Paramount reported direct-to-consumer subscriber growth across streaming services in the second quarter, with CEO Bob Bakish highlighting the company’s global strategy and international market launches in 2022.
On the subscription side of the business Paramount+ added 4.9 million, for a base now totaling 43.3 million. Across its streaming direct-to-consumer services, subscribers rose to nearly 64 million. That includes 3.9 million customers in Russia removed, with 1.2 million taken off from Paramount+. Subscribers at Paramount+ are balanced between its premium ad-free tier and the lower-cost ad-supported essential tier, according to Paramount CFO Naveen Chopra.
Meanwhile, free ad-supported streaming TV (FAST) service Pluto TV expanded its base to reach 69.6 million monthly active users as of the end of June.
International market launches for Paramount+ helped partially drive subscriber growth, including June debuts in the U.K., Ireland and South Korea.
Speaking on the company’s second quarter earnings call Thursday, Paramount CEO Bob Bakish said that “those launches are performing above our expectations.”
It’s taken a partnership approach with Sky in the U.K. and Ireland and CJ ENM in South Korea. Bakish said Sky is “very pleased with what we brought to the market” – adding that “response to the [UK] launch more broadly has been very strong.”
For global reach, Paramount is using three-pronged distribution strategy of hard bundles, direct-to-consumer, and use of channel partners like Roku, Apple and Amazon.
“Hard bundle deals like these allow us to quickly unlock a healthy volume of subscribers at zero acquisition cost and with very low churn,” Bakish said of the international launches.
And international expansions helping to boost subscribers “definitely extends past” just the second quarter, according to the chief executive. Paramount sees subscriber growth coming not only from hard bundles, but also the other two distribution strategy pillars starting to kick in, he added.
In September, Paramount will follow the same strategy to launch Paramount+ as a hard bundle in Italy with Sky Italia. It will follow-on with launches in Germany, Austria, and Switzerland with Sky and with Canal+ in France later this year.
In India and Eastern Europe, the company is focused on balancing long-term market growth with a smart allocation of capital, he said. An India launch for Paramount+ is teed up for 2023.
By the end of the year, Paramount expects to have SVOD services in a total of 60 markets, including Paramount+ and Sky Showtime.
Paramount just this week tapped Pamela Kaufman to lead its international business as CEO and president of International Markets, Global Consumer Products & Experiences. She takes the helm as Raffaele Annecchino decided to exit the company, after being put “on leave” in June.
With an uptick in subscribers direct-to-consumer revenues grew 56% from a year ago to $1.19 billion in Q2. That includes 74% growth in subscription revenue to $830 million, reflecting Paramount+ paid sub additions, while advertising revenue jumped 25% from a year ago to $363 million, driven by growth from increased impressions on both Pluto TV and Paramount+. Revenue at Paramount+ grew 120% year over year to $672 million, while Pluto TV contributed $265 million in revenues.
Total DTC adjusted OBIDA decreased $302 million from the year prior, reflecting increased DTC service investment. Paramount recorded total Q2 revenue of $7.78 billion in Q2, up 19% year over year. Operating income declined 33% to $819 million.
On the call, Bakish said third-party data shows Paramount+ is the most popular streaming service in the U.S. to add among switchers.
“That means people who dropped a service in the last 12 months were more likley to add Paramount+ than any other service, yet again evidence we are taking market share,” he noted.
Just this week The Roku Channel added Paramount+ as a premium subscription partner, also giving the service its own dedicated programming guide – a first for Roku premium partners.
Bakish again pointed to the power of Paramount’s content strategy, spanning movies, series, sports, events and news, with distribution across streaming, linear and theatrical.
“The diversity and quality of our content is unrivaled, especially on Paramount+,” he said. Bakish pointed to box office releases “The Lost City” and “Sonic the Hedgehog 2,” which came to the streaming service in May, and are “generating terrific engagement across all demographics.”
“Their success demonstrates that our strategy of a big theatrical release, with a fast follow to streaming, is by far the most effective way to maximize the return on our investments in movies,” he continued.
Paramount’s multi-platform approach will also drive more to streaming, he said. For example, the major hit series “Yellowstone” is teed up for a fifth season on Paramount network in the U.S.
“Importantly, Yellowstone’s linear premiere will support the streaming launch of Taylor Sheridan’s latest original for Paramount+, Tulsa King,” which debuts in November starring Sylvester Stallone.
Meanwhile, success at the box office with blockbuster “Top Gun: Maverick”, which has earned more than $1.3 billion to date at theaters, helped filmed entertainment revenue up 126% year over year. Top Gun along with Sonic the Hedgehog 2 drove a $630 million increase in theatrical revenue. Paramount’s TV media revenue ticked up 1% to $5.26 billion in Q2.