In a move that’s making waves in the realm of streaming entertainment, Paramount Global has declared its intention to raise prices on most Paramount+ subscription plans. The ad-free Paramount+ With Showtime tier is set to increase by $1 to $12.99 per month, while the Paramount+ Essential plan featuring ads will see a $2 uptick, reaching $7.99 per month for fresh adopters. These revised rates are slated to kick in on Aug 20 for prospective customers.
Current subscribers of Paramount+ With Showtime will encounter the new rate during their next billing cycle on or after Sep 20. Meanwhile, those on the Paramount+ Essential monthly plan will maintain the existing $5.99 fee, with annual subscription costs for both tiers unaffected. Customers on the legacy Paramount+ Limited Commercial package are in for a $1 price hike, taking their monthly fee to $7.99.
The first quarter witnessed a 22% surge in subscription revenues, propelled by an influx of subscribers and price adjustments within Paramount+. The platform’s subscriber count has soared to around 71 million, welcoming 3.7 million fresh sign-ups in the same quarter.
This upward trajectory is anticipated to persist in the near future. Yet, the intense competition in the streaming sector casts a shadow on the company’s long-term outlook.
Paramount Global Price and Consensus
Streaming Market Dynamics
In recent times, the landscape of streaming entertainment has transformed into a fiercely competitive domain, with enterprises pouring billions into crafting their individual platforms and content reservoirs to take on the industry titan Netflix. The consequence has been a pricier participation in the streaming epoch.
Subscription costs across various services, including Netflix, Disney’s Disney+, Hulu, Warner Bros. Discovery’s Max, ESPN Plus, and Paramount+, have witnessed a consistent uptick over the years.
After a decade of stressing subscriber growth over profitability, streaming entities are now compelled to turn a profit to sustain themselves. To bolster their financial standing, organizations are resorting to tactics like price hikes, tightening measures on password sharing, axing shows for tax advantages, and vending content to other platforms.
Notably, the revised price for Paramount+ With Showtime remains lower than the ad-free editions offered by Netflix, Disney+, and Max.
Recently, Warner Bros. Discovery increased the rates for Max’s ad-free plans in the U.S. In July, NBCUniversal’s Peacock tiers experienced price bumps for new entrants, right before the Paris Summer Olympics.
Final Thoughts
Despite Paramount’s shares tumbling 31.4% year to date, trailing the Consumer Discretionary sector’s meager 0.3% uptick, the company’s recent pricing adjustments and expanding subscriber base serve as a propellant. Nevertheless, the formidable competition looms large as a significant apprehension for this Zacks Rank #3 (Hold) entity.
The overhanging worry of PARA’s substantial debt levels is undeniable. As of Mar 31, 2024, the total debt tallied $14.6 billion, juxtaposed with cash and cash equivalents amounting to $2.38 billion. A leveraged financial structure coupled with modest liquidity levels casts a shadow on investors’ enthusiasm.
The Zacks Consensus Estimate pegs PARA’s second-quarter 2024 earnings per share at 14 cents, down by a cent over the past 60 days. Furthermore, the consensus forecast for third-quarter 2024 earnings sits at 32 cents per share, reflecting a decrease of 3 cents within the last month.