Deezer lost 300,000 subscribers in the first half of the year as it failed to keep and attract users outside its home market of France.
The online music streaming platform, which recently received lukewarm response in its initial public offering on the Euronext, recorded a 2.9% drop in its total subscribers as of the end of June to 9.4 million from 9.7 million in the year-ago period.
The drop came as the 10.7% increase in its subscriber base in France offset the 18.1% drop in its subscriber count in the rest of the world, according to Deezer’s first earnings release since its public listing in July.
“B2C (business-to-customer) subscriber base saw a solid growth in France and a decline in the rest of the world,” in line with the company’s new strategy.”
In France, Deezer’s growing subscriber base was fueled by an increase in family mix plans and the company’s addition of new partners.
Yet outside its home market, Deezer’s subscriber base shrank as the group significantly reduced its spending in non-core markets. The company’s exit from the Russian market at the end of the first quarter led to the loss of 104,000 subscribers alone.
“B2C (business-to-customer) subscriber base saw a solid growth in France and a decline in the rest of the world,” in line with the company’s new strategy, Deezer said.
That strategy refers to the company’s increased focus on selected key markets as the company seeks to direct its efforts towards large attractive markets via a partnership-first go-to-market model.
Earlier this month, Deezer disclosed plans to expand in Germany in the coming weeks by partnering with local broadcaster RTL.
It was a similar strategy to that employed by the company in Brazil where it launched in 2013 through partnerships with TIM, Globo and Mercado Libre.
Despite seeing a drop in its subscriber base outside France, Deezer’s overall first-half sales jumped 9.9% YoY (constant currency) to €219 million in H1 2022.
Deezer attributed its global revenue growth to price increases that it implemented, and a change in the company’s geographical mix.
“This positive momentum shows the strength of Deezer’s unique B2B/B2C strategy, as well as our capacity to capture the global growth of the music streaming industry,” Deezer CEO Jeronimo Folgueira said.
Deezer’s revenue outside France jumped 8.1% year over year (at constant currency) to €87 million from €76.6 million last year, faster than the 11.1% YoY increase in revenue it saw in France in the period.
Direct B2C revenue globally edged up 10.8% YoY (constant currency) to €155 million as direct B2C ARPU (average monthly revenue per user) rose to €3.90 from €3.40.
During Q2 2022, Deezer accelerated its efforts to grab a bigger share of the world’s streaming market.
It merged with I2PO, a Special Purpose Acquisition Company (SPAC), allowing it to raise funds from the capital market. The transaction gave Deezer a pre-money equity valuation of €1.05 billion.
“This positive momentum shows the strength of Deezer’s unique B2B/B2C strategy, as well as our capacity to capture the global growth of the music streaming industry.”
Jeronimo Folgueira, Deezer
The IPO “gives us the resources to continue the successful expansion of Deezer,” Folgueira said on Wednesday (August 24).
Other major highlights during the first half include Deezer’s expanded integration with Sonos, the launch of the company’s in-app lyrics translation, its first major in-app livestream, and a new brand positioning targeting Gen Z launched on Monday in France, Brazil and Germany to make the platform more appealing to younger users.
“With a highly competitive product, a clear strategy, a renewed and experienced management team, supported by a strong new board of directors, I am very confident that we are now perfectly positioned to accelerate our growth, and deliver substantial value for all our stakeholders,” Folgueira said.
Deezer’s fundraisings and expansions come as the company aims to better compete with Spotify, the world’s dominant market player in the streaming industry.
While Deezer lost 300,000 subscribers YoY in the first half of 2022, Spotify added 6 million net Premium subs in the second quarter, ending the first half of 2022 with 188 million subs, compared with Deezer’s 9.4 million.
Looking ahead, Deezer said it does not expect any significant negative impact from uncertainties in the overall macroeconomic environment and high inflation.
Deezer reaffirmed its revenue forecast for the year, expecting to generate €455 million for the full financial year, up 14% from a year prior. Deezer expects its partnership with Germany’s RTL and the incremental impact of price increases to lead to better results in the second half.Music Business Worldwide