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ViacomCBS Takes a Streaming Gamble on Paramount+ — Analysis

ViacomCBS' rebranded and expanded version of CBS All Access faces fierce competition in a highly competitive market.

Pictured (L-R): Sandy Cheeks, Spongebob Squarepants, Patrick Star, Squidward and Mr. Krabs on the Paramount+ series Kamp Koral: SpongeBob's Under Years. Photo Cr: Paramount+ 2021 CBS Interactive, Inc. All Rights Reserved.

“Kamp Koral: SpongeBob’s Under Years” will debut on Paramount+.


Out with the old, in with the rebranded. ViacomCBS launched its Paramount+ streaming service on March 4, and the media conglomerate is hedging its bets that the platform and its slew of upcoming high-profile content will allow it to carve a major place for itself in one of the most competitive parts of the entertainment industry.

Paramount+ is not ViacomCBS’ first foray into the streaming industry: The service is effectively a rebrand of CBS All Access, which launched in 2014. CBS All Access subscribers will not notice any service interruption and all of the original platform’s content is available on Paramount+. The rebranded service sells the same ad-free $9.99 per month subscription tier as CBS All Access, while a $4.99 ad-supported tier will launch in June and is $1 cheaper than CBS All Access’ ad-supported option.

Content is king in the streaming industry and Paramount+ will exclusively stream a slew of films and television shows that could help sell the platform for years to come. Paramount+ launched with a handful of new titles, including “The SpongeBob Movie: Sponge on the Run,” a revival of BET’s “The Game,” and “The Offer,” a miniseries about the making of “The Godfather.” The “SpongeBob” film will likely seen as Paramount+’s most high-profile launch title and sets up a “SpongeBob” prequel series that will exclusively stream on Paramount+, which is part of ViacomCBS’ effort to court younger audiences following the massive success of the family-friendly Disney+.

Paramount+’s upcoming titles suggest that the service will better leverage ViacomCBS’ catalogue of popular brands than CBS All Access, which was primarily known for its “Star Trek” originals (more of which are on the way), ever did. A “Frasier” reboot, the long-awaited “Halo” series, and retooled version of “60 Minutes” are in the works, as are multiple animated feature films and series based on Nickelodeon’s acclaimed “Avatar: The Last Airbender” series. The new “Avatar” titles could prove critical to Paramount+’s success in the long-term, given the franchise’s significant fan base and ViacomCBS’ recent investment in the recently-launched Avatar Studios.

That said, it will be months or years before any of those titles hit Paramount+ and the streaming service’s competitors are also actively working on their own high-profile content. ViacomCBS recently stated that it expects to acquire 65 to 75 million global streaming subscribers between Paramount+ and Showtime by 2024. The company has a long ways to go to meet that goal, and achieving it wouldn’t position Paramount+ at the top of the streaming game; CBS All Access and Showtime OTT had a combined 10 million subscribers in January, a significantly smaller pool of customers than those who subscribe to leading platforms such as Netflix and Disney+. Disney stated in February that its Disney+ platform, which launched in late 2019, had 94.9 million subscribers, while Netflix stated in January that it had surpassed 200 million subscribers.

The streaming industry has become significantly more crowded in the years since CBS All Access launched. Apple hasn’t disclosed subscriber numbers for its Apple TV+ streamer, which launched in late 2019, but the tech company is spending big and courting well-known talents to bulk up the platform, while NBCUniversal and WarnerMedia are investing heavily into their Peacock and HBO Max streamers, respectively.

Analyst opinions on Paramount+ were mixed in the weeks leading up to the service’s launch. Brandon Nispel, equity research analyst at KeyBanc Capital Markets, told clients in a February research note provided to IndieWire that ViacomCBS’ subscriber goals would still cause Paramount+ to lag behind competitors and argued that the company’s lack of original content could cause it to stumble in the streaming industry.

“(The) Viacom earnings and streaming event highlighted a company chasing streaming with aspirations that will likely position the company at a substantial disadvantage relative to scaled peers,” Nispel said in the research note. “Additionally, the linear business appears unlikely to fully recover from the pandemic in that if Viacom goes ‘all-in’ on streaming, achieving scale will likely be difficult, making profitability appear challenged for the foreseeable future.”

Some analysts, such as Morgan Stanley’s Benjamin Swinburne, have offered more neutral outlooks on Paramount+. In a research note provided to Deadline, Swineburne praised ViacomCBS’ ability to handle multiple streaming services and focus on incorporating a variety of genres into its platform offerings.

Paramount+ isn’t ViacomCBS’ only stake in the streaming industry — there’s also the free, ad-supported Pluto TV, which ViacomCBS says will continue being a key part of its broader streaming strategy — but the platform’s success will be critical for the company in the coming years: ViacomCBS spent $1 billion on streaming content in 2020 and aims to increase that investment to $5 billion by 2024. Paramount+ will need to court enough subscribers to offset that financial investment, lest it adversely impact the rest of the company. Such was the case with WarnerMedia; that company’s investments in HBO Max reduced parent company AT&T’s Q4 2019 revenue by $1.2 billion and analysts partially blamed WarnerMedia’s large layoff waves last year on HBO Max’s slow start.

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