Despite a weaker advertising market, total TV revenues are increasing. Streaming is shifting from paid towards free ad-supported services; ad income may return to production, and Viaplay will be ok.

The total Nordic TV/video market reached EUR 9.8 billion in 2023. Entering 2024, the market is likely to surpass EUR 10 billion, according to Swedish media research company Mediavision.

Mediavision’s complete TV market estimates include both advertising and paid subscriptions for broadcast and online, as well as cinema and public service.

The total TV market value should offer some encouragement to a production environment still bruised by a combination of high inflation, in some cases receding ad revenue, market saturation, and one case of overstretching.

“Despite a weakened general economy and a feeble advertising market, revenues are increasing. The number of paid streaming subscriptions is increasing and is now approaching a total of 20 million in the Nordics. And for the first time, online viewing exceeds viewing of traditional TV on a Nordic aggregated level,” Senior analyst and strategy consultant Fredrik Liljeqvist, Mediavision, said.

TV services, such as SVOD (subscription video on demand), TVOD (digital rental video), and AVOD (advertising-based video on demand) spearhead the market. They have grown 10 per cent yearly over the past four years. Growth has more than compensated for the two per cent yearly decline in broadcast TV ad revenues during the same period, Mediavision estimates.

”Nevertheless, last year the total streaming market slowed down to annual growth rates in the lower single digits. This compares to 2022, when all four Nordic markets grew by ~+20% year-on-year,” principal analyst in TV, Tony Gunnarsson at research and advisory group Omdia said.

Entering a new year, the question is whether there is a comeback in the cards for 2024 or 2025 for TV and streaming in the Nordic region, i.e., continued growth in subs and scripted commissioning returning close to previous high levels.

Gunnarsson sees no indications that current market shares will change significantly over the foreseeable future. As such, he doubts the Nordics will return to pre-2023 levels. According to him, the Nordic SVOD markets have reached early maturity. With few new services launching, the Nordics are settling into a slower pace of growth.

Advertising soon available on all streamers

Streaming as a media phenomenon is gradually shifting from subscription-paid services towards various cheaper/free and ad-supported services.

All major global services will likely have ad tiers by the end of 2024, Omdia predicts.

This oncoming shift in Nordic consumer preferences will materialise during 2024, streaming expert Claus Bülow Christensen suggests.

It is the next phase for the TV market, Omdia writes in “Trends to Watch: Media &; Entertainment Super Themes”. From a period of 10-12 years, in which TV packages and pay TV were swapped for subscription-paid streaming services - to a new phase where paid services are swapped for free or cheaper ad-funded streaming services.

"Both the TV business and consumers can spot the new phase, which will change quite a few things,” Bülow Christensen believes.

Netflix, Disney+ and the upcoming Max have introduced ad tiers, and are now improving their various ad-based options, so they match the needs of the advertising community, according to Bülow Christensen. As always, AI is a keyword. Better use of tech will give advertisers more precisely segmented placements.

"I expect 4-5 minutes of ads an hour, less obtrusive than what we know from traditional TV, and ads will be perceived more relevant. Streamers have accumulated massive data on viewer habits, and assisted by AI it is expected to refine advertising on streaming services in terms of placement, relevance, and frequency," Bülow Christensen said in an interview with talk radio P1.

Bülow Christensen expects less invasive advertising with placements around programmes and with ad breaks lasting just 30-60 sec.

It remains unclear precisely when Netflix will introduce ads in the Nordics; as well as the exact launch date for Prime Video in early 2024.

Gunnarsson goes on to speculate that SkyShowtime will introduce Nordic ads, since Paramount+ is moving ahead with ad tiers in other markets, and Sky has already begun testing in the UK.

New ad revenue flow back into production

Nordic streamer-broadcasters are losing traditional advertising income on linear channels, but the total TV market will likely be able to recuperate some money that will find its way back into content production, media agencies told Nordisk FIlm & TV Fond.

"There is certainly a possibility that some of the investments that “leave” broadcasters will be recovered by the advertising opportunities offered. If prices and target audiences add up," Chief Investment Officer Claes Braagaard, Omnicom Media Group Nordic, said.

"It's fair to assume that some of the TV investment now moving away from linear TV will flow back into the TV market. The ad market is looking to replace some of the missing impressions on flow TV, and they can be picked up on streaming services with advertising," Head of Broadcast, Bo Thierry-Poulsen, Dentsu Denmark, said.

Thierry-Poulsen believes Disney+ has shown potential with advertising sales, as the global streamer has entered a co-sales agreement with TV2 Denmark, and he anticipates Max arriving before the summer, and then Netflix at some point.

"But apart from TV 2 Play, we still need a sharper segmentation of streaming viewers," Thierry-Poulsen said.

At Havas, CEO Søren Bronee agrees that TV investments are now flowing from linear to streaming and video. But if streamers are to recuperate ad income back to the TV business, they must improve.

“Streaming ad products are still unsophisticated and not competitive with for example YouTube,” Bronee said. He is also expecting that advertising on streaming will mature with many more but smaller outlets, including ad products on Connected TV.

Troubled Viaplay will land on its feet

Viaplay’s drastic downturn this summer was largely about having overreached in terms of international expansion. The Nordic success story scaled too fast.

But Viaplay will land on its feet, and settle into a new Nordic role, according to Omdia.

“I think Viaplay is in a relatively decent position. It may not necessarily be able to greatly improve its market shares going forward, but at the very least it will be able to maintain its position as the dominant local pay-tv / SVOD service,” Gunnarsson said.

The shift from paid services towards free and ad-supported services could suit Viaplay well.

“Long-term, Viaplay is in a good position to exploit these shifts in TV and video viewing trends, partly because it already has a vested interest in linear TV and pay-tv (Allente), and of course notably Viaplay is already an experienced AVOD player (Viafree, now Pluto TV).

In early January, Viaplay hinted at a future realistic programme strategy. The goal is to commission "up to" ten original scripted shows per year across Denmark, Sweden, Norway, and Finland. In comparison, Viaplay premiered at least 40 in-house productions in 2021.

”It will be a mix of original content, scripted and non-scripted. This means more documentaries,” Alexander Tanno VP, Viaplay editor-in-chief, told Dagens Media. Originals.

Traditional streamer/broadcasters look ok

The traditional commercial streamer-broadcasters, TV4 Play, TV 2 DK, and TV2 Norway, were hurting through 2023 from inflation and receding ad revenue, but they look well-suited for the future.

“They are already leaning on hybrid ad-supported strategies. I believe the national streaming services are doing all right with slow and healthy growth,” Gunnarsson said. He went on to suggest that Nordic commercial players could benefit if they modernise their content strategies in 2024, seen from a business perspective. One example is TV4 Play’s major investment in the Estonia series, which Gunnarsson believes initially did not get the distribution and attention it deserves.