Last week, Paramount Global announced their fourth-quarter and full-year 2022 financials. A key highlight is the growth of the company’s Paramount+ streaming subscription service which added 9.9 million new subscribers in the fourth quarter. The service now boasts 56 million subscribers. Paramount’s total direct-to-consumer global audience is now more than 77 million. In the fourth quarter, Paramount’s direct-to-consumer revenue grew 30% to $1.4 billion year-over-year, including Paramount+ whose revenue grew 81% to $800 million year year-over-year.

Other direct-to-consumer highlights for the fourth quarter include the following:

• Paramount Global’s direct-to-consumer audience added 10.8 million subscribers, including Paramount+, during the fourth quarter.
• The company said subscription growth was driven by strong content, including the NFL, and the success of popular franchises including Top Gun: Maverick, 1923, Tulsa King and Smile.
• Internationally, Top Gun: Maverick and Yellowstone attracted new subscribers.
• Partnerships like Walmart, Delta, Sky, Canal+, Amazon and Roku helped Paramount+ grow its audience base for the year.
• Antenna reports that since the launch of Paramount+, it is the #1 premium streaming service based on domestic sign-ups and gross subscriber additions. The service also had the most sign-ups in 2022.
• Pluto TV, a free, ad-supported streaming service, grew global monthly active users to 6.5 million during the fourth quarter.

On the February 16, 2023 earnings call, president and CEO Bob Bakish said 2022 was an investment in the company’s streaming business. While impacted by a challenging economy and a soft ad market, the company exceeded expectations in some areas, and they expect to continue their investment and growth into 2023.

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.

“We see a year of continued content and platform momentum ahead of us, a year of further scaling streaming as we hit the peak investment point, a year where we further harness the power of One Paramount, including importantly with our Paramount+ Showtime integration and a year where we look to the ad market to turn as we get to the back half,” Bakish said.

“We know our audiences, which enables us to efficiently manage content spend across platforms. To that end, we focused on developing, expanding and exploiting the premium content franchises fans love, an approach we’ll lean into more and more,” added Bakish.

Paramount+ price increases

Bakish noted that growing subscriptions and subscribers will be important in 2023, but revenue growth is the key performance indicator the company will focus on this year. A factor in revenue growth will include price increases.

“Paramount+ offering is far from the industry price leader. We are on the value end of the pricing spectrum. And so in 2023, we will raise price, both for Paramount+ Premium and Essential, both in the U.S. and select international markets,” Bakish said.

Paramount is integrating Showtime and Paramount+, a strategic move that will benefit subscribers in terms of a broader content slate and the company by consolidating content acquisition costs and marketing expenses. Paramount+, currently priced at $4.99 a month, will increase to $5.99 a month for the essential tier without Showtime. The integrated product will include Showtime and Paramount+ will be priced at $11.99, a $2.00 price increase. The pricing will impact new and existing customers when the integrated premium streaming package is offered in the third quarter. International pricing will also increase.

Paramount financial highlights

For the fourth quarter, Paramount reported $8.1 billion in total revenue, a 2% increase year-over-year. For the full year, Paramount had $30.2 billion in total revenue, a 5% increase year-over-year. TV Media represents the majority of Paramount Global revenue at about 72% with direct-to-consumer coming in second place at about 16%. The company reported a loss of $(0.29) diluted earnings per share for the fourth quarter, a decrease of 110% year-over-year, and net income of $1.03 diluted earnings per share for the full year, an 85% decrease year-over-year.

Insider Take

All the major streaming services have increased prices recently, and many have added an ad-supported model to increase consumer choice and give themselves another revenue stream. Paramount’s news comes as no surprise, and it is a good strategic move to grow revenue. As they stated, they are on the low end of streaming subscription pricing, so there is room to grow without significant subscriber loss. The integration of Paramount+ and Showtime into a signal service is also a smart strategy. They bring the best of both services together, providing added value for subscribers while also reducing their costs.

Takeaways for subscription companies: This is a great example of a legacy media and entertainment company evolving with the times to meet their changing needs. They know content, and they know their audience. They are capitalizing on that and are willing to innovate and build on successful partnerships to keep up the momentum. The takeaway – old dogs can learn new tricks.

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.