Paramount Global intends to continue its path to profitability for streaming, particularly through its integration of Paramount+ and Showtime. As the company aims to achieve cost savings, it will also strive to milk the Showtime content library.
Speaking at a Deutsche Bank investor conference Tuesday, Paramount CFO Naveen Chopra said bundling the two services would “reinvigorate” the Showtime content slate and in turn bolster the consumer experience.
“What we will be able to do with franchises like ‘Dexter,’ ‘Billions,’ ‘Yellow Jackets’ and thinking about we take some of the historical Showtime audiences and create new franchises for them, I think is going to be really exciting,” he said.
From a marketing perspective, Chopra noted franchises “are fundamentally more efficient” because they don’t require as much awareness build-up as entirely new IP. And Paramount is optimistic that the Showtime bundle will improve customer retention and drive revenue growth, given the company’s plans to hike Paramount+ prices later this year.
Since last summer, Paramount has enabled Paramount+ users to subscribe to Showtime from within the Paramount+ app. Chopra noted Paramount has seen “an increasing percentage of new customers” take that bundle, even though the package is priced higher than the base Paramount+ service.
“The fact that we have Showtime content integrated [in Paramount+] and we know that customers are willing to pay for that is encouraging,” said Chopra.
Indeed, Paramount recognizes the value of Showtime. The Wall Street Journal on Tuesday reported the company turned down a $3 billion offer for Showtime from former Paramount exec David Nevins.
Nevins, who exited Paramount at the end of 2022, previously oversaw Showtime and served as chief creative officer for Paramount+ originals. Other parties have also vied for Showtime in recent years, said WSJ, including former Showtime executive Mark Greenberg and Lions Gate Entertainment Corp.
Paramount in Q4 earnings stated the Paramount+-Showtime integration is expected to realize $700 million in future annual expense savings. The company aims to lower expenses for content as well as across marketing, technology and operations.
Chopra added Paramount is ahead of its targets for Paramount+ revenue growth, which has been driven by “better than expected” subscriber growth and average revenue per user. For 2024, Paramount previously gave guidance of $9 billion in streaming revenue and $6 billion in content spending.
“On the cost side of the equation, the integration of Paramount+ and Showtime does mean that I think we will spend less than previously anticipated in DTC content expenses in that period of time,” said Chopra.
Paramount+ in Q4 reached 56 million global subscribers, with Paramount’s overall direct-to-consumer tally surpassing 77 million. Chopra asserted Paramount+ has “an incredible value proposition” relative to its competitors.
“That will likely be enhanced by the general upward trajectory of pricing in the industry,” he added. HBO Max for instance recently implemented its first price hike since its launch in 2020, and Peacock this month stopped offering its free tier for new subscribers.