EXCLUSIVE: Paramount's CFO On The Streaming Landscape, IP Strategy, And The Future Of Film

Shifting consumer behavior is changing the way people experience their favorite media, and therefore impacting the companies that create and distribute content.

Naveen Chopra, Chief Financial Officer at Paramount PARA, recently took questions from retail investors via Public.com about how the global entertainment company is strategizing for the future. Here’s an exclusive recap of the Town Hall event for Benzinga readers.

What are you doing to stay innovative given shifting consumer behaviors when it comes to how people prefer to consume content?

Naveen Chopra: Not too long ago our traditional businesses — like our film studio, our cable and broadcast TV business — were looked at as a barrier to growth. Today, it is clear that it’s a massive accelerant for our streaming business. We are leveraging our traditional business to transition into streaming, which is where consumers are headed and we are having success as Paramount+ was the fastest-growing brand in any category in 2021. In the most recent quarter, Paramount+ added 6.8 million subs. 

Our multi-platform approach improves the economics of streaming growth. We are monetizing content across various platforms to increase our content ROI in a way that pure-play streamers can’t. We have both ad-supported and pay streaming models, which have been a key piece of our strategy from the beginning, ensuring we can hit the largest total addressable market across consumers.

How do you plan to compete against other streaming platforms?

NC: This is not a winner take all market. The streaming market continues to grow and consumers are subscribing to more services. On average, consumers subscribe to ~5 services. Moreover,  we have a differentiated playbook to continue to fuel our growth: 

• First, our broad collection of exciting, engaging content: Paramount+ includes not only scripted originals like our competitive set, but also big sports, theatrical movies, kids content, news programming, events, unscripted or reality programming. These content formats have been a huge part of consumer viewing for decades and we are uniquely positioned to make the full breadth of content available via streaming. 
• We’re also focused on building a better financial model than legacy streamers. Our diversified streaming business model offers free ad-supported and paid subscription options. 
• Our wide-ranging set of platforms, combining streaming with broadcast, cable and theatrical which reduces the cost of both customer acquisition and retention.
• And fourth, our truly global operating footprint. 

This is a playbook which was designed from the start to leverage our specific asset base to create an advantaged streaming model — one with a superior financial outlook relative to pure play streamers.

Can you talk a bit about your international business and how that fits into the overall revenue strategy for the company?

Paramount is a truly global operating company, with teams on the ground in more than 30 markets and a dozen studios creating original content around the world.

We have strong international relationships that drive streaming distribution, and our strategy comprises a mix of direct-to-consumer and partnership models with distribution leaders like Sky and Canal+ in Europe. These partnerships quickly unlock material volumes of subscribers at zero acquisition costs with very low churn. And they help maximize reach by complementing our higher ARPU direct channels and subscribers we acquire through other streaming platforms.

At the same time, our local broadcasters provide a powerful channel for promotion and content synergies, which is additive to penetrating the addressable market outside the U.S. By the end of the year, our combined SVOD premium services will be available in more than 60 markets.

Next up is the launch of Paramount+ in the UK and South Korea in June, and in major European markets, including Italy, Germany, France, Switzerland, and Austria, in the second half of the year. In 2023, Paramount+ will be distributed in India, via our joint venture Viacom18’s platforms in 2023.

What is Paramount’s approach to investing in new IP vs. existing IP?

NC: We take a very balanced approach. Legacy streamers are realizing that too much dependence on new IP can be very expensive given the cost of building and driving awareness. They have to spend billions of dollars a year renting library content. We have that in-house. And library content is responsible for a large share of viewing on streaming services, and it's absolutely critical to subscriber retention. Additionally, it’s not uncommon to see a big scripted original need tens of millions of dollars of marketing support to build an audience. 

Our model helps avoid those costs. We have a lot of existing IP, well-known IP, large franchises that have built-in audiences that we can bring to streaming […] with very limited incremental marketing expenses. We also have access to a lot of very valuable, very powerful promotional inventory across the broadcast, cable, digital and social channels that we run.

What are the biggest shifts in the film industry that you’re considering in your strategy?

NC: Paramount Pictures is the only studio to have released four No. 1 box office hits this year, with Scream, Jackass Forever, Lost City and Sonic 2, with Top Gun: Maverick to come Memorial Day weekend. Building on that, we continue to execute the “fast follow” strategy, which I’ll explain in a minute, and we pioneered last year with A Quiet Place Part II.

In other cases, shortening the theatrical window when it comes to films has been very successful for us. We continue to lean into our top franchises and IP. Our approach to Paramount film releases directly following their theatrical window brought Scream and Jackass Forever to the service in March.

Our “fast follow model,” where we release films in theaters and then make available on Paramount+ 45 days afterwards, continued to deliver strong metrics, including strong ROI. We capture the vast majority of box office revenue relative to a longer window and we are able to bring the content to Paramount+ while it is still fresh and can benefit from theatrical marketing investments.

Public.com members can view the full Q&A in the app. Open To The Public Investing is a member of FINRA and SIPC. This content is not investment advice. Investing involves risk of loss.