Addressable Streaming Market ‘Huge,’ Will Continue to Grow: Paramount CEO
Implied slaps at Netflix and Disney+ as “legacy” streaming services permeated the talk of Paramount Global senior executives during their Q1 earnings call Tuesday, their first since rebranding the company from ViacomCBS. Its signature Paramount+ service added 6.8 million subscribers by the end of the quarter, bringing its installed base to nearly 40 million customers, said CEO Bob Bakish.
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Though “many legacy streamers are rethinking their paid-only models, our mix of free ad-supported and paid subscription streaming options has been a hallmark of our strategy from the start,” said Bakish. The strategy gives viewers “the freedom to choose the plan that’s right for them,” and gives Paramount access to the largest total addressable market (TAM) globally, he said.
Paramount was "early in that game" of ad-supported streaming, said Bakish. "We led it, because we believed in it when other people didn’t." Bridging ad-supported and paid-only models is "not an easy business to replicate," he said.
Netflix has begun studying the possible rollout of lower-priced, ad-supported tiers as one way of restoring subscriber growth, said CEO Reed Hastings last month (see 2204200002). Disney announced in early March that it’s adding an ad-supported Disney+ VOD service in the U.S. late this year, and internationally in 2023 (see 2203040042).
Paramount’s ad-supported Pluto TV grew global monthly active users to nearly 68 million in the quarter. What makes Pluto “so special” is that many viewers see the service as “complementary to linear and paid streaming,” said Bakish. He estimates 80% of Pluto’s customers “also subscribe to paid streaming services,” he said. “We all know that people consume content on a variety of platforms.”
Paramount+ debuted in 25 markets in Latin America, Canada and Australia in 2021, said Bakish. “In 2022, we’re continuing to expand in more of the biggest markets of the world,” and “next up” is the launch of the service in the U.K. and South Korea in June, he said. Austria, France, Germany, Italy and Switzerland are to debut in the second half, he said. Paramount+ also will launch in India in 2023 via the Viacom18 joint venture with Mumbai’s Network 18 Group, he said.
Bakish conceded there’s “definitely a lot of conversation” about future growth potential in the streaming “space,” after Netflix reported last month it lost 200,000 paid subscribers in Q1 and stands to lose another 2 million in Q2 (see 2204190066). “We continue to believe that the TAM today in streaming is huge, and that it will continue to grow,” he said. “As a company, we’re early in penetrating the market, so there is tremendous runway ahead of us.”
Paramount can offer its various platforms along “a more attractive financial model, where we’re able to produce similar margins, we believe, to legacy streamers at a lower scale,” said Bakish. “Despite all that conversation, nothing has changed in the context of our thinking,” he said. “We see tremendous momentum here, and we’re very excited about the road ahead.”