Paramount+ with ads is rolling out in new markets in the coming months, alongside a premium tier launch slated for Europe this year. While Paramount is teeing up international streaming expansion, analysts at LightShed Partners separately suggest the media company needs an immediate change in strategy and leadership.
On Tuesday Paramount Global announced launches of its Paramount+ plan with ads in Canada and Australia, set for April and June, respectively. The ad-supported tier in the respective markets will cost CAD$6.99 (about $5.15) and AUD$6.99 (about $4.55) per month.
Marco Nobili, EVP and International general manager of Paramount+, said the launch of "Basic (with ads)" in international markets at a lower price point enables the SVOD “to ultimately increase our reach and expand our advertising offerings to partners.”
Paramount, like most U.S.-based streamers has added the option for a lower-cost plan with ads, working to build up audiences and drive advertising revenue. Warner Bros. Discovery’s Max is also launching or relaunching in several international markets this year.
Lee Sears, president of International Markets Advertising Sales, in a statement commented on the Paramount+ launch opportunity for advertisers.
“By introducing the 'Basic (with ads)' plan in Canada and Australia, we will enhance our value to our partners by enabling advertisers to buy across our global franchises, series and films through our digital platform, EyeQ, alongside the breadth of Paramount's premium video inventory in a comprehensive and impactful way," stated Sears in the announcement.
Paramount’s ad platform EyeQ debuted globally in beta last fall, fueled by Paramount Global’s free ad-supported streaming TV (FAST) service Pluto TV. At the time the company said international launches of its streaming service with ads in Australia and Canada would help to accelerate EyeQ’s ad-supported reach.
Built on top of tech from Comcast’s FreeWheel, EyeQ includes Paramount’s internally-built identity management system and programmatic ad platform Conduit, offering advertisers single, multi-market or global campaign executions across the company’s premium digital inventory in one place.
Australia and Canada markets have had access to the premium tier of Paramount+ since last year, when the ad-free version also launched in Brazil and Mexico. Now the premium Paramount+ tier, which offers concurrent streams on up to four devices and 4K UHD picture quality, is expanding to Europe starting with France this month. That will be followed by launches in the U.K., Ireland, Germany, Switzerland, Austria and Italy later this year. In France, Paramount+ is charging €10.99 (or roughly $12) per month for a premium subscription.
"Our pricing strategy and a market-by-market approach to our offering is key to providing customers choice, flexibility and value,” said Nobili in the announcement. “The 'Premium' tier has demonstrated great success in Canada, Australia and Latin America, and I am confident this offering will enable us to reach new subscribers in Europe, as well.”
The international launches come after comments during fourth quarter earnings results in February, when Paramount leadership said the company plans to pull back investment on production of local original content and related marketing in certain markets, as well as exit some hard bundle relationships internationally where the economics weren’t favorable.
“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 in February. Executives noted Paramount+ subscribers outside of the U.S. spend nearly 90% of their time with global Hollywood hits.
And as it seeks to prioritize streaming profitability and content monetization in 2024, Bakish in a memo to employees at the beginning of the year that also disclosed job cuts, said Paramount would be leaning further into markets “where we have a strong multiplatform presence, our US Studio content resonates best, and where there is the greatest revenue potential” such as the U.S., U.K., Canada and Australia.
Paramount+ in Q4 added 4.1 million net global subscribers, for a base of 67.5 million. Executives reiterated Paramount’s peak streaming losses are now in the rearview, having achieved the milestone in 2022 and earlier than planned. It now expects domestic streaming profitability for Paramount+ in 2025.
LightShed analysts say Paramount+ was ‘critical strategic mistake’
Paramount may be focused on streaming profitability, but the veracity of its overall business and various assets have been the subject of rampant reports, particularly around potential M&A. And not everyone thinks Bakish has led Paramount in the right direction – namely analysts at LightShed Partners, which in a March 11 note to investors described the 2020 decision to create the Paramount+ SVOD as a “critical strategic mistake…that has ultimately crippled the company financially.”
The firm went as far as to say Paramount controlling owners National Amusements and Shari Redstone need to make an immediate leadership change, as a result of what LightShed sees as current CEO Bakish’s failed strategic moves.
According to the firm, expectations were that following the 2019 Viacom/CBS merger, Paramount would become a content arms dealer, leaning on its NFL and CBS assets to fortify Viacom’s cable networks, rather than its move to enter the streaming wars by scaling up the former CBS All Access service and utilizing its full content portfolio for the service that became Paramount+ 2021.
Analysts led by Richard Greenfield cited Bakish and team as explaining the strategy to investors at the time with the view that licensing content would make the company less attractive to a buyer, in contrast to keeping most content for the SVOD service, which could entice potential suitors that would also have an immediate streaming service to purchase.
The firm asserted that underlying logic was flawed for several reasons and contends the strategy has decreased the value of Paramount’s IP itself, as it hampered reach and engagement of both original and catalog content. LightShed analysts also zeroed in on the strategy as harming Paramount’s relationships with distributors, since a wide breadth of its content – from NFL, to popular originals like Yellowstone, and kids programming from Nickelodeon, can all be found on the Paramount+ app – meaning no need for an MVPD or virtual MVPD subscription, or alternatively, customers ultimately double paying for content.
“When Paramount+ was created, Paramount management could have chosen to eliminate Sunday NFL programming from the platform or at least to require subscribers to pay for the premium tier to better protect their MVPD/vMVPD relationships,” wrote Greenfield. “Instead, Paramount kept NFL games on their low-end, Essentials tier, which was initially $4.99/month, now $5.99 and is included for free if you sign up for Walmart+. There is no doubt that having NFL content has boosted subscribers to Paramount+, unfortunately the cost was damaging distributor relationships.”
The firm believes major carriage renewals, including with Charter, Dish and Comcast, are set for 2024 and said they will be challenging “as it has become far less important to distributors to carry Paramount given how little content is exclusive to the legacy multichannel bundle.”
LightShed also took issue with Bakish’s decision to keep, rather than sell, its Showtime linear asset. Characterized by the firm as a move to “financially engineer improved profitability” for the Paramount+ streaming service and grow subscribers – it noted Showtime was integrated into the SVOD, rebranded as Paramount+ with Showtime, and the streaming service offered to existing Showtime subscribers.
“Selling Showtime for over $3 billion would not only have been helpful to Paramount’s financial situation, it would have improved its relationships with distributors,” wrote the analysts.
While emphasizing its view that the original Paramount+ decision was a misstep, Greenfield said the company has continued to double down on its strategy “and left Paramount with a subscale streaming platform, a weakened relationship with its MVPD/vMVPD partners and an over-levered balance sheet as linear TV headwinds grow stiffer.”
While LightShed doesn’t think it’s easy to quickly course correct, the analysts suggested sharp changes, namely “dramatically scaling back Paramount+” and axing Bakish from the chief executive role.
“Given our belief that Bob Bakish does not agree with our stated strategy and is directly responsible for what is today Paramount+, we believe Shari Redstone and National Amusements must terminate Bob Bakish and seek new leadership at Paramount immediately,” wrote LightShed earlier this month. “It may already be too late to save Paramount, but a new strategic direction is the best hope Redstone and National Amusements have for saving what is left of the company.”