Paramount ‘s strategy for achieving profitability in the streaming sector involves forming additional partnerships and expanding its content offerings, which will provide the flexibility to raise prices, according to CEO Bob Bakish.

Speaking at the Goldman Sachs Communacopia and Technology conference in the US, Bakish stated that the integration of Paramount+ with Showtime in the US, launched on June 27, is meeting expectations.

This merger allowed for a price increase, aligning with industry trends, and also resulted in significant cost savings for Paramount.

The content strategy

Regarding the content strategy, Bakish emphasized the effectiveness of a broad content mix in the market. Paramount aims to increase Average Revenue Per User (ARPU) significantly by increasing prices and incorporating advertising.

Bakish expressed confidence in the value proposition of streaming, highlighting that their first price increase demonstrated pricing power without significant customer churn. He noted that there’s room for further growth in this regard and emphasized that pricing isn’t the sole means to increase revenue.

Internationally, Paramount has consolidated western Europe with its broader international business, which includes Latin America, to boost ARPU.

In terms of partnerships and distribution, Bakish believes that partnerships with distributors will play a vital role in Paramount+’s expansion, both domestically and internationally. He mentioned the success of bundling Paramount+ with existing Showtime subscribers as a strategy, similar to the Disney-Charter dispute, which showed the effectiveness of bundling.

Bakish also mentioned the possibility of further partnerships beyond their current markets and highlighted their hard-bundling approach outside the US as a cost-effective strategy.

Within the US, Bakish pointed out the partnership with Walmart as a valuable collaboration for both companies.

He also acknowledged the appeal of more affordably priced, slimmer entertainment bundles to attract pay-TV consumers and combat cord-cutting.

Significant investment for Paramount

Bakish reiterated that 2023 will be a year of significant investment in streaming for Paramount, with expected improvement in losses the following year and overall earnings growth. Factors contributing to this include subscription levels, churn rates, pricing strategies, and cost reductions.

Regarding advertising, Bakish mentioned signs of recovery and how Paramount leveraged its strong sports content to counter the negative impact of actors’ and writers’ strikes.

Lastly, Bakish discussed the continued competitiveness of sports rights auctions and the strength of a hybrid offering that combines sports and entertainment. He noted that Paramount is well-positioned in this landscape.