The media company now known as Paramount Global fired off a battery of news announcements Tuesday, earnestly and near-endlessly making the case that it plans to extract every cent of value it can from every corner of its operations, all to the benefit of its streaming future.
It marks the most concerted declaration yet of streaming love by any major media company (short of, of course, Netflix itself).
“This is a time characterized by great momentum and tremendous go-forward opportunity,” CEO Bob Bakish said during a nearly two-hour-long investor presentation, followed by 30 minutes of analyst Q&A on Tuesday afternoon. “Our momentum is building and as it grows, as we take Paramount Plus and our other streaming businesses to the next level, the size of the opportunity we see ahead is matched only by the scale of our ambition to seize it.”
The long-in-coming streaming embrace for a company that’s finally moved beyond years of corporate chaos couldn’t come soon enough. The fact is, even after Viacom and CBS merged, and finally launched a revivified successor to CBS All Access last March, it still can’t afford to be sloppy.
Netflix is still spending billions more on programming, without any legacy overhead or distractions. Apple and Amazon both are building highly attractive platforms with their trillion-dollar valuations, and Disney has righted its listing ship with an emphatic uptick last quarter.
Paramount Global’s future looks brighter today than, say, six months ago, when it was still ViacomCBS and Paramount Plus was around seventh on the list of must-have streaming services.
But Paramount Global still must maximize value extraction for its TV shows, movies, news, sports, and other content at every turn, and plow that into its streaming initiatives repeatedly over the next few years to make sure it can build a sturdy and sustainable base of users/subscribers.
Thankfully, that’s exactly what was promised Tuesday by Bakish, company chair Shari Redstone, a herd of other executives, and high-level talent partners such as Tom Cruise, John Krasinski, JJ Abrams, and Taylor Sheridan.
“We are very early in the Paramount Plus subscriber journey,” Bakish said. “It didn't exist a year ago. We’ve seen it build. Really, the fourth quarter was the first time we had anything approaching scale.”
The company said it will put all of its movies on Paramount Plus, either on initial release or in the Pay One window after a theatrical run, by 2024. That’s a big shift from years of arms-merchant licensing of its movies and TV shows to just about anyone else.
It’s also pulling back the episodic content it has licensed widely over the years to competitors, funneling all that into Paramount Plus and Pluto.TV.
Ending those lucrative deals will take years to play out, which means, for instance, that more than 300 episodes of South Park will remain on competitor HBO Max until 2024 (speaking of which, can a post-merger rebrand to Warner Max be coming?).
All Paramount movies will head to Paramount Plus, either directly or in the Pay One window after a theatrical release, matching similar decisions by WarnerMedia and NBCUniversal to keep the crown jewels in hand.
Even the farmed-out franchises will get new programming spinoffs that Paramount can keep to itself.
With South Park, that means two feature-length movies a year headed straight to Paramount Plus for the next six years. As well, the service will whatever else warped geniuses Trey Parker and Matt Stone come up with in their spare time.
For franchises such as Transformers and Sonic the Hedgehog, it means not only another movie, but an episodic series soon after. The company also announced numerous other spinoffs, reboots, sequels, new seasons, and more.
Chopra said the company’s “incredible” array of licensed (and unavailable) content holds much promise when it’s repatriated to owned-and-operated platforms. In the meantime, “Rather than just forego that opportunity, we got into spinoffs. That's working very well for us.”
The company is pushing international expansion hard after debuting Paramount Plus and/or Pluto in 25 territories last year. This year, the streaming services will add 60 more territories, still far behind Netflix’s 192 or so, but a big bump up.
And the company plans to partner widely overseas, especially with the big broadcasting outlets it already owns in countries such as Australia, Chile and Argentina.
The company is also pursuing other kinds of partnerships, announcing a “hard bundle” partnership in France, with Canal+, which dominates there.
Though such bundles don’t provide all the customer data and other benefits of a standalone launch, company executives said they also don’t require the same marketing, technical, billing and other expenses, while providing instant access to a large installed local base.
All of it is designed to funnel more value into Paramount Plus and Pluto.TV, then to cross-promote between them so audiences will stick around and stay engaged.
Paramount executives also made a solid case that Paramount Plus is already finding some traction in the market less than a year after its launch (apparently operating CBS All-Access for most of decade doesn’t count).
Most notably, the company’s streaming outlets (which include BET Plus, Noggin, and Showtime OTT) are on target to hit 2024 audience targets by the end of this year. Accordingly, Paramount bumped up its 2024 goal by about half to 100 million.
And that doesn’t even include the “many millions” of new subscribers that Bakish said are expected to flow into the SkyShowtime joint venture with Comcast that launches in Europe later this year.
The company is also making more money from each streaming subscriber, CFO Naveen Chopra said. Average revenue per user, or ARPU, hit $9 a month in the last quarter for subscribers to the two tiers of Paramount Plus.
Pluto’s ad-only viewers generate far less revenue each, but also saw a substantial jump in ARPU last quarter. The company previously announced Pluto revenues topped $1 billion last year.
“We’re very encouraged by what we’re seeing in ARPU,” Chopra told analysts. “We see continued upside in domestic ARPU” growth, thanks to “very healthy trial-to-pay conversions” between Paramount Plus’ two tiers, and “continued monetization” on the ad-supported lower tier.
The company goals to grow subscriber/MAU numbers and ARPU should be helped by the presentation’s bigger message: lots of desirable new content from lots of different directions. All of it will make the service more attractive, and more sustainable in the middle to longer term.
Another overdue move will create an $11.99/$14.99 bundle of Paramount Plus’ two tiers with the streaming version of premium channel Showtime. In a blow for simplicity in subscribers’ lives, Showtime programs will be integrated in the Paramount Plus interface, with a single sign-on.
To the company’s credit, it’s also taking a step toward more transparency in reporting its numbers, promising to disclose Paramount Plus subscriber ads and Pluto MAUs, along with ARPU and other key data.
Such transparency is a rare thing in the streaming business, despite frequent calls for it from investors, journalists, and analysts.
To that end, the company even detailed its streaming losses, using a new process that allocates costs by each project’s relative value to the various platforms.
Under that approach, Paramount streaming lost $2.2 billion in 2021, and $1 billion in 2020. It should continue to lose money this year, but expects free cash flow and other key numbers to remain sturdy, Chopra said, thanks in part to an aggressive effort to reduce debt and sell off non-core assets.
All these moves are welcome. They suggest that Paramount executives understand the existential challenge they face as long as Redstone remains committed to remaining independent.
Paramount doesn't have a lot of room for error, but it’s clear Bakish and his team are focused in the right direction, and committed to more transparency and clarity along the way, and why. For that, they deserve a big pat on the back.
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David Bloom of Words & Deeds Media is a Santa Monica, Calif.-based writer, podcaster, and consultant focused on the transformative collision of technology, media and entertainment. Bloom is a senior contributor to numerous publications, and producer/host of the Bloom in Tech podcast. He has taught digital media at USC School of Cinematic Arts, and guest lectures regularly at numerous other universities. Bloom formerly worked for Variety, Deadline, Red Herring, and the Los Angeles Daily News, among other publications; was VP of corporate communications at MGM; and was associate dean and chief communications officer at the USC Marshall School of Business. Bloom graduated with honors from the University of Missouri School of Journalism.