Paramount (PARA) Global’s streaming service remains a bright spot in the entertainment conglomerate’s uncertain future. Paramount’s direct-to-consumer division, which includes Paramount+, gained 4.1 million subscribers during the December quarter and had 67.5 million subscribers at the end of 2023, the company said in its fourth-quarter earnings report yesterday (Feb. 28).
During the last quarter of 2023, Paramount brought in $7.64 billion in revenue, missing Wall Street analysts’ estimate of $7.85 billion. Nevertheless, Paramount managed to turn a profit of $514 million, a significant jump from the $21 million in the same quarter in 2022.
On an earnings call with analysts, Paramount CEO Bob Bakish touted that direct-to-consumer revenue in 2023 was $6.7 billion compared with $1.8 billion in 2020. He forecasted that Paramount+ should reach profitability in 2025. He attributed the streaming service’s rapid growth to higher user engagement, lower subscriber churn and price hikes, among other factors.
As a part of building out its streaming business, Paramount is considering joining forces with other media companies to create combined streaming packages. It most recently held talks with Comcast (CMCSA) to bundle Paramount+ and Comcast’s Peacock. Paramount also reportedly had similar conversations with Apple (AAPL) in December.
“We’re big believers in bundling. It is one of the tried and true methods of value creation in media. It’s certainly the case in streaming,” Bakish told analysts yesterday. “It’s strengthening your consumer proposition that allows you to drive subscribers, enhance your share, reduce your churn. You get access potentially to an existing subscriber base that lowers or potentially eliminates SAC (subscriber acquisition cost).”
Paramount is apparently considering following an industry trend. In early February, Warner Bros. Discovery, The Walt Disney Company and Fox Corporation announced a joint streaming service that would combine all of their sports offerings onto one platform.
Bakish brushed off an analyst’s question about a similar joint venture, saying, “there’s still a lot we don’t know about this service, things like price, packaging, consumer appetite.”
“And to the consumer point, for a true sports fan, this product only has a subset of sports,” he added. “It’s missing half the NFL, a lot of college, has virtually no soccer or golf, etc. So look, that’s hard to believe that’s ideal, especially at the price points that have been speculated.”