Paramount is seeing subscribers shift towards the ad-supported tier on Paramount+, according to the company’s latest results, and is attracting more small and medium-sized advertisers to the streaming service. The strategy is reportedly putting Paramount+ on the path to full domestic profitability in 2025, following three consecutive quarters of profitability for the D2C segment.
The results close a “transformative year” for Paramount, in which the US entertainment company reached a merger agreement with Hollywood studio Skydance Media. But ongoing losses for the TV business could bolster the argument for the new leadership to shed some of the company’s linear assets, following a 7 percent YoY revenue drop for the TV Media segment during 2024.
Paramount’s total full-year revenues were down 1 percent YoY, driven by a declining TV ad market, with TV ad revenues falling 4 percent YoY during Q4. And the company expects those trends to continue in Q1 2025, with ad revenues impacted by unfavourable YoY comparisons due to the migration of the Super Bowl from CBS to Fox this year.
Shifting priorities
But as much as incoming CEO David Ellison will be evaluating the performance of the linear business, the results will likely shore up his commitment to the streaming service – particularly when it comes to advertising and data capabilites. Ellison has spoken about building out the ad tech for Paramount+, and the current management discussed how the firm’s investment in technology has helped it compete for social budgets from smaller advertisers.
“We’re growing the demand side of the equation,” said Paramount Co-CEO George Cheeks. “Over the past couple of years, we’ve expanded our client base to tens of thousands of small and mid-sized businesses that are now advertising with Paramount every quarter. We’re also investing in data, technology, as well as identity frameworks, which expand our attribution capabilities. These product enhancements will set us up to compete more effectively over time for a larger share of social media budgets.”
This helped drive an 18 percent YoY increase in D2C ad revenues in 2024, according to Paramount, alongside 12 percent growth in subscription revenues. The company cited the shift to the ‘Essential’ (ad-supported) tier on Paramount+, as well as price rises driving ARPU up 1 percent. Paramount+ revenues climbed 33 percent across the full year, fuelling a 13 percent increase in D2C revenues.
Paramount+ also added 10 million new subscribers during 2024, reaching a total 77.5 million, while FAST service Pluto TV saw global watch time jump 8 percent YoY. And the company is focusing its content investments on its streaming service, describing the “ongoing remixing in favour of streaming”, whereby more content is produced exclusively for Paramount+.
“As we work to close the Skydance transaction, we’re focused on continuing to leverage Paramount’s content assets to transform our business for the streaming era,” said Paramount CFO Naveen Chopra. “That means continuing to invest in sports, powerhouse film and TV franchises, and streaming originals to support D2C growth.”
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