Paramount Global on Wednesday reported quarterly streaming subscriber and revenue gains alongside narrowed losses, with an expectation for its Paramount+ service to reach domestic streaming profitability in 2025.
Paramount+ in Q4 saw its global subscriber count increase by 4.1 million net additions since Q3, for a total base of 67.5 million at the end of 2023. On Wednesday’s earnings call Paramount CFO Naveen Chopra categorized subscriber growth as “relatively balanced” between domestic and international subscribers, speaking to what Paramount sees as a solid mix of sports and entertainment despite some strike-related impacts to its content slate in the U.S. The finance chief also cited nice performance in Q4 from partnerships such as inclusion of Paramount+ Essentials within the Walmart+ bundle, alongside the launch of a hard bundle in Japan, as contributing to subscriber growth.
And while not contributing to Q4, Chopra said the company was “very excited about the magnitude of starts” it saw from the NFL Super Bowl, which aired on CBS and was available on Paramount+. It’s too early to assess how many of those subscribers will stick around, he noted, acknowledging “high churn on an event like that” but saying Paramount’s “encouraged by what we’ve seen thus far.”
Paramount CEO Bob Bakish emphasized Paramount+’s mix of sports and entertainment, saying that among people who come to the service for sports, 90% of their engagement is with non-sports content.
That said, Paramount expects lower subscriber gains in 2024 than 2023. While Bakish reiterated Paramount is “big believers in bundling”, Chopra noted it will be exiting some hard bundle relationships in international markets where the economics “just weren’t that compelling.” Changes internationally are likely to represent “a loss of a couple million subs,” but Chopra said it won’t have a material impact financially, including on streaming revenue or EBITDA.
Paramount also plans to pull back on investment in production of local content and related marketing in international markets, which could result in slower international subscriber growth.
“Internationally it’s become unquestionably clear that Hollywood hits are the biggest draw for our audiences and partners around the world, which means there’s a clear opportunity to lean into our CBS slate, Paramount+ originals and Paramount films, while slowing spend on local content and associated marketing,” Bakish said. Executives noted Paramount+ subscribers outside of the U.S. spend nearly 90% of their time with global Hollywood hits.
In Q4, alongside subscriber gains, Paramount’s direct-to-consumer streaming business marked revenue growth and improved losses in the period.
Total Q4 DTC revenue grew 34% year over year to $1.87 billion. That includes $1.3 billion in subscription revenue, up 43% yoy, driven by subscriber growth and a price hike at Paramount+, which integrated Showtime last year. Quarterly DTC advertising revenue of $526 million grew 14% yoy, on the back of growth and increased engagement from Paramount+ and the free ad-supported streaming TV (FAST) service Pluto TV. Global viewing hours across both platforms increased 27% in the quarter. For the full year 2023 Paramount’s DTC business generated $6.7 billion, an increase of more than $1.8 billion compared to 2022.
For its Paramount+ SVOD specifically, revenue grew 69% year over year in Q4, on the back of subscriber growth and the company generating more revenue per user. In Q4 Paramount+ global ARPU was up 31% over the prior year period.
According to Chopra, Q4 DTC results also benefited from strong performance of the company’s Paramount+ with Showtime offering. He said expanded content on the premium tier led to an increase in hours of engagement per subscriber as well as improvements in monthly churn for those subscribers, both quarter over quarter and year over year.
In addition to revenue gains, Paramount’s Q4 DTC Adjusted OBIDA loss of $490 million improved by $85 million year over year, with the company citing higher revenue as more than offsetting increased costs to support the growth of Paramount+. Full year streaming losses of $1.66 billion also improved year over year, as Paramount last quarter reported hitting peak annual DTC losses sooner than expected in 2022. The company now expects to achieve domestic streaming profitability for Paramount+ in 2025.
On Wednesday’s earnings call Bakish cited three priorities for the company going forward: maximizing content, achieving streaming profitability and unlocking synergies across the whole of Paramount, including across content and marketing partnerships.
As Paramount reported growth in streaming, DTC revenue gains didn’t offset declines in its film segment and TV media business that includes linear networks like CBS, Nickelodeon, and MTV, with each reporting quarterly and full-year revenue declines. Paramount’s TV media business, which still accounts for the bulk of its revenue, generated $5.2 billion in quarterly revenue, reflecting a 12% yoy drop. Full-year TV media revenues were down 8% to $20 billion. In its TV segment Paramount saw affiliate and subscription revenue decrease 1%, while advertising revenue was down 15% and licensing and other revenue declined 25%, the latter including impacts from the dual Hollywood actors and writers strikes in 2023 on the amount of content available for licensing.
Quarterly revenue in its film segment declined 31% to $647 million, with full-year film revenue down 20% to $2.9 billion. Paramount said Q4 revenue declines were due to lower theatrical revenues and lower revenue from licensing and other revenues, the latter attributed to a difficult comparison to the success of “Top Gun: Maverick” in the digital home entertainment market among other factors. Declines in film and TV segments drove Paramount’s total Q4 revenues down 6% yoy to $7.6 billion and full-year 2023 revenues declined 2% to $29.7 billion. The company posted $404 million in operating income for Q4 and a full-year operating loss of $451 million. Paramount’s total quarterly adjusted OBIDA was down 15% to $520 million, with full-year Adjusted OBIDA declining 27% to $2.4 billion.