Paramount Global wants to record its own international hit a la Netflix squid gameas the company prepares to expand its flagship streaming service to the UK, South Korea, Germany and other territories in the coming months.
“I’ve always wanted international productions to air in places like the US, but that never worked out because it was difficult to get them on linear networks and streaming,” Paramount chief executive Bob Bakish told the Financial Times. “Netflix has shown it off. . . you could bring a global product to people.”
Paramount Plus, which offers hits like TV shows Spongebob Square Pants as well as yellow jackets and Best shooter The films launch in the UK on Wednesday at a cost of £7 per month. Paramount declined to say how many subscribers it expects to attract in the UK.
The expansion comes as Paramount’s group, formerly ViacomCBS, tries to convince investors it can succeed without merging with a bigger competitor in the midst of a costly, high-stakes battle for streaming customers.
In the $15 billion market cap of online TV and movies, Paramount competes with giants like Apple, Amazon and Disney.
“I’ve heard the narrative, but we definitely have what it takes to compete,” Bakish said, pointing to the company’s extensive international TV network portfolio and longstanding partnerships with local operators such as Sky in the UK, Reliance in India and CJ ENM. In Korea.
Share prices of Paramount and its entertainment rivals have tumbled in recent months as Netflix’s recent downturn has spooked investors about the viability of the streaming model.
Naveen Chopra, Paramount’s chief financial officer, dismisses these concerns, pointing to the fact that the company has never been given the financial leeway that Wall Street has given Netflix and Disney. “Frankly, for a few years they had the luxury of playing for free money. And, for better or worse, we never had that luxury,” he said.
“From day one, we needed to develop a streaming strategy focused on . . . the right balance of investment and growth, and how to do it in order to make a reasonable profit.”
Some analysts are also wondering if streaming could ever be as profitable as traditional TV, but Bakish insists it’s worth the investment.
“We think streaming is a great opportunity,” he said. “We are in investment mode and will increase our investment in content in 2023, but beyond that we are seeing momentum building and eventually seeing streaming will have very similar margins to television.”
Amid wider economic troubles and skyrocketing inflation, the old media businesses that Paramount stuck to, such as advertising and film, are back in vogue.
While Netflix is just now trying to get into advertising, Paramount already has experience with its Pluto streaming service and traditional TV channels. Paramount also has a century-old film studio that generates box office revenue. “People kind of wake up and say, oh, actually what Paramount is doing probably makes a lot of sense,” Chopra said.
Paramount executives have had reason to be optimistic lately. Top Shooter: Maverick which was delayed by more than two years due to the pandemic, grossed over $800 million at the box office, making it the second highest-grossing film in the studio’s history.
As Netflix faltered this year, Paramount’s streaming services are growing rapidly, albeit from a smaller base. In the first quarter, its two major streamers, Paramount Plus and Showtime, amassed 62 million subscribers, up 73% from a year earlier.
By the end of the year, the company expects to reach 75 million subscribers.
And after Wall Street’s cold shoulder of its stand-alone strategy, Paramount landed a coveted investor in Berkshire Hathaway, Warren Buffett, which bought about 69 million shares in the first quarter. Berkshire’s disclosures gave the stock a boost in May, but the stock fell along with the broader market sell-off and is down 23% this year.
Despite recent successes, analysts are unconvinced of Paramount’s strategy. The company, controlled by the billionaire Redstone family, is rumored to be up for sale after a broader entertainment consolidation that included Disney and Fox, as well as Warner and Discovery.
According to a New York Times report, Paramount’s board of directors met with bankers earlier this year about options for a deal. The meeting was part of a presentation on the state of the industry, and the bankers offered ideas in that context, said a person close to the situation.
Asked by the FT, Bakish brushed aside the notion of buying or selling any assets.
In addition to the film studio, Paramount owns cable channels such as Nickelodeon and MTV, the CBS broadcast channel, and other free-to-air television channels around the world. “Our asset portfolio is very strong. we have billions of dollars in cash on our balance sheet,” Bakish said. “So we like our position.”