Paramount, the global media company that owns several top brands like Nickelodeon and CBS, reported today that the number of subscribers of its Paramount+ streaming service grew to 60 million by the end of March 2023.
This results in a 50% year-on-year jump and highlights the extent to which consumers are embracing the content that the company is putting up, which includes the latest titles from successful franchises like Top Gun: Maverick and the platform’s originals including Mayor of Kingstown and Star Trek: Picard.
A total of 4.1 million new subscribers were added during the first quarter of 2023 while revenues from this segment of the business known as “direct-to-consumer” jumped by 39% compared to a year ago to $1.51 billion.
Also read: Best VPN Services – Top 17 VPNs for Streaming and Privacy in 2023
Subscription revenues were the most relevant driver for this positive year-on-year leap as they grew by 50% – a percentage that is in line with the platform’s user growth – to $1.11 billion. This income source accounts for nearly three-quarters of the firm’s total DTC revenues.
“Paramount continues to demonstrate the strength of its content engine, driving momentum across streaming, television and theatrical. This resulted in Paramount+ and Pluto TV reaching significant milestones with 60 million subscribers and 80 million MAUs, respectively, while CBS is poised to claim the #1 spot in broadcast for the 15th straight season”, commented Bob Bakish, the President and Chief Executive Officer of Paramount in regards to the performance of the business during this period.
Paramount is Still Far from Becoming a Top Player in the Space but it’s Growing Fast
In 2022, Paramount+ accounted for nearly 60% of the revenues produced by the DTC segment, which includes PlutoTV, Showtime, BET+, and Noggin. Meanwhile, DTC revenues accounted for nearly a fifth of the corporation’s overall top-line figure during this year as well. The contribution of this segment to the total has been growing in the past three years, moving from 7% in 2020 to 16% in 2022.
Same as multiple other streaming companies, Paramount+ launched an ad-supported tier that costs $4.99 per month in June 2021. The company was a pioneer in this type of subscription tier at a point when Netflix (NFLX) and Disney+ were not even toying with the idea.
Even though Paramount’s subscribership figures pale in comparison to the more than 200 million paid subscribers that both Netflix and Amazon Prime reportedly have, they could soon surpass HBO Max and seem to have already outpaced Hulu.
Paramount’s DTC Bet is Weighing Heavily on Its Financial Performance
Perhaps one of the caveats of growing the DTC segment is that its negative results are weighing significantly on the company’s overall financial performance. Overall, Paramount reported a net loss of $1.12 billion during the quarter.
These negative results were primarily caused by a $1.7 billion impairment charge on the company’s programming. The company added the following statement to explain the origin of this extraordinary expenditure:
“In connection with our plan to integrate Showtime into Paramount+ and initiatives to rationalize and right-size our international operations to align with our streaming strategy and close or globalize certain of our international channels, during the first quarter of 2023 we reviewed our content portfolio and determined that we would not use certain content on our platforms”, the disclosure reads.
Also read: Best Stock Trading Platforms to Watch in 2023
The statement continues: “Accordingly, we recorded programming charges, which were comprised of impairment charges for content removed from our platforms or abandoned, development cost write-offs and contract termination costs”.
Paramount (PARA) stock is shedding a quarter of is value this morning as investors appear to be reacting negatively to this hit the company took on its finances.
The DTC unit continues to put weight on the firm’s earnings-generation capacity as its operating income stood at $511 million, accounting for roughly a third of the revenues it generates.
In addition, according to the figures shared by Paramount today, DTC is its biggest losing segment. During this first quarter of 2023, DTC ate up almost half of the operating income produced by the TV Media unit – the only profitable one for the business.
In addition, Paramount’s cash burn accelerated significantly during this quarter as the firm burned $554 million in contrast to the $243 million in cash inflows it reported during the same period a year ago.
The firm’s net debt stood at $13.74 billion by the end of this quarter while its cash and equivalents ended the period at $2.11 billion.
Other Related Articles: