Paramount Global CEO Bob Bakish on Thursday expressed positivity over the benefits of hard bundles that combine traditional pay TV services and streaming services in the U.S.
During Paramount’s Q3 earnings call Bakish acknowledged that pay TV operators in the U.S. have different priorities but said the company has shown it “can adapt our partnerships to accomplish common objectives.” Going forward he said it’s possible that some partners “will embrace a strategy that more tightly integrates DTC into the pay TV bundle.”
The most prominent example of this was cable operator Charter’s recent carriage deal with Disney, which involved including ad-supported Disney+, ESPN+ and the forthcoming flagship ESPN DTC offering in certain Spectrum TV packages. The operator is also marketing Disney’s DTC apps to broadband-only customers.
Bakish said if partners want them, hard bundles in the U.S. that incorporate its Paramount+ streaming service “would have many of the same advantages we’ve observed in the various hard bundles we’ve deployed internationally” – including increased subscribers, no subscriber acquisition costs, and lowered streaming churn, as well as potentially improved TV ecosystem trends.
Bakish previously said Paramount already embraces some of the ideas Charter touted in its new approach to carriage deals, and during Q2 pegged bundling as a growing part of its streaming play.
“In addition, adding the scale of U.S. pay TV to Paramount+’s ad-supported would bring incremental benefit to our digital advertising offerings, as well as an additional marketing and promotional value,” he commented Thursday. It would also provide the chance to upsell customers to Paramount+ with Showtime, Bakish said.
The deals have the potential to be additive to Paramount’s model, while also delivering simplicity and more value for consumers, he continued.
Still Bakish said it’s not clear that all partners would want to go in that direction, but noted Paramount already has deals finalized with multiple U.S. distributors to offer Paramount+ with Showtime to their customers “as a true multi-platform product,” which includes linear Showtime pay TV subscribers getting credentials for the streaming app.
Bakish acknowledged that while there are benefits of domestic hard bundles, they come with puts and takes, such as lower potential DTC revenue that comes with what could be a wholesale structure. However, “when you net it all” Paramount sees the lifetime value “as compelling,” he said.
As Paramount has already taken a similar approach internationally, he said “we’ve seen these hard bundles actually catalyze DTC growth.”
And when the idea of bundling is extended to broader distributor economic relationship, that includes Paramount’s linear channels and other elements such as advanced ad sales, data relationships, and marketing partnerships – which results in bespoke arrangements.
Again, Bakish pointed to how Paramount has seen these relationships play out in international markets.
“The result was DTC was launched, revenue was remixed a bit, total revenue increased, and importantly…no linear channels were dropped. So in aggregate, that’s clearly a positive outcome,” Bakish commented.