Paramount recently announced its plans to increase the price of its streaming plan within the next two years, following the successful launch of Paramount+ with Showtime earlier this summer. According to CEO Bob Bakish, this price increase is just the beginning, as the company believes it has the power to raise prices further due to the valuable content it offers.
During the Goldman Sachs Communacopia + Technology Conference in San Francisco, Bakish shared that the price of Paramount’s premium tier had already gone up from $9.99 to $11.99 per month. However, this increase did not result in a significant loss of subscribers or slow down the growth of the subscriber base. Bakish explained that this demonstrates the company’s pricing power in the market and indicates that there is still room for further price increases.
When asked about the path to profitability, Bakish stated that the investment in streaming will reach its peak this year, as previously mentioned. He also expressed confidence that 2024 will be a year of significant improvement in streaming losses. In the second quarter of the year, Paramount reported a streaming loss of $424 million, a decrease from the $511 million loss in the previous quarter.
However, Bakish’s focus was not solely on streaming. He highlighted the company’s ability to continue striking deals in the pay TV sector without experiencing any disruptions, unlike the ongoing carriage dispute between Charter Communications and Disney, which has left millions of Spectrum subscribers without access to Disney-owned networks. Bakish explained that Paramount has co-marketing agreements with every major distributor for streaming products, which incentivizes them to embrace the shift in consumer behavior and transition to streaming platforms.
Paramount+ with Showtime was described by Bakish as the “definitive multiplatform product,” offering consumers multiple ways to access its content. The company sees this as a natural evolution of its business, working together with key distributor partners to offer channels through both streaming and cable services. Bakish believes that this approach will ultimately help Paramount grow its linear share compared to its competitors.
Regarding free cash flow, Bakish acknowledged the challenges posed by the recent strikes from writers and actors but emphasized that it has become a “deleveraging element” for Paramount to reduce its debt. Additionally, the sale of Simon & Schuster to a private investment firm for $1.6 billion has contributed to the company’s debt reduction efforts. Bakish expressed confidence that the company is on track to come out stronger and that meaningful progress will be seen as the company transitions into 2024 and beyond.
In conclusion, Paramount plans to raise the price of its streaming plans in the next two years and is confident in its ability to do so based on the valuable content it offers. The company also continues to strike deals in the pay TV sector and believes that its multiplatform approach will set it apart from competitors. Paramount is actively working on reducing its streaming losses and expects improvements in the coming years. With its focus on managing debt and leveraging its valuable assets, Paramount is poised to thrive in the evolving entertainment landscape.