CFO: Paramount+ Eyeing Price Increase, Total Streaming Biz Looking to Exceed Year-End Goal of 75 Million Subs

Paramount Global ended the most-recent fiscal period with 67 million subscribers across the Paramount+, Showtime, Noggin and BET+ streaming platforms. The media giant now believes it will exceed previous year-end estimates of 75 million global subscribers — and plans to raise subscription pricing in the near term, according to CFO Naveen Chopra.

Speaking Nov. 16 at the RBC Capital Markets 2022 Technology, Internet, Media and Telecommunications Conference, Chopra said ongoing consumer adoption of Paramount+, coupled with a strong theatrical slate earmarked for streaming bodes well for Paramount’s positive direct-to-consumer business outlook.

Paramount Global CFO Naveen Chopra

“We’re very bullish about … actually accelerating growth in Paramount+ subscribers … with some adjustment for services we shut down in Russia,” Chopra said. “And that is, again, very much content-driven and distribution-driven.”

The executive said the studio’s six No. 1 box office releases this year (Top Gun: Maverick, Scream, Smile, The Lost City, Jackass Forever, Sonic the Hedgehog 2), the Paramount+ debut of Smile, the arrival of Maverick on the platform in December, new series “Tulsa King,” starring Sylvester Stallone, the next “Yellowstone”-themed series “1923,” and the return (from Netflix) of former CBS series “Criminal Minds” on Thanksgiving, all give management confidence that the previous subscriber guidance was too cautious.

“I couldn’t be more excited about the trajectory that we’re seeing there,” Chopra said.

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With that confidence comes the reality that market conditions warrant the pending first-ever price increase for Paramount+, which, coupled with increases in projected ad-revenue from the less-expensive subscription tier, could increase the average revenue per user, or ARPU.

Paramount+ currently costs $5.99 with advertising, and $9.99 without ads. The company expects to have 100 million D2C subscribers by the end of 2024, along with streaming revenue in excess of $9 billion.

“We’re now starting to see some of the other comparable streaming services in the marketplace taking price up, something we expected would happen,” the CFO said. “And that actually gives us room now to start increasing price on our service while maintaining sort of that value positioning. I think the market has not fully appreciated the long-term trajectory that we expect to see in this business.”

Warner Bros. Discovery CEO Zaslav: HBO Max Is ‘Not Particularly Good’ Right Now

Warner Bros. Discovery CEO David Zaslav continues to aggressively clean house while cheerleading about the upstart media giant’s content IP and distribution channels.

While media reports publicize ongoing movie and TV show cancelations, along with layoffs at Warner, Zaslav says the noise has only redoubled his desire to make the company more efficient and accretive to shareholders through free cash flow and higher stock valuation, while also exploiting what he characterizes amounts to 40% of all Hollywood content.

Speaking Nov. 15 at the RBC Capital Markets 2022 Technology, Internet, Media and Telecommunications Conference, Zaslav pulled no punches in describing the “illogical” decision among some studios to collapse the theatrical window in favor of streaming.

He contends that a ‘B’ movie released theatrically performs five times better than it does if it is released directly to a streaming service. Zaslav says there remains an ecosystem of economic return in the theatrical window, unlike streaming, adding that former company WarnerMedia’s 2021 strategy of simultaneously releasing all theatrical movies on HBO Max was largely an attempt to generate subscribers.

“We’re not doing that [anymore],” he said. “Subscribers today are like clicks in the 1990s. We want real subs that are going to pay real money. We’re not collapsing businesses [i.e., theatrical] because we are a diverse company. Optionality and the ability to move content around [different distribution channels] is one of the greatest opportunities of this company.”

WBD plans to launch a hybrid Max/Discovery+ subscription service next spring that will also feature ad-supported options. In addition, mindful of the success of AVOD pioneers Pluto TV and Tubi, Zaslav contends WBD can create a similar service (using the Warner Bros. shield logo as marketing) stocked with Warner Bros. Television catalog shows, rather than licensing third-party content. The television production unit is the largest in Hollywood, generating around 100 shows currently in production, according to Zaslav.

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“We recognize that there’s a huge number of people in every country that aren’t going to pay [for a subscription streaming service],” he said. “That will position us, in terms of aggregating an audience, better than anybody.”

The CEO said that while 60% of HBO’s content is not consumed, much of Discovery’s programming is consumed during the day in homes as background entertainment, resulting in lower subscriber churn and higher demand — especially in Europe.

“We have a platform [HBO Max] that’s not particularly good [right now], that will be merging with a new platform [Discovery+] that is going to be much better, much more user-friendly,” Zaslav said. “It’s taken a lot of courage. It’s taken vision for what we think we can be and who we want to be. And we’re going to be wrong about a lot of it, but when we emerge next year, it’s going to be the company we believe in.”

HBO, HBO Max and Discovery+ ended the most-recent fiscal period (ended Sept. 30) with almost 95 million combined subscribers.

Netflix Stock Up 83% Over Past 12 Months

Netflix keeps firing on all cylinders; the latest Wall Street salvo coming from RBC Capital Markets, which tagged the subscription streaming video behemoth with an “outperform” stock rating.

Citing an internal survey from the U.S., U.K. and India suggesting satisfied subscribers and low churn levels, RBC says Netflix shares can grow 13% to $620 per share, up from the current $549 share price valuation. The news sent Netflix shares up 3.8% in midmorning trading. Netflix ended its most-recent fiscal period with 190 million subscribers.

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