Paramount is regaining some footing after a less-than-impressive Q2.
Overall revenue from Paramount+ alone is up 61% YOY, including an 18% YOY increase in streaming ad revenue from Paramount+ and Pluto TV. Paramount’s price hikes for both its ad-free and ad-supported memberships also helped pad its bottom line.
“We’re clearly advancing on the path to streaming profitability,” said CEO Bob Bakish during the company’s earnings call on Thursday. Consider 2022 the year of “peak streaming investment” (aka operational losses), he said.
Paramount+ added 2.7 million subscribers last quarter, a hair over half the 4.6 million new subscribers it gained this time last year and a marked increase from the 700,000 it reported in Q2 this year.
To be fair, Paramount expected low subscriber growth in Q2 because it had delayed some TV and movie releases to align with the rebrand of its ad-free tier to Paramount+ with Showtime. Now that bundle is helping the company gain more sign-ups, reduce subscriber churn and grow engagement.
Global viewing hours across Paramount+ and Pluto TV rose 46% YOY, which contributed to the streamer’s 16% YOY jump in average revenue per user (ARPU).
Moving mountains
But the path to streaming ad growth isn’t a linear one (pun intended).
Because of lingering economic concerns and the ongoing Hollywood actors strike interfering with upcoming film and TV productions, “the ad market continues to face challenges [with] weaker demand from some ad categories,” Bakish said, such as tech, pharma and media and entertainment.
The streaming industry overall still “isn’t seeing [an] expected recovery” in ad sales, Bakish said. But, he added, “we’re navigating the headwinds.”
Eye spy ad revenue
Paramount expects to attract more ad demand through EyeQ, its CTV ad selling platform, which includes Paramount+ and Pluto inventory.
The platform now reaches more than 100 million monthly unique viewers in the US alone, Bakish said. That number should continue pacing upward following Paramount’s announcement of direct integrations between EyeQ and several major supply-side platforms on Monday.
Making it easier to buy inventory programmatically puts Paramount in a better position to “compete for media budgets previously earmarked for other [digital] formats, like social,” Bakish said.
Specifically, EyeQ is helping bring in more small- and mid-size advertisers, but Paramount also opened up EyeQ to global markets outside the US this week, which should further propel ad sales momentum.
Paramount will roll out more opportunities for global ad growth next year, Bakish said, including making ad-supported Paramount+ available in more international markets, such as Australia and Canada.
Spreading out
Speaking of global expansion, scaling distribution is another way Paramount is trying to boost both subscribers and ad sales.
For example, Paramount made the Paramount+ app available on Amazon’s Prime Video service earlier this year to get in front of more viewers, and the company’s streaming bundle with Walmart+ is helping raise subscriber numbers, Bakish said.
Some new subs are also coming from travelers who have watched Paramount+ for free on a Delta flight.
More content bundling might be in the cards for Paramount, too.
“Going forward, it’s possible some of our [distribution] partners will embrace a strategy that more tightly integrates [streaming] into the pay TV bundle,” Bakish said. (Looking at you, Charter Spectrum and Disney.)
According to CFO Naveen Chopra, the company’s growth next year will depend on “a combination of operational efficiency, subscriber growth and healthy global ARPU expansion.”
