Paramount anticipates 'future price increases' amid streaming profitability push

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Subscribers should expect even more price hikes to Paramount+ following a surge of increases across a variety of streaming platforms last year, Paramount CFO Naveen Chopra said on Wednesday.

"When we look at the business going forward, we do anticipate future price increases," Chopra said at Morgan Stanley's media and telecom conference.

The comments come as media companies face pressure from shareholders to scale their streaming services and make them profitable. Last week, Paramount reported streaming losses narrowed to $490 million in the fourth quarter, ahead of analyst estimates. The company expects Paramount+ to reach profitability in 2025.

The company last hiked prices for its streaming service last year. Chopra said there are no current price increases planned for 2024.

In June, Paramount launched its ad-free Paramount+ with Showtime streaming offering for $11.99 a month — $2 more than the previous price for a Paramount+ subscription. It also raised the prices of its ad-supported tier by $1 to $5.99.

"It really wasn't until Q4 that the price increases we did [were] rolled out across the entire subscriber base," Chopra explained. "So yes, we do see upside in pricing in terms of what we've learned from the price increase that we did last year."

Paramount raised streaming prices last year in profitability push (Courtesy: Getty)
Paramount raised streaming prices last year in profitability push (Getty) (Giuliano Benzin via Getty Images)

The executive said Paramount did not expect the hikes to increase churn — or subscribers canceling their streaming plans — for existing subscribers given the "value proposition" of its content offerings.

However, he did admit price increases typically affect the ability to capture new paying users.

"For new starts it's a little harder because if you're not already in the service, then the question of, 'Do I want to add another $6 or $12 streaming service?' is one that requires more consideration. That's where we've been able to use things like promotional pricing and bundles to lower that barrier to entry."

According to Chopra, any churn was "more than offset by the incremental average revenue per user" the price hikes generated.

Paramount has been working to increase revenues and pare down its debt as M&A rumors surround the media giant and its holding company, National Amusements.

"We're very conscious of the fact that our job as management is to create value for all of our shareholders," Chopra said on Wednesday. "There are multiple ways to potentially accomplish that. As I said, we think execution of our plan is compelling. But to the extent that there are other alternatives, we'll be diligent about exploring those."

Streaming's price hike boom

Price increases have become a go-to trend in the streaming industry with virtually all media companies (with the exception of Netflix) hiking prices in 2023.

Added up, the cost of these services now rival the dreaded cable TV bundle of years past — the very thing that streaming set out to undo.

Consumers are taking notice with subscribers canceling more of their plans to combat rising costs.

According to the latest data from subscription analytics platform Antenna, subscribers to premium subscription services grew at their slowest pace since before the pandemic began, rising just 10.1% last year compared to the 21.6% seen in 2022.

On top of slowing growth, churn has nearly tripled since 2019, with 140.5 million cancellations in 2023, the largest drop in subscribers over the last five years.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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