Friday, 9 August 2024, 8:36 am Press Release: Parrot Analytics
With Paramount Global reporting its first earnings since
announcing the Skydance Media sale, it’s important to
review what the company’s future leader David Ellison will
be receiving in the $8.4 billion agreement.
The
billionaire scion is a proven hitmaker with the Mission:
Impossible franchise as well as Top Gun:
Maverick. Hollywood views his future stewardship of
Paramount — likely to become official in mid-2025 — with
optimism (though Wall Street is indifferent as Paramount
Global’s stock is down 6% in the last month since the
announcement).
As of Q2 2024, here is where Paramount
Global stands with US audiences:
Paramount Global
Corporate Demand Share: 11.4%, 3rd place
Paramount+
Total On-Platform Demand Share: 8.1%, 7th
place
Paramount+ Streaming Original Demand Share:
5.7%, 6th place
Ellison will be taking over a
high value library, as well as Paramount+’s 70M+
subscribers. He’ll need to weigh fundamental questions
such as what his streaming and licensing strategy will be,
how to best leverage sports rights — especially the NFL on
CBS — and even whether he wants to keep the company public
or not.
First, a look at which Paramount brands are
over performing with Paramount+ audiences should help the
new ownership with priorities:
Paramount+ Supply and
Demand
Linear
TV is a shrinking business, and lowering debt is a key
initiative for today’s entertainment
conglomerates.
Only three Paramount Global brands
over-perform when we look at the share of audience demand
they generate on Paramount+ compared to supply.
Two
of these are linear staples: Nickelodeon, and CBS. The kids
shows on Nick and CBS’s industry-leading sitcoms and
procedurals should clearly be part of the the long term
strategy of Ellison’s Skydance owned company. This
doesn’t even take into account the importance of the NFL
on CBS, so maximizing the profitability of CBS needs to be a
key part of Ellison’s plan. TV media accounted for a
whopping 68% of the company’s revenue last quarter after
all.
The surprise standout here is Paramount+
Originals. Largely led by Taylor Sheridan series and the
Star Trek universe, these original series are
over-performing with demand vs supply. This suggests there
is value in continuing these franchises, whether on an in
house platform or licensing them
elsewhere.
Corporate Demand Share
Corporate
demand share is the most macro level view of the
entertainment industry. It helps assess which companies have
the most in-demand content to license as well as keep
in-house to drive subscription growth/retention, and can
effectively value a conglomerate’s legacy and library
content in aggregate.
Paramount Global remains in
third place in this category, well ahead of NBCUniversal and
Netflix, but significantly behind leaders Disney and Warner
Bros. Discovery.
Paramount Global dipped slightly in
Q2 2024, from from 12.0% in Q1 2024.
Licensed
programming from Paramount accounted for a 12% demand share
among Netflix’s U.S. TV catalog in Q2 2024. After the
company’s licensing revenue dropped 25% last quarter,
partially due to the 2023 labor strikes, this division may
ramp up once more with stable leadership and
direction.
On-Platform Demand Share
While
demand for original content drives subscription growth,
library content is key for customer retention, an
increasingly crucial element of all streaming strategies as
consumers have more choice and easier ways to cancel than
ever.
Paramount+ (8.1%) has now finished behind
Peacock (8.9%) in this category for three consecutive
quarters. Peacock was consistently in last place of the
major streamers in on-platform demand share until Q4 2023.
It’s worth remembering that Paramount Network’s smash
hit Yellowstone is still streaming on Peacock due to
a late 2010s licensing deal.
Paramount+’s total
catalog demand share has shrunk dramatically year over year,
down from 11.2% and fifth place in Q2
2023.
Furthermore, Paramount+ is the odd man out of
the two major streaming bundles so far: Comcast's
Streamsaver bundle, combining Peacock, Netflix, and Apple
TV+, and the Disney-Max
bundle.
