce a lot of content which is relevant to insert in all the local broadcasts in the countries, so there are of course advantages of scale in multiple territories like this,” Nørrelund explains.
Nent is Formula One’s second-biggest broadcast partner after Sky Sports
The same multi-territory advantages apply to the Premier League and the Bundesliga, but not only has Nent secured those properties across the majority of Viaplay’s markets, it has also done so with rights contracts that run for double the conventional three-year deals typically seen in Europe.
Timing, as Nørrelund previously points out, is crucial when negotiating sports broadcast deals. The Nordics was the first territory where the Premier League launched its tender for the 2022 rights cycle and, with Nent having previously pushed for such an option, it was also the first market where English soccer’s top flight offered a six-year contract. The resultant deal was announced in February 2020 and with the pandemic taking hold barely a month later, it looked a masterstroke for the Premier League as the rights market subsequently entered a period of severe volatility.
In hindsight, the agreement has benefits for both sides. At a reported 20 per cent increase on its annual fee, Nent added another country, Norway, to its existing Premier League contract and locked in a key piece of content for its pan-Nordic offering for more than half a decade. By the time Nent came out on top of tender processes for Poland, the Netherlands and the Baltics in mid-2021, the Premier League’s move to double contract cycles delivered much-needed security for the rights holder just as much as the broadcaster.
Having already established its new model with the Premier League, Nent was then able to enter direct negotiation talks with the German Football League (DFL) for the Bundesliga with an example of what could be done. Having originally signed off single-cycle deals for the Nordics in February 2020, and Poland in November of the same year, Nent returned to the negotiating table in April to add the Baltics, as well as putting an extra four years on all those contracts. An eight-year deal with the DFL was also later announced for the Netherlands.
“They also liked our arguments, I must say, after we had discussed it for a while,” says Nørrelund. “That was of course also a big decision for the Bundesliga to go above and beyond their domestic deals, which are two to four years at a time.”
If it is the right content, I would love to do 20-year deals. I know that is not possible, but we have 30 years of experience on how this works.
This strategic approach, Nørrelund says, provides security but also signals to Nent’s expansion markets that Viaplay is in it for the long haul.
“We are not looking at our competitors – no, we are making our own plans,” he says. “Long-term deals are, of course, a proof of the seriousness when we go into a country.”
Expanding on that approach, he adds: “If it is the right content, I would love to do 20-year deals. I know that is not possible, but we have 30 years of experience on how this works.
“We know what it takes to get our business to the levels we want. We know what kind of content we need to do that and when we have identified that content, then I would like to do as long as possible. I will not do it with any content owner. You know with the Premier League that, in ten years’ time, it is very likely still the superior league in the biggest sport on the planet.
“The deal done with the Bundesliga, I’m really, really happy with. There we were pushing for two cycles – eight years – because you have the Premier League up here [at number one] and then probably La Liga at number two, with the Bundesliga and Serie A shifting between three and four. I think if we look three years ahead, we will still have Premier League up here on top and we will have Bundesliga as a very clear number two.
“If you look at the macroeconomics in football, the Bundesliga clubs are in really good shape, they have lots of spectators, they have the 50+1 rule, which they may eventually lift so they can get further investments into the clubs.
“The German clubs in general in the future will be in a much better financial shape than the La Liga clubs and the Serie A clubs, meaning that the second-best pool of players in the world will go to Bundesliga.”
Denmark’s Superliga is the only soccer property that Viaplay covers domestically
Local service, international outlook
Looking across the Nent portfolio, both in the Nordics and in its expansion markets, a property that is consistently absent is domestic soccer, with Denmark’s Superliga the only exception. Nørrelund confirms that it is a deliberate strategy to focus on the major international properties, with bids on domestic soccer seen as a more opportunistic play.
“In Norway and Sweden, for example, the Premier League is much stronger than the domestic league,” he says. “So there we decided to go for Premier League, then go for the Europa League and the Conference League with the hope of getting some local teams in there.
“As it turned out there were no Swedish teams this year, but that’s also the beauty with this world that sometimes it goes like that.
“We are definitely open to the local leagues, but our core DNA is to have the biggest international premium sports. Football is more and more globalised. When I grew up I was interested in the Danish clubs, my son is not.”
Nørrelund also fairly points out that neither the Dutch Eredivisie nor Ekstraklasa in Poland were on the market when Viaplay made its initial plays in those markets.
In the Netherlands, Disney holds the Eredivisie contract until 2025 via its joint partnership with the league and the KNVB, Dutch soccer’s governing body. That property could be set for a shakeup with Belgian soccer’s Pro League clubs voting in favour of a merger with the Eredivisie earlier this year.
The Ekstraklasa is also off the market for at least a couple of seasons after the league sought to bolster its financial security amid the pandemic last year by extending its domestic broadcast deals with Canal+ and Telewizja Polska until the end of the 2022/23 campaign. That four-year contract is worth PLN1 billion (US$252 million).
Whether Nent moves for those properties in time remains to be seen, but Nørrelund says that it will assess the domestic soccer options for Viaplay every time they go out to tender.
“Don’t get me wrong, it’s important content,” he adds. “We have broadcast the Danish league for 23 years so it’s not like we can’t do it. If we approach it, it will be on an opportunistic basis.”
Keeping it original
One of the major themes of the pandemic has been the increased focus for sports broadcasters and rights holders on producing original content. The PGA Tour is the most recent to be linked with the fly-on-the-wall Netflix treatment, while the National Football League (NFL) expanded its HBO-produced Hard Knocks series for a 2021 in-season edition with the Indianapolis Colts.
Given its background in original content, it should be no surprise Nent is making its own moves in that field. A drama series on Swedish NHL legend Börje Salming (pictured right) was commissioned earlier this year and will shoot in 2022. That will be an English-language production in order to appeal to as broad an international audience as possible. Incidentally, Nørrelund confirms that Nent will be taking a similar approach to most of the original sports content it produces.
For Viaplay, relevance across its various territories and the possibility of selling those in-house productions in dark markets will primarily inform commissioning. Nørrelund himself seems enthused with the success enjoyed by Formula One’s Netflix series Drive to Survive and says Nent is looking at opportunities within its rights portfolio.
“It’s funny, years ago, you only had the live sports events,” he adds. “Then we started to do pre shows and analysis afterwards – sports talk shows also had good viewing – and now we see these documentaries.
“Given that we are one of the biggest sports broadcasters on the planet – we are producing more live hours of sport than many others – [and] we have a division of people who are working with scripted and non-scripted originals, then of course, it is a natural step for us to do documentaries and series within sports. So that is certainly also an area we are investigating.”