Paramount Global’s streaming investments peaked ahead of schedule, as the media company reported streaming revenue and subscriber gains alongside narrowed direct-to-consumer losses in Q3.
Paramount expected 2023 to be the year of peak losses for its streaming business, but after improving losses by over 30% in Q3, the height of investment is in the rearview.
In a statement Paramount CEO and President Bob Bakish said “we now expect DTC losses in 2023 will be lower than in 2022 – meaning streaming investment peaked ahead of plan. Looking ahead, we remain on the path to achieving significant total company earnings growth in 2024.”
Overall, Paramount’s direct-to-consumer business, which includes the flagship Paramount+ service (now with Showtime incorporated) and its free ad-supported streaming TV (FAST) service Pluto TV, saw revenue climb 38% to reach $1.7 billion in Q3. Subscription revenue grew 46% to $1.3 billion, driven by subscriber gains and a price bump for Paramount+, as well as revenue from pay-per-view events. DTC advertising revenue was up 18% to $430 million, with growth at both Paramount+ and Pluto TV. DTC Adjusted OBIDA losses improved 31% to $238 million.
Paramount+ saw revenue climb 61% on the back of subscriber growth and advertising revenue gains. The Paramount+ subscriber base reached 63 million, with the streaming service adding 2.7 million net additions in the quarter. Paramount+ global ARPU expanded 16% year-over-year, benefiting from an earlier price bump. And domestic monthly churn continued to improve, executives said, despite the price hike that saw Paramount+ rise to $12 per month.
On the earnings call Bakish cited the combination of Paramount+ with Showtime in June as driving increases in acquisition, engagement, ARPU and operational efficiency.
He also pointed to partnerships as “a meaningful contributor to our momentum,” including a deal with Delta Airlines and a year into a partnership for Paramount+ Essentials bundled with Walmart+ membership. Bakish said the Walmart deal continues to help add Paramount+ subscribers and grow engagement while providing an incremental driver of consumer products franchises like “Teenage Mutant Ninja Turtles” “Paw Patrol” and “Yellowstone.”
He noted that in certain smaller international markets Paramount is now prioritizing partner-centric distribution approaches, where partners will incorporate a subset of the company’s content into a Paramount+-branded area on their own platforms. He cited benefits of having a fully engaged local partner driving the business, while being able to monetize Paramount content and amplify the Paramount+ brand “without the investment in local content, marketing or operating infrastructure.” Bakish said in the past few weeks alone it’s struck deals in Belgium and Greece, with more in the pipeline.
During the call Bakish also commented positively on the potential for hard bundles of streaming services and pay TV in the U.S. - more on that here.
Alongside subscriber gains Paramount+ and Pluto TV marked increased engagement in Q3, with global viewing hours jumping 46%. According to Bakish, Pluto TV had its highest total viewing hours ever in Q3, both domestically and globally.
In Q3 total company revenue grew 3% year-over-year to $7.1 billion. Paramount’s TV media revenue was down 8% to $4.56 billion, where advertising revenue declined 14% to $1.7 billion. Filmed entertainment grew 14% to $891 million. Paramount Adjusted OBIDA was down 9% to $719 million.