Paramount Chief Financial Officer Naveen Chopra said Wednesday that subscribers should expect further price increases for Paramount+ after price hikes across various streaming platforms spiked last year.
“Given the future of the business, we certainly expect future price increases,” Chopra said at the Morgan Stanley Media and Telecommunications Conference.
The comments come as media companies face pressure from shareholders to expand their streaming services and increase profits. Paramount last week reported that its fourth-quarter streaming loss narrowed to $490 million, beating analyst expectations. The company expects Paramount+ to reach profitability in 2025.
The company last raised prices for its streaming service last year. Chopra said there are currently no plans for price increases for 2024.
In June, Paramount launched its ad-free Paramount+ with Showtime streaming service for $11.99 per month. This is $2 more than the previous price for a Paramount+ subscription. We've also increased the price of the ad-supported tier by $1 to $5.99.
“It wasn’t until the fourth quarter that we actually raised prices. [were] “It has been rolled out across our subscriber base,” Chopra explained, adding, “Yes, we believe there is room for improvement in pricing in light of what we learned from last year's price increases.” did.
The executive said Paramount does not expect the price increase to result in an increase in existing subscriber churn (subscribers canceling their streaming plans), given the “value proposition” of its content offering.
However, it acknowledged that price increases typically impact its ability to acquire new paying users.
“If you're starting new, it's a little bit harder because if you don't have a service yet, you're asking, 'Would you like to add another $6 or $12 streaming service?'” That's where we've been able to lower the barrier to entry through things like promotional pricing and bundling.”
Chopra said customer churn was “more than offset by the increase in average revenue per user” caused by the price increase.
Amid rumors of M&A involving the media giant and its holding company, National Amusements, Paramount is working to increase revenue and reduce debt.
“We are very conscious of the fact that our job as a management team is to create value for all of our shareholders,” Chopra said Wednesday. “There are multiple ways that we could potentially achieve that. As I said, we think it is compelling to carry out our plan. But as long as there are other options, we will consider them diligently.”
Streaming price boom
Price hikes are the norm in the streaming industry, with virtually every media company (except Netflix) planning to raise prices in 2023.
In total, the prices for these services are now comparable to the dreaded cable TV bundles of a few years ago. That's exactly what streaming is trying to counteract.
Consumers are noticing more people canceling their plans to combat rising costs.
Subscribers to premium subscription services grew at the slowest pace since before the pandemic began, increasing just 10.1% last year compared to 21.6% in 2022, according to the latest data from subscription analytics platform Antenna.
In addition to slowing growth, cancellations have nearly tripled since 2019, with 140.5 million cancellations in 2023, the largest subscriber decline in the past five years.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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