For the second consecutive year, Mediavision has asked stakeholders in the Nordic media industry to (anonymously) give their view on the market development in an online survey. Almost 200 people have shared their opinions and views. The findings from the survey, combined with our own reflections and insights, are presented in the Mediavision Nordic Industry Outlook.

If you would like your own copy of this report, free of charge, please send an email to julia.gotborg@mediavision.se

 

 

Ten years after Netflix made its’ debut in the Nordic countries – October of 2012 – what can we say about the journey so far? The launch was the real kick-start of the Nordic SVOD market, even if other companies also had begun their transformation earlier. But no doubt, Netflix was the true disruptor of the traditional TV industry. What has the development of Netflix been so far, and what is laying ahead in the very competitive Nordic market?

 

Netflix’s journey to become the streaming giant it is today started back in 1997, first as a DVD-rental-by-mail firm, in the US. But it wasn’t until 2007 that Netflix went into streaming. A few years later Netflix made its’ next strategic move: Premiering the first original series “Lillyhammer”, in February 2012, followed by the huge success of “House of Cards” the following year. And the rest is history… Netflix had started its’ ride to become not only a streaming platform, but also one of the world’s most prominent content producers.

“Lilyhammer” was co-produced with NRK, the Norwegian public broadcaster. This was perhaps an early sign of what over time has become a strong Nordic commitment. Steve Van Zandt, known from “The Sopranos”, both stared and co-wrote the series. During his first promotional tour he had to explain Netflix to the audiences: “Well, it’s like Blockbuster, but they’re going to make their own content”. At the time this often came across as confusing and somewhat odd.

In 2013, Netflix’s second original series “House of Cards” debuted, which went on to be the first original online-only scripted TV series to receive major Emmy nominations. Director of the show, David Fincher, also won the Emmy Award for “Outstanding Directing for a Drama Series”. With that success, Netflix’s journey towards being considered one of the top content producers had begun for real.

 

Immediate Nordic success

 

On October 15^th, 2012, Netflix launched in Sweden and shortly thereafter in the other Nordic countries. The Nordic streaming landscape was still at an early stage of development and with Netflix as a disruptor, things really started to change. 2012 there were only a handful of competing SVOD streamers; mostly local companies like MTG/Viaplay, TV2 Sumo and Elisa Viihde. 2013, only a few months after launch, Mediavision could conclude that Netflix had taken the #1 SVOD position in the Nordics. One year after launch Netflix’s Nordic subscriber base encompassed over 1 million households. And it pushed growth for other SVOD actors as well.

Today: Has the competition caught up to Netflix?

 

Four years after the Nordic launch, in 2016, Netflix reached 2.5 million subscribing households. That was approximately the same amount as all other SVOD services managed to attract together in this region. Netflix’s market share amounted to 46 percent (of all Nordic SVOD households) in 2017 – no doubt a market leader.

However, the launch of several other global SVOD services, combined with a substantial push of some regional players, clearly increased competition. While other streaming services enjoyed a boost during the pandemic, Mediavision analysis pointed at diminishing growth for Netflix, below the overall market trajectory after 2020.

On a global scale, Netflix for the first time in Q1 2022 reported subscriber loss. Fierce competition and password sharing were stated as reasons, as well as the closing of the Russian operations. Focusing on the Nordics as a total, Mediavision could ascertain that spring 2022 was quite tough for Netflix. The streamer was losing subscribing households also here, and for the first time.

However, despite the sharp increase in competition, Netflix has remained the Nordic market leader with +4 million subscribing households fall 2022.

 

Local originals – a key to success?

 

How did Netflix become such a strong player in the Nordics? One reason could very well be its investments in locally produced original content.

Netflix was the first global player to commission Nordic originals. It started off with “The Rain”, a Danish series in the spring of 2018, followed by the Swedish original series “Quicksand (Störst av allt)”, released in early 2019. Other major titles released since then include “Snabba Cash”, “Bordertown”, “Ragnarök” and “Borgen – Power & Glory”. By the end of last year, Netflix had nearly seventy Nordic originals in its’ library. And the titles have also attracted viewers outside the region. According to Netflix, almost two thirds of their members globally have chosen to watch a Nordic original film or series.

But despite heavy investments, Mediavision’s Content Analysis reveals that local competitors have the upper hand when Nordic consumers are to choose the service provider with the best local fiction. Netflix, on the other hand, is considered superior when it comes to foreign fiction.

Last year, Netflix levelled-up its Nordic presence by opening an office in Stockholm. The company now also has a team based in Copenhagen, to further support the region.

 

So, what’s next?

 

No doubt, Netflix will remain a major player in the region, but not without challenges. Today’s market is, in many respects, completely different than 10 years ago. Consumers are more sophisticated and have increasingly high demands. The market is characterized by strong competition, especially between the major services. Clearly, all streamers are facing a maturing market with weakening subscriber growth, combined with challenging times in the macro-economic environment. Maybe not a surprise, AVOD is more and more looked upon as a possible saviour – for companies and households. Netflix’s AVOD tier is reportedly set to launch in the US at the end of 2022. If, and when, it will come to the Nordics remains to be seen.

With the launch of an AVOD tier, Netflix will enter a new arena and meet new competition. The “legacy” broadcasters have 50 years of experience in creating ad financed content as well as in ad sales. This should not be underestimated as a future challenge. Still, Netflix is the biggest streaming service in the Nordics and generally appeal to a different audience than most broadcasters do – making Netflix a highly attractive platform for advertisers.

Last year Netflix also launched a gaming service, as another measure to increase consumer loyalty. The plans are to expand from today’s 24 games, to 50 by the end of this year. So far, games have been downloaded a total of 23.3 million times and average daily users are 1.7 million – less than 1% of Netflix’s 221 million subscribers.

In conclusion – a lot has happened in the market since Netflix entered a decade ago. The media consumption habits of many people have changed completely, and we’ve been served hours of great content. We look forward to seeing what the next 10 years will bring from Netflix and the SVOD-market!