In a significant development for the streaming industry, Paramount has reported its second consecutive quarter of profitability for its Direct-to-Consumer (DTC) segment. This achievement was highlighted during a recent investor call, where Co-CEO Chris McCarthy emphasized the company’s growing stature as the fourth largest global streaming service.
For the third quarter of 2024, Paramount’s DTC revenue reached an impressive $1.8 billion. This figure includes $507 million from advertising, which represents an increase of $77 million compared to the same period last year, showcasing a robust year-over-year growth rate of 18%. However, it is worth noting that overall advertising revenue saw a slight decline of 2% year-over-year, totaling $1.6 billion.
In addition to advertising, Paramount’s TV media revenue—which encompasses advertising, licensing, affiliate revenue, and subscriptions—decreased by 6% year-over-year, amounting to $4.3 billion. Overall, advertising comprised just over a quarter (27%) of the DTC revenue and approximately 38% of the TV media revenue during this quarter.
Paramount’s overall revenue for Q3 stood at $6.7 billion, marking a modest decrease of 6% compared to the previous year. Despite this drop, the company remains optimistic about its future prospects, particularly with the ongoing success of its streaming platform, Paramount+.
One of the key drivers behind this profitability is the FAST channel Pluto, which has emerged as a profitable entity for Paramount. In this quarter, Pluto achieved its highest consumption rate to date, with viewers logging a remarkable 5.6 billion hours. This performance underscores the platform’s growing popularity and its contribution to Paramount’s overall financial health.
Paramount+ also reported impressive growth, adding 3.5 million new subscribers during the quarter. The revenue from this segment grew by 25% year-over-year, although specific figures were not disclosed. McCarthy attributed this growth to the return of high-profile sports events, including the NFL and UEFA Europa League, as well as the success of original series like “Mayor of Kingstown” and “Tulsa King.” Additionally, theatrical Video-on-Demand (VOD) releases, such as “A Quiet Place: Day One,” have further fueled subscriber interest.
Looking ahead, CFO Naveen Chopra expressed confidence in Paramount’s trajectory, indicating that the company is on track to achieve domestic profitability for Paramount+ by 2025. However, international profitability may take an additional 12 to 18 months. This distinction highlights the varying dynamics and challenges of different markets in the streaming landscape.
As Paramount navigates the competitive streaming environment, McCarthy reiterated the importance of maintaining a diverse subscriber base. He noted that the company is focused on remaining a standalone streaming provider without overly relying on bundles or app integration deals. Nonetheless, recent collaborations with Walmart’s membership benefits package and Delta Airlines’ in-flight entertainment services demonstrate Paramount’s strategic approach to expanding its reach and enhancing subscriber acquisition.
Chopra reinforced this strategy, stating, “We’ve talked for some time about the importance of having a diverse subscriber base that spans multiple channels.” This adaptability is crucial as Paramount seeks to attract and retain subscribers in an increasingly crowded marketplace.
As the streaming industry continues to evolve, Paramount’s recent financial performance and strategic initiatives position it favorably for future growth. The company’s focus on original content, sports programming, and innovative partnerships reflects its commitment to enhancing the viewer experience while driving profitability.
With the ongoing changes in consumer behavior and preferences, Paramount’s ability to adapt and innovate will be key to its sustained success in the competitive streaming arena.
