Paramount +

[Bruce]

Well, they all TRIED to be profitable. This is a new technology. Every Big Media company (well, except for Sony and Fox, which is who my money is on) thought all they had to do was start up a streaming service and boom goes the dynamite. It has not worked out as planned. Wall Street is starting to notice. So there is no real option but the cut content (which they are all doing, no matter what the press releases say, press releases are for rubes) and raise prices.

Will it work? That is how Wall Street works. For every buyer thinking a thing will go up, there is a seller who disagrees. NOTHING is certain. NOTHING is some inevitable trend that you can predict. Maybe streaming can someday be profitable, although for the life of me, I don't really know how. Or maybe it is just like many forms of entertainment media over the year. Great for the customer, entertaining, fine. And unprofitable.

As I posted last year, the next two years will be a time of transition.

Some streaming services will go into profitability ( Hulu, Netflix, Discovery+ already there), some will not make it or merge with another.

During the same time period, some Traditional Cable Channels will shut down because of the loss of per sub fees and the advertising moving to streaming more and more( RSNs look to be first), certain Providers will go into unprofitability, with DirecTV predicted to lose 5-6 million subscribers the next two years, they will be the biggest to go down.

 

[meStevo]

Paramount Shares Drop 28% as Streaming Costs Mount

The media company cuts its dividend and restarts the process to sell book publisher Simon & Schuster.

www.wsj.com

"Paramount and other streaming companies have been working to rein in costs as they shift focus to making their streaming businesses profitable."

Wait. They weren't trying to be profitable before?

Growth and the development of new platforms and content for those platforms is expensive, these platforms consistently say profitability is years away, as pricing, cost and reach hit inflection points where the revenue from subscriptions, advertising, etc result in a profitable service. iirc a few of them are expected to hit that point in the next year or so (and have been forecasting as much, for years). In the meantime, right-sizing, mergers, etc will continue.

Well, they all TRIED to be profitable. This is a new technology. Every Big Media company (well, except for Sony and Fox, which is who my money is on) thought all they had to do was start up a streaming service and boom goes the dynamite. It has not worked out as planned. Wall Street is starting to notice. So there is no real option but the cut content (which they are all doing, no matter what the press releases say, press releases are for rubes) and raise prices.

Will it work? That is how Wall Street works. For every buyer thinking a thing will go up, there is a seller who disagrees. NOTHING is certain. NOTHING is some inevitable trend that you can predict. Maybe streaming can someday be profitable, although for the life of me, I don't really know how. Or maybe it is just like many forms of entertainment media over the year. Great for the customer, entertaining, fine. And unprofitable.

Cute narrative, but as usual that's all it is. Please show us where a streaming service launched and said they intended to be profitable in the first year, or analysts even forecast the effort to be profitable in the short term.

 

[Bruce]

Cute narrative, but as usual that's all it is. Please show us where a streaming service launched and said they intended to be profitable in the first year, or analysts even forecast the effort to be profitable in the short term.

As I have pointed out to him before, it took many years before his DirecTV service became profitable.

 

[SamCdbs]

DirecTV had hundreds of millions of dollars in debt to pay for the delivery system. Dozens of satellites, millions of dishes and STBs, and thousands of people being paid to install everything. It took a few years for the product (the fastest growing consumer product in history) to reach a point where there were enough customers to carry the debt service. It then became profitable and remains profitable. Hugely profitable. As is DISH, and as is cable.

Which is not apples to oranges, vis streaming, it is apples to industrial fasteners.

Streaming has almost literally no distribution costs. The CUSTOMER pays for end-users device (either as smart TV or some kind of dongle like a Fire Stick) and the CUSