Paramount Is Finally Getting Serious About the Streaming Future

Photo-Illustration: Vulture; Photo by Paramount+

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Paramount+ hits its one-year anniversary in 15 days, and the streamer marked the occasion this week by revealing some surprisingly strong subscriber stats. The service, which until March 4 of last year was known as CBS All Access, said it now has 32.8 million global customers, including 7.3 million who signed up during the last three months of 2021. While still puny compared to the likes of Netflix and HBO Max, it’s well ahead of the fewer than 10 million paying customers for rival Peacock. And it’s apparently strong enough that on Tuesday, P+’s parent company announced it was changing its name from ViacomCBS to Paramount — a nod to the company’s legendary film studio but, even more importantly, its streaming future.

Rebrandings have become fairly common for modern media conglomerates. To shake the many scandals associated with its namesake product, Facebook recently rechristened itself Meta; a few years ago, Google transformed into Alphabet as it tried to move beyond its roots as an internet search engine. In the case of Paramount, the name change seems designed to send a very clear signal to Wall Street that the company — which for the last few years tried to straddle the worlds of linear and digital distribution — is now fully committed to being a participant in the streaming wars. While Viacom and in particular CBS are storied brands with some historical resonance, they’re also closely associated with cable and broadcast TV, the technologies of the past. The new name offers a chance for a symbolic reset.

Of course, Paramount can’t just bank on vibes to get Wall Street to accept that it’s serious about streaming. And that’s why, during a three-hour virtual event for investors Tuesday, company leadership worked overtime to make the case that it was willing to commit the resources needed to become a serious combatant in the platform wars. Among the most important takeaways:

Paramount is done selling off its best content to other platforms. For several years, ViacomCBS (and now Paramount) CEO Bob Bakish was more than happy to make billions of dollars by auctioning off his company’s best-known IP to the highest bidder. His so-called “arms dealer” strategy is why past seasons of Paramount Network’s red-hot Yellowstone are on Peacock and the South Park library streams on HBO Max, rather than helping lure subscribers to P+. But those days are clearly over. Paramount Tuesday said that South Park will become a P+ exclusive in 2025, once the HBO Max deal expires, while Paramount Pictures releases — which are currently shared with Epix — will stream exclusively on P+ by 2024. Paramount will no doubt continue to share some titles with other companies on a nonexclusive basis, but the company is now betting it can make more money from boosting its own streamer than it can by cashing big checks from rival conglomerates.

This was a no-brainer decision, and one many industry analysts believe should’ve been made years ago. After all, Disney started taking back content from Netflix nearly five years ago, even before it finalized plans for Disney+. WarnerMedia and Comcast made similar calls when they made sure to spend the money needed to keep Friends and The Office in the family so they could be used for HBO Max and Peacock, respectively. Bakish hesitated because he and his leadership team believed the best way to grow CBS All Access/Paramount+ early on was to use the revenue from the South Park and Yellowstone deals to make more original content. It’s not entirely dumb: Research has shown most people sign up for streamers because of interesting new originals and not library shows. Still, over the long term, P+ needs to be a one-stop destination for all things Paramount. Tuesday’s announcements indicate that’s exactly what will happen within the next three years.

Paramount+ might as well be called Yellowstone+. And speaking of creator Taylor Sheridan’s megahit, Paramount used the investor event to unveil yet a further expansion of his empire. Yellowstone is getting another P+ spinoff featuring the Dutton clan, this one called 1932. It will join the already-announced 6666 (a nod to the Four Sixes Ranch in the show) as well as the Sheridan-produced dramas Land Man (starring Billy Bob Thornton) and Tulsa King (with Sylvester Stallone). What’s more, Paramount confirmed that the upcoming fifth season of Yellowstone will expand to 14 episodes and be split into two batches of seven episodes. Nothing official has been decided on when the new episodes will air, but the Wall Street Journal reported on Wednesday that the current plan is to have them run in the summer and fall so that some of Sheridan’s new shows can premiere around the same time. That’s the strategy that was used to roll out 1883, whose first couple of episodes aired on Paramount Network adjacent to the ending of Yellowstone season four before becoming P+ exclusives.

Cable is becoming less relevant than ever for Paramount, at least for scripted content. Remember when Comedy Central announced it was making a new Beavis and Butt-Head series, taking over the franchise from MTV? Well, the show is still happening — but as of Tuesday, it is now a P+ exclusive. This isn’t a shock, but it is yet another walkback of a strategy outlined just 18 months ago, which had the company planning to use its best IP to keep its cable networks stocked with adult animation as well as a regular cadence of original low-budget movies. But between Beavis and previously announced South Park movies, that animated content seems to have shifted to P+. And while the MTV cable nets did air some holiday movies in November and December, that promised slate of TV movies has yet to materialize. (There are apparently still plans to do some movies for cable, but they’re happening at a much slower rate than announced.)

Still, it would be a mistake to assume Paramount is completely abandoning linear, be it broadcast or cable. CBS, for instance, is a huge source of content and promotion, according to Eye president and CEO George Cheeks. At Tuesday’s event, he noted CBS’s hit new comedy Ghosts has become the No. 1 comedy on P+, and said that the network promotes P+ on its air at least once every hour during network programming — an annual total of 4 billion marketing impressions. And Bakish himself went out of his way to give Par’s linear properties a vote of confidence, saying that he rejects those who think broadcast and cable platforms are “a hindrance in our streaming path. We see it as exactly the opposite,” he said. “Paramount’s reach, recognition, and relationships are core reasons why our streaming strategy is working. Our existing platforms allow us to launch and grow shows and fandoms for streaming. They help us promote and make the most of our content investments across platforms.”

Paramount is expecting P+ and its other streaming properties to get a lot bigger, and soon. After the strong growth of 2021, the company now believes it can build a base of 100 million global streaming subscribers by 2024. That’s up from last year’s forecast of 70 million. Paramount is already more than halfway toward that goal. In addition to the nearly 33 million subscribers for P+, the company’s Showtime, BET+, and other smaller international platforms have enough subscribers to boost the company’s overall base to just over 56 million. Two years isn’t that much time, but Par is clearly willing to spend the money needed to boost its numbers. Plus, the news that  P+ and Showtime content will soon be offered within the same P+ app could substantially boost sign-ups, particularly if the company once again resorts to discounting offers, like the one last year which let users lock in a year of Showtime and P+ for $10 per month.

But Is All This Enough?

As impressive as Tuesday’s presentation might have seemed, the first reaction from Wall Street was surprisingly sour. Even with better-than-expected gains in subscribers and the strong commitment to streaming, traders sent shares of the new Paramount down about 18 percent. After years of analysts complaining Bakish didn’t seem willing to spend what was needed to win in the streaming wars, it now seems investors are worried it might be spending too much and that, as a result, profits won’t be as strong. “Even though we think Paramount’s shift to streaming is necessary given the headwinds the company faces on the traditional business, we still have a hard time seeing how [direct-to-consumer streaming] would become big enough to return the total company on a path to growth within the next five years,” analysts Michael Nathanson and Robert Fishman wrote in a letter to clients Wednesday.

But whatever the whims of Wall Street, or the long-term prospects of Paramount as a company, I think this has been arguably the best week yet for the one-year-old Paramount+. The long-overdue decision to incorporate Showtime content into the app should help solve one of P+’s biggest problems to date, which is the lack of compelling new content for weeks on end. Unless you’re a fan of CBS shows or Star Trek, there’s often little reason to even think about the platform. Showtime isn’t exactly in the volume business either, but the combination of its hits and P+’s growing slate of originals (including the steady supply of Sheridan series) will make a big difference. Similarly, the news that South Park will leave HBO Max for P+ in three years is a hopeful sign that Paramount will start making other library content exclusive. (Why are Cheers and Frasier anywhere but P+?) None of this means anyone at Netflix, HBO Max, Disney+, or Prime Video needs to be all that worried about P+ representing an existential threat. But at least Paramount+’s owners finally seem ready to give their streamer a fighting chance.

Paramount Is Getting Serious About the Streaming Future