Vivendi SE (VIV) Earnings Call Transcript & Summary

Good morning. I hope you're all fine. And as always, a great pleasure to be with you. So Cher [indiscernible] should begin with, and Cher Claire, thank you for the invitation that allows me to stand before you today. I'm all the more delighted that I have been unable to be present for too long. It must be said that those years have been particularly busy to say the least, and I will have the opportunity to come back to this in a few moments. In the meantime, the world has changed. And with it, our industry has undergone profound transformation. 10 years ago, content is king was the catch phrase, the war for IPs was raging as companies sought the best possible high-quality content. Today, an obsession with quality is still relevant. But while quality is necessary, it's no longer sufficient. We have shifted from an equation with a single variable to one that is complex and multifactor. I could call it the Three-Body Problem. If this expression were not already the title of a famous sci-fi book by Liu Cixin, which has also become a Netflix series that I recommend you to watch on Canal+, of course. You see my [indiscernible]. The inflation of content explains this shift. The supply of content is now almost infinite. And within this vast supply, quality content is abundant. Beyond quality, the desirability of content has become an equally important dimension because the quality of the work means little if it doesn't meet its audience. Let's take the example of the publishing sector, which operates as a supply-driven market. In France, publishing revolves around the so-called literary season, a distinctly French phenomenon during which nearly 600 titles are released each September, culminating in the awarding of literary prizes in the fall. In practical terms, this results in a bottleneck on bookseller shelves, which has limited space and cannot accommodate or promote all these new releases effectively. If we look at the 2024 literary seasons, 486 new titles were published in just 6 weeks. Among this supply, only 101 titles were mentioned at least once on influential media, roughly 1 in 5. In other words, 4 books out of 5 were passed over in silence, do not exist in bookstores and can only rely on word-of-mouth to gain any traction. The quality is not in doubt. They simply don't exist. Hence, the need to build both awareness and desire around book consumption. This is precisely what Joel Dicker, one of our best French-speaking authors, advocates and achieves with great success. He repeatedly emphasized that books must become cool, that we must increase the desire for books, both in bookstores and online. This is what Barnes & Noble's execute perfectly by turning certain book release into events, I should say, Waterstones. That's the same. I was recently in New York City. And while returning from dinner, I passed by the Barnes & Noble at Union Square in Manhattan. To my surprise, there was a crowd gathered for the launch of the book recommended on TikTok. I have not witnessed such excitement since the release of Harry Potter 20 years ago. Desirability is also increasingly built online. This is an obvious fact that is not yet that obvious to all authors. I think of this gastronomic critique who was amazed to see 2 years of Instagram post boost his book sales more than 3 decades of press coverage. The reality is that the majority of authors have understood the promotional power of BookTok as well as the potential of self-publishing for sourcing. The [indiscernible] phenomenon is a perfect example. It began with self-publishing on Wattpad in 2021 before our [indiscernible] PMR, turned into a worldwide success. This leads me to the third key factor, which is the essential role of technology in user experience, consumption patterns and content accessibility. The creative industry have long stretched their tentacles into new territories with the support of technology. For instance, heart incorporated photography, music became recorded and actors moved from stage to screen. Over the past 15 years, however, tech has stretched its own tentacles into media, for instance. Netflix, initially a massive digital distributor, developed its own studio to supplement its library and Amazon's retail hub added video content as a sweetener. The evolution of the music industry reflects this trend. When I joined Vivendi in 2014, gosh, music was wrongly considered as a doomed sector. I still remember the incomprehension caused by the refusal of a EUR 7 billion offer we had received on Universal Music Group. 7 years later, UMG was listed on the Amsterdam Stock Exchange with a market value of EUR 45 billion. Streaming is at the origin of this remarkable value creation resulting from several combined factors. A, the audience for music is now global. 10 years ago, 5 countries accounted for 80% of the music market. Today, the same 5 countries represent less than 50%. B, we have moved from a transactional model, you bought your vinyl, your CD, your track on iTunes to a subscription-based model that offer operators recurring revenues. And c, finally, the service aspect, which with Playlist in particular, has led to better valuation of the music catalog. We were just talking about books. The integration of audiobooks into Spotify's catalog is a fantastic opportunity for authors to capture new audiences in addition to their traditional readership. For the future, we can easily imagine AI disrupting our sectoral economics, creating new modes of consumption and fresh sources of revenue. Our industry is, therefore, evolving in this environment with the tryptic of quality, desirability, accessibility has become strategically essential. This is precisely the purpose of Havas Group, this fantastic world's communication group, which puts creativity at the core to serve the power of global brands. We are at crossroads where the abundance of quality content, the technological revolution and the evolution of consumer behavior are redefining our way of operating. And Vivendi is very well positioned to thrive in this new paradigm. It must be said that while the world has changed, Vivendi has also greatly evolved. The end of 2024 was marked by the