Paramount says there will be 'continued opportunities' to hike streaming prices
Paramount (PARA) said streaming subscribers will see even more price increases moving forward — a trend that's permeated throughout the entire media industry.
"We see a very compelling pricing opportunity longer term, which is to say this won't be the last price increase that we do," CFO Naveen Chopra said on the company's third quarter earnings call on Thursday.
"We think there is a continued opportunity for pricing to play a role in growing both revenue and earnings in our streaming business," he added.
In June, Paramount launched its ad-free Paramount+ with Showtime streaming offering for $11.99 a month — $2 more than the previous price for a Paramount+ subscription. It also raised the prices of its ad-supported tier by $1 to $5.99.
Paramount+ added 2.7 million subscribers in the third quarter, beating expectations of a 1.8 million increase. In total, Paramount+ has reached more than 63 million subscribers.
Subscription revenue also grew 46% in the quarter to reach $1.3 billion, driven by subscriber growth and pricing increases for Paramount+, coupled with revenue from pay-per-view events. Overall direct-to-consumer revenue totaled $1.69 billion in the quarter, compared to the expected $1.64 billion.
"Paramount+ is still positioned at a very compelling price point, and that's true both on our ad-supported tier and our ad-free tiers," Chopra said.
"Relative to competitors, Paramount+ is still positioned at a very compelling price point," the executive said, adding that the June price increases "actually performed better than we expected" with the impact on churn, or consumers cancelling the service, coming in less than expected.
"The price increase is actually more accretive to earnings than we originally anticipated, so that gives us some confidence," he said, doubling down on the streamer's value proposition with sports, films, franchises, and kids' content at the cornerstone of its pipeline.
"The data we've seen coming out of our first price increase suggests that, that value proposition and the stickiness of the content does give us additional room for growing price over time," he said.
Paramount reported a direct-to-consumer (DTC) loss of $238 million, narrower than analysts' expectations of $438 million and the $343 million loss seen in the year-earlier period.
The company now forecasts full-year direct-to-consumer losses in 2023 will be lower than in 2022, with anticipated fourth quarter DTC losses similar to the year-ago period.
Streaming prices have ballooned across the board as profitability becomes top of mind for media companies — and even tech giants like Apple (AAPL) and Alphabet (GOOGL).
Last week, Apple became the latest platform to raise prices after announcing the monthly cost of streaming service Apple TV+ will go up by $3 to $9.99 for new subscribers. Netflix (NFLX), Disney (DIS), and Hulu also raised streaming prices last month.
Added up, the cost of these services now rival the dreaded cable TV bundle of years past — the very thing that streaming set out to undo.
Consumers are taking notice with subscribers canceling more of their plans to combat rising costs. According to a new report from Antenna, US subscribers are canceling streaming services at record rates with 6% of overall subscribers cancelling plans in September — the highest recorded rate.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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