Since the launch in 2012, Swedish digital magazine subscription service Readly has attained the market leading position in Europe. The service is currently available in eight European markets, in addition to the US, and cooperates with 800 publishers in 11 countries. Next week, on September 17th, the company reaches a new milestone when being listed at Nasdaq Stockholm. Mediavision closely tracks the development of the Swedish market for digital magazines – currently small and stable, showing limited growth in the past year. So, Readly is ready, but what about the consumer?

Readly is currently valued at 2.2 billion SEK. The company is pressured by losses, but sales are growing, and investors are bullish. In 2019, Readly’s turnover was 265 million SEK and in H1 2020 revenues had climbed +32% compared to the same period the year before. If sales continue to climb according to trend, this would give a Price to Sales Ratio of just above 6, which is in line with Spotify that currently trades at PS 6. Maybe this is a fair value, as both companies still lose a lot of money. In the first half of 2020 adjusted EBIT for Readly was -138 MSEK – a margin of approximately -50%.

Readly is a growth case, and most of the funds from the IPO will go to marketing and expansion into new territories. At the end of June 2020, Readly reported it had 324 000 paying subscribers and according to Mediavision estimates, roughly a third of those stems from the Swedish market.

Mediavision closely tracks the development of the Swedish market for digital magazines – a market that is small and stable, showing limited growth in the past year. In Q2 2020, approximately 5% of the Swedish households subscribed to a digital magazine service. This compares to digital news and tabloid press services at 10%, music streaming services at 50% and video at 60%.

In addition to size, the digital magazine market battles high churn intentions. According to Mediavision estimates, almost 30% of subscribers plan to cancel their subscription within the coming 12 months. For other digital media subscription services churn intentions are lower; 20% for digital daily press and tabloids, 10-15% for video streaming and below 10% for music streaming.

According to Readly the global magazine industry is worth 73 bn USD. The question is, how much of it that can be expected to transform in the foreseeable future and who stands to benefit. Readly says they are ready to take on the challenge. Analysts have pointed out that strong relationship to publicists and rightsholders are of utmost importance, in addition to adding more daily press to the service – increasing the frequency of subscribers’ usage. But there are also other contenders out there – Amazon for one, should they decide to offer a similar service to its Prime-consumers. Amazon’s financial strength enables them to invest or even take over an entire market without an urgent need to reach profitability.