On the surface, Paramount doesn’t appear to be doing too hot.
Paramount+ only added about 700,000 global subscribers this quarter, now totaling 61 million. That growth is small potatoes compared to the 5 million subs Paramount+ added in Q2 last year.
Which may explain why the broadcaster’s overall revenue fell 2% YOY to $7.6 billion. The decline is a jarring drop from Paramount’s 19% YOY growth rate last year.
But Paramount, in its earnings call on Monday, said it’s all for a reason.
Better in bulk
Paramount pushed back movie and TV releases to align with the rebrand of its ad-free Paramount+ tier, Paramount with Showtime, in late June. Hence the soft subscriber growth, said CFO Naveen Chopra. The good news is that Paramount’s bundled streaming services are helping bring in more revenue: 40% YOY growth in streaming, to be exact.
Folding the Showtime channel into Paramount+ means people are spending more time on the unified app, which is bringing in more advertisers, Chopra said. Plus, the bundle justifies price increases for both ad-free (from $9.99 to $11.99 per month) and ad-supported (from $4.99 to $5.99 per month) viewing.
To secure more cash, Paramount also announced its agreement to sell Simon & Schuster, its book publishing arm, to the private equity firm KKR, which should net about $1.6 billion.
Calling all advertisers
Paramount+ earned almost 50% more subscription revenue than last year, thanks to its price increases. And streaming ad revenue is up 21% YOY to $441 million.
“Improvements in programmatic buying activity” and international expansion each contributed to growth in streaming ad revenue this quarter, Chopra said.
Paramount expects EyeQ, its CTV ad selling platform that aggregates Paramount+ and Pluto TV inventory, to generate $3 billion in digital advertising revenue for 2023, Chopra said. (Though he didn’t share how much streaming ad revenue Paramount made this quarter other than as a percentage of growth.)
Increases to both subscription and advertising revenue are increasing Paramount’s average revenue per user (ARPU), Chopra said. The company didn’t share exact numbers or growth rates this quarter, but Chopra said the company expects Paramount+ ARPU to spike by 20% in 2024.
It also helps that Paramount has already saved the $700 million by consolidating tech and operating expenses for Paramount+ and Showtime.
“We’re confident that our [content and advertising] strategy will position Paramount for long-term growth as a profitable streaming business,” Chopra said.
