Paramount+ sees subscriber growth, but higher production costs offset earnings
By Matt Collins Article may include affiliate links
Paramount had a mixed bag of results in its last quarter of 2021 that included some good news for streaming — but also a red flag.
The company credits series such as “Halo,” “1883,” “Star Trek Picard,” live event specials and the NFL for helping drive that growth. Subscription revenue increased 95% year over year.
Meanwhile, Paramount’s free ad-supported streamer Pluto TV grew to 68 million active users. Advertising revenue in the company’s direct-to-consumer division, which includes both streamers, grew 59%.
While these figures are positive signs of growth and beat Wall Street’s expectations, there’s a catch.
The company said higher costs to run its streaming businesses, including content production and licensing, increased significantly, a significant reason the company’s profits fell significantly in the quarter. In fact, spending in the division rose to $1.5 billion, about twice as much as it did the previous quarter.
Overall, Paramount Global saw revenue drop slightly from $7.38 billion to $7.33 billion and earnings fall from $911 million to $433 million.
While Paramount’s streaming growth is a good sign, investors appear to be spooked by the higher production costs to feed those efforts — especially given the recent news that Netflix lost subscribers for the first time in years and the CNN+ streamer shut down after less than a month even as media companies continue to pour money into streaming.