spin-off of the group and the respective listing of our entities, Canal+ on the London Stock Exchange, Havas in Amsterdam and Louis Hachette Group in Paris. This operation, which, as you can imagine, was quite complex, was carried out for several reasons. The strategic reorganization will allow to reduce over time the conglomerate discount of around 45% that we had been suffering from since the distribution listing of UMG in 2021. It was also a question of empowering the entities and providing them with the levers to develop, and thus accelerate their sustainable growth in an integrated group, it's difficult to execute several major restructuring operations, seems -- oh, that's a tough one, this one, simultaneously. Thank you. Thank you for your support. Thank you. With this autonomy, the business can develop in parallel and no longer sequentially. This is how Canal+ is currently carrying out its takeover bid on the -- for the South African pay TV operator, MultiChoice, while Havas and Louis Hachette are able to seize market opportunities as they arise in its new configuration. Vivendi is therefore composed of today of listed financial holdings and Gameloft, a nonlisted operational asset in the gaming sector. However, with a profoundly remodeled profile, the group remains faithful to its DNA. I have in mind this sentence that you may know taken from Visconti's, The Leopard, everything must change for everything to remain the same. Much has changed, but two constants remain. Number one, all these entities retain the same reference, shareholder. And after being sisters, they have come -- become cousins, and they know they can count on their common history. Second, ties remain at the governance level of the different entities, which offers privileged discussion channels for common projects. If I had to summarize Vivendi profile today, I would say that, first of all, Vivendi remains a historic player in the content, media and entertainment industries. This is the meaning behind the strategic refocusing we initiated with our recent exit from the telecommunications sector, including the sale of our stake in Telecom Italia. Vivendi is also a transformation agent. Over the years, we have developed expertise transforming and accelerating our activities. Two quick examples. The pay TV sector has long been driven by IPs and sports rights. For Canal+, this was a differentiating advantage before the customer experience took over. Canal+ has massively invested to meet the quality, desirability, accessibility, tryptic that I mentioned earlier. The MyCANAL platform has been the catalyst for a massive transformation for the group and its customers. MyCANAL places the customer in the driving seat of their media consumption with all the playlist options download to go from at award consumptions anytime, anywhere, any device, in short, everything that places MyCANAL at the best market standard. MyCANAL has also strengthened its service dimension by becoming a content aggregator, offering its customers a one-stop shop to access the best of Netflix, Max or Apple TV. We are carrying out similar transformation work in the field of gaming with Gameloft, which we have completely reinvented since 2022. Gaming experienced a golden period with the COVID years where games consumption was boosted by successive lockdowns. Some studios which hired massively and increased their production pipeline were caught up by a declining market in 2022, which then became stagnant in 2023. The Gameloft teams who are a bit like the Navy Seal -- no I should say, the Royal Marines of gaming with pragmatism and reactivity that we know them for have navigated the post-COVID environment exceptionally well. A significant amount of restructuring work has been accomplished. Gameloft today has close to 3,000 people, 11 technicals and creative studios around the world, successful franchise like Asphalt, Dragon Mania or Gangstar and collaborations forged with Disney, success of Disney Dreamlight Valley, with LEGO or with Netflix release of Carmen Sandiego in March, which I highly recommend. Gameloft has also successfully ridden the wave of convergence. The group has carried out diversification and transition of its production tool and its activity towards multi-platform. This transition allows it to respond to 100% of the game market and to diversify its commercial partners and its sources of revenue with the PC console segments that today accounts for 42% of its revenues. As a consequence, Vivendi in its new configuration intends to be an operating investor. We do not intend to be a purely financial investor. On the contrary, we wish to support the company we invest in and leverage our transformation expertise as demonstrated in the example I mentioned earlier. For this, our investment thesis remains firmly focused on the content, media and entertainment industries. We do not rule out any operation as long as the targets have a critical size and offers a strong potential for medium- to long-term value creation. Here in a few words is the current situation of Vivendi. The prospect of reinvention are numerous as we evolve in an unstable economic, political and geopolitical context. Our changing sector offers us a world teeming with opportunities. Our ability to evolve is deeply rooted in our DNA. Since our creation, we have always shown agility, which has allowed us to adapt to market changes and the expectations of our shareholders, customers, partners and teams. I often say that at Vivendi, our past leads for our future. I say it again in front of you today, the rest of our story remains to be written. And with our creativity, expertise experience, we have everything we need to make it a great one. Right on time to the second. To the second. So thank you. Thank you. Thank you very much. So a, I'm very sorry for my appalling English. I'm spending too much time in France, obviously, but thank you for your patience. And second, no time to take any questions, but [email protected], and I will be very pleased to take them offline. And now it's my great pleasure to welcome on stage the amazing Andria Vidler, CEO of Allwyn and National Lottery and President of the Advertising Association. Welcome. Thank you.