Although we don’t have the date yet, it’s now official that Storytel will be launching in Bulgaria this year, and as there’s only this month to go it now seems certain Storytel Bulgaria will formally be announced in the Bulgarian capital at the Sofia Literary Festival (11-16 December), running in tandem with the Sofia International Book Fair, where 50,000 visitors are expected, just in time for Christmas.
This won’t be news to TNPS regulars, just confirmation, as TNPS speculated on this date last month –
and has been advising since February that a Storytel launch in Bulgaria was on the cards.
The full Q3 report from Storytel offers us more insights into Jonas Tellander’s plans.
I’ve covered the numbers previously here –
Now to take a look at that else the report told us.
Iceland, for example, became the fourth Storytel market to break even – in just six months!
Last year we had three profitable markets (Sweden, Denmark and Norway) and now we have four profitable markets with a positive cash flow, as Iceland turned profitable in record time, only six months after launch. Storytel Iceland has extremely favourable metrics with a high degree of proprietary content resulting in a high gross margin, and low marketing investments relative to sales thanks to a strong word of mouth virality effect. We expect to add at least one market to this cash-flow-generating group next year before allocation of global costs.
No indication which market that will be, but my money would be on Poland or Russia.
Tellander reports that Storytel expects to increase from five to ten the number of markets with 10,000 subscribers by end of year.
Iceland may well be one of those, and Finland, Poland, Russia and the Netherlands have to be strong contenders too. India, the UAE, Italy and Mexico are all more recent lunches so unlikely to have had time to clear 10,000 subscribers yet.
In indirectly confirming the Bulgaria launch as imminent, Tellander said,
With the addition of Mexico and Bulgaria we will have launched six markets by the end of the year and will be live on fifteen markets, with production of stories and audiobooks in as many languages. After the end of the quarter we announced that we are also preparing for launch in Singapore and Brazil. We expect to add at least the same number of new markets next year as in 2018.
Singapore and Brazil are two of those.
The Singapore launch will be part of the Bangkok (Thailand) based “self-containing regional hub”, while Brazil will be from the self-containing hub in Mexico.
While the Storytel Mexico store will be accessible across Latin America my guess is Tellander will quickly move to independent Storytel launches in Argentina and Colombia, as first reported here back in May.
If so that would account for four of the six 2019 launches. The other two?
My money’s on expanding the SE Asia regional hub, starting with a full service in Thailand (57 million internet users) along with Singapore, and then one or more from Malaysia (25 million internet users), Indonesia (143 million), the Philippines (67 million) or Vietnam (64 million), which have not just the online numbers but also advanced engagement with e-commerce and online payments.
That said, we shouldn’t rule out the possibility Storytel could focus on another Arab country, turning the UAE into a regional hub, or that Storytel could be looking at further European markets.
Portugal would be a logical contender given the Portuguese language content being prepared for Brazil. Romania, Hungary and the Czech Republic have to be candidates, and a Germany / Austria dual launch would not be a surprise.
The only real surprise from Storytel right now would be if it launched in any of the Big 5 Anglophone markets.
Going head to head with Audible in its core markets (currently the only cross-over between Audible and Storytel is in Italy and India) is probably not on Tellander’s agenda. Storytel would also face resistance from publishers unconvinced about the pay-per-minute royalty schedule.
But the publishers might want to ask themselves, are they better off with Audible’s model and it’s near monopoly?
My guess is we’ll see Storytel break into the Anglophone markets in the early 2020s, and that could be a game-changer. But right now Storytel needs to continue to focus on safer bets.
The other key news in the Q3 report is about ebooks.
Tellander reports that,
During the last week of September we made our first advertising campaign for our e-book device the Storytel Reader, generating more than 1,000 Readers sold in a single week, during the Book Fair in Gothenburg. User data has so far indicated high usage, resulting in high loyalty for early users of the Reader. Furthermore, the Reader will support audiobook listening capability shortly, via an over-the-air software upgrade. We expect this audiobook feature to boost Reader-sales. Having said that, we still believe it will take some time to generate high demand for e-books on the highly penetrated Swedish audiobook market, and it will likely take a couple of years until the Reader has a material impact on our overall revenues.
Storytel’s ebooks are branded separately from Storytel, under the Mofibo brand it acquired for 13.5 million euros in 2016, but that will change in 2019 when the ebook service will be merged into the Storytel platform and brand.
CORRECTION: Boktugg’s Sölve Dahlgren advises the following clarification – “Storytel includes ebooks in their service in all markets and has been since the start. In Denmark Mofibo and Storytel both offers ebooks and audiobooks. But now Storytel wants to stop having two different platforms and brands doing the same thing so they are finally merging the two.”