TelevisaUnivision on Thursday boasted double-digit revenue growth and success for the premium tier of its Spanish-language ViX streaming service.
In Q2 TelevisaUnivision grew total revenue by 11% year over year to $1.2 billion, driven by growth across its advertising and subscription and licensing streams in both main markets of U.S. and Mexico. Total advertising revenue was up 10% to $1.2 billion, led by just under 30% ad growth in Mexico. Advertising revenue in the U.S. was up 1% to $452 million. ViX’s premium subscription tier, meanwhile, was the primary driver for 14% growth in global subscription and licensing revenue, which totaled $453 million in the three-month period. That includes 10% growth in the U.S., which again was driven by the ad-free tier, and 27% growth in Mexico.
Adjusted OBIDA of $374 million was flat, as the company said its core linear business continues to fully fund investments in ViX. Operating expenses for the period totaled $846 million, up 17%, attributed to money poured into ViX including new original premium content, sports rights, marketing and technology.
The ViX streaming service launched with a free ad-supported version in March 2022, followed by the debut of a paid premium version in July last year. During Q1 results, TelevisaUnivision disclosed a quick marketing pivot that saw the company drop the original “ViX+” branding for the premium tier. That was in response to consumers, as marketing the two tiers, which are available within one app, under different names and as separate services caused confusion in the market.
On Thursday’s Q2 earnings call, CEO Wade Davis called it “absolutely the right move,” as it resulted in less customer confusion and a simplified customer journey. And he touted success for ViX, which in May announced monthly active users had surpassed 30 million, and the outlook for profitability.
“We have launched a unique streaming product that has grown to become the market leader in Spanish-language streaming in under a year,” said TelevisaUnivision CEO Wade Davis during Thursday’s earnings call. “The efficiency of this model has allowed us to fully fund these investments and the growth of our core business and see a profitable streaming business on a timeline never before seen in the industry.”
Davis also said its core linear business remains important to the audience and the company continues to invest, while also pursuing a streaming strategy that’s meant to complement linear and vice versa.
Engagement on ViX also continues to grow, with a 17% sequential bump in total streaming hours in Q2. And TelevisaUnivision is seeing benefits from the two-tier strategy, with Davis disclosing that over half of direct-to-consumer ViX subscribers are coming from the free ad-supported tier – reiterating earlier comments that the free version is a “massive” customer acquisition funnel for the paid tier. On Thursday the chief executive said this cuts subscriber acquisition costs (SAC) significantly as free users are much less expensive to acquire than paid users.
“And these free users generate meaningful, sellable inventory they move through the funnel,” Davis said. “It’s incredibly gratifying to see our strategy really play out in numbers.”
TelevisaUnivision is looking to capitalize on what it says is an $8 trillion global Spanish-speaking market. As for ad sales growth in the U.S., the company is aiming to execute on an opportunity where Davis said advertisers haven’t yet caught up with the size of the Spanish-speaking market. It said the 1% growth in Q2 reflected strength in national advertising and traction in streaming where it continues to see demand and increase pricing alongside its new ad formats, even in the face of a soft ad market.
"This was a fantastic quarter for TelevisaUnivision, accelerating our revenue growth into double digits and continuing to drive our leadership position in Spanish-language streaming with ViX— all through a disciplined approach in which our core business continues to offset our investments in streaming,” Davis said in a statement. “Leading our portfolio this quarter was extraordinary growth in Mexico, where we strategically programmed across linear and the ad-supported and premium subscription tiers of ViX to drive 22% revenue growth. This is a terrific example of the components of our ecosystem working together to deliver amazing financial performance.”
Programming for linear and streaming
In an example of how TelevisaUnivision is leveraging its linear and streaming businesses as complementary, Davis cited a programming strategy the company launched in Mexico in June that drove major metrics across both platforms.
Last month the company implemented the strategy around the launch of TelevisaUnivision’s version of a popular reality show called “La Casa de los Famosos México.”
They launched the structured show on linear with two airings a week, he said. Then immediately created multiple livestreams that aired 24-hours a day, uncensored and for free in front of the paywall on ViX. Two week later, after “extraordinary” engagement ramped up, they moved the livestreams behind the paywall under ViX’s premium tier.
“The metrics for ViX around this property are on par with or better than many of the metrics we saw for the World Cup last year,” Davis said. “As of last week, over 20 million people had engaged with the show on one or more of our platforms, lifting ViX’s ad revenue, ViX subscriptions, linear ratings and linear revenue.”
On the distribution front, Davis noted ViX launched without a fully formed footprint, which it meaningfully expanded in Q2, including as a premium subscription partner on The Roku Channel, the ViX app integrated on LG smart TVs, and plans to launch on Vizio smart TVs later this quarter.
“These new partnerships have virtually doubled our connected TV footprint, making ViX available on all major TV OEMs in the U.S.,” Davis commented.