The media landscape has been changing greatly (and rapidly) since last year, with most every major media company making huge changes and scaling back spending. Combining Showtime and Paramount+ is about consolidation and controlling spending, along with a shift in overall strategy. In the short time, Paramount is taking a $1.3 billion to $1.5 billion impairment charge related to content, meaning that assets the company owns have lost a great deal of value. But, in the long term, Paramount says it should see $700 million of future savings annually. The plan is to reduce operating expenses in marketing, in addition to content expenses related to integrating Showtime. It’s about the long game here.
Overall, Paramount+ now has 56 million subscribers, with the company’s total streaming subscribers now sitting at 77 million. They added more than 10 million subscribers in the most recent quarter. Plus, Pluto TV now has nearly 80 million active users. The perceived added value of Showtime could help grow that base in the long run. Meanwhile, Bob Bakish also explained that the idea is to take a “quality over quantity” approach, while leaning into franchises more:
“By far our biggest lever to manage spending is to focus on franchises. The higher levels of consumer awareness and built in fan bases associated with this IP drive strong subscriber acquisition volume, lower acquisition costs, lower churn, and extend LTVs (lifetime values). And while we will, of course continue to take selective swings on new IP, there’s no question that franchises are a powerful advantage.”
In short, expect to see more “Yellowstone” spin-offs, “Transformers,” and things of the like, in addition to “Billions” and “Dexter” spin-offs in the future, and less stuff like “American Gigolo.” Will that strategy help them survive the streaming wars when the dust settles? Time will tell.