A ViacomCBS executive on Tuesday said the company's approach to incorporating broad content in its flagship streaming service Paramount+ has helped it compete against bigger players in the same space.
Speaking at the Bank of America Securities 2021 Media, Communications & Entertainment Conference, ViacomCBS CFO Naveen Chopra said Paramount+ and other streaming platforms helped generate 15% of the company's revenue this year, and that he expects streaming will grab "obviously meaningfully higher" revenue next year.
As such, like other media companies, ViacomCBS is re-allocating certain resources and attention away from its traditional linear business toward its streaming endeavors, which include premium movie network Showtime and free, ad-supported service Pluto TV.
"During our investor day back in February, I think at that point, I indicated that we expected streaming content expense to exceed $5 billion by 2024. That's compared to about $1 billion in 2020," Chopra said. "This year, streaming content expense will be more than double what it was in 2020."
Part of the significant expense in streaming comes from production and licensing, with ViacomCBS choosing to incorporate a diverse catalog of content across Paramount+ and its other streaming services.
"Paramount+ is intentionally a broad service," Chopra said. "A lot of the existing large-scale streaming services — probably with the exception of Disney+ — have really focused on big, scripted dramas for adult audiences. We know, in part from our experience in the linear world, that there's a whole world of viewing out there that is drawn to sports, to news, to unscripted content, to kids content. And we're trying to really lean into that."
That strategy is already starting to generate meaningful wins at ViacomCBS: Chopra noted that the recent opening weekend of the National Football League's season drew more viewers to the company's streaming platforms "than on any other opening weekend to date." Of the three major broadcast networks that have Sunday NFL sports rights, ViacomCBS is the only one to offer a linear feed of its broadcast network affiliates through its own subscription streaming service.
Chopra acknowledged the industry trend of consumers switching away from traditional forms of television delivery like cable and satellite toward streaming options, but he believes concerns that streaming platforms will erode traditional businesses like movie theaters and broadcast television are overblown.
He drew upon a recent example of ViacomCBS releasing a "Paw Patrol" movie in theaters and on Paramount+ as proof that the streaming platforms didn't cut into traditional revenue — and, in the case of "Paw Patrol," likely helped increase it.
"Paw Patrol's box office results actually exceeded the expectations that we set when we thought it would be an exclusive theatrical release, meaning that the simultaneous release on [Paramount] Plus and theaters was very synergistic," he said.
And ViacomCBS continues to pull a significant audience into its traditional linear channels, with NFL events offered as an example of programming that "pulls double duty" on CBS Sports and Paramount+.
"I don't think streaming and linear are necessarily a zero-sum game," Chopra said. "The reality is, we monetize many viewers today in both our linear and streaming services, and I think that will continue to be the case for many years because there is unique content in both channels."
But that isn't to say streaming is an afterthought at ViacomCBS: The company remains focused on growing its share of the market across its various digital products. It is also working to break into new territories, with recent announcements that Paramount+ will launch in several Western European countries and a unique partnership with Comcast for a new streaming service called Sky Showtime that will roll out in several Eastern European countries.
And streaming is generating big dollars that are hard to ignore, with Pluto TV offered up as a prime example. Just a few years ago, the ad-supported streaming service was generating around $100 million in annual revenue. Now, that figure has jumped to $1 billion, spurred in part by ViacomCBS' decision to incorporate over 200,000 hours of content into the service.
"We're all in on Pluto TV," Chopra said. "We're very bullish about its future. I think a lot of folks probably underestimate the capability and the value of Pluto...and I think we're going to continue to prove exactly what an incredible asset it is."
Chopra said streaming platforms offer two core advantages for ViacomCBS: More control over ad pricing and monetization, and a broader set of distribution pipelines for the company's content.
"We're already seeing digital video advertising as a major growth driver, which, in combination with rate increases on the linear side, allow us to do two things: Number one, make available more total impressions for our advertisers than we could in the linear world. And, [number two,] it allows us to secure greater aggregate economics than to the combination of streaming and linear," he said.
Chopra said Paramount+ and Pluto TV "are the key parts to making that equation work," in that they create additional advertisement opportunities that don't necessarily exist on linear television.
"Streaming has definitely added to the business, and that's obviously a big reason that we are investing so heavily behind it," he said.