Former SVP at Paramount Pictures Corp (ViacomCBS Inc)
- Paramount Global’s (NASDAQ: PARA) operating environment – subscriber growth and content strategy in SVOD (subscription video-on-demand) services
- Competition vs Netflix (NASDAQ: NFLX), Disney (NYSE: DIS), Warner Bros Discovery (NASDAQ: WBD) and other streaming players
- Pricing dynamics and expense management
- Outlook for 2023 and beyond
Could you share an overview of Paramount Global’s operating environment and pull out 2-3 trends or drivers that you see impacting the business?
I’d like to focus on the SVOD [subscription video-on-demand] offerings and D2C division. As you’ve highlighted, Paramount+ is the company’s primary platform here, which reached 46 million total subscribers in Q3 2022, an increase of 4.6 million from the previous quarter. What are your 2023 expectations for subscriber growth?
You discussed the ceiling or targets for overall subscribers. You mentioned the 100 million number that Paramount Global CEO Bob Bakish pulled out as a target for 2024 across the various streaming offerings. How do you see a softening of the macroeconomic environment affecting this? The word recession is on everyone’s minds. You also mentioned that the market is quite saturated at this point, and looking at a variety of different platforms, domestic growth has been fairly slow. Consumers are perhaps making decisions about where their entertainment spend is going across a ton of options, some of which are also increasing their prices.
You mentioned the potential coming together of Showtime with Paramount+. What do you see as the best way forwards for Paramount monetising this content? Do you think it makes sense to bring it all together into one platform?
You mentioned that the alternative to merging the platforms is spinning out Showtime. Is this viable given the recessionary backdrop and increased scrutiny on the business fundamentals, profitability and expenses of a lot of different streaming players? If so, who would be a logical suitor?
We’ve seen third-party data that churn from Paramount’s platforms has been quite high. Where could this stabilise? What dynamics are at play there?
You mentioned wholesale deals, such as the one with Walmart, as a churn-mitigating factor, but outside of those subscribers, how engaged would you say the Paramount+ subscriber base is? Looking at true levers for the product, you highlighted the velocity of content, the release timings and the impacts of these things across different subscriber bases.
You said that Paramount has one of the largest libraries at 140,000 hours, but looking across the competitive set, Disney and Netflix certainly have very strong senses of audience, ie the family-friendly content at Disney and the something for everyone at Netflix. How does Paramount’s library compare with those players’, perhaps looking at HBO and Warner Bros Discovery as well? What are the strengths and weaknesses of the company’s content?
What are your thoughts on Paramount’s content spending over the next 3-5 years given the economic backdrop and the need to have constant programming to drive subscribers to various platforms? You highlighted that the company plans for content spending to rise to USD 6bn in 2024.
Paramount grew streaming revenue by 38% in Q3 2022, but it also saw an accompanying rise in expenses of 44%, so the division continues to be a loss leader for the business. You highlighted the timeline to drive this division to profitability, but on the flip side, there is the debt burden and backdrop of more scrutiny on expenses. What do you see as the efforts to continue subscriber growth, considering that the goalposts have shifted a little bit on what is understood as the overall total available market opportunity? Where is Paramount today in terms of what it’s spending its resources on and the growth that it’s seen so far?
What are your concluding thoughts on Paramount? What do you see as the largest risk to the company in the near term?
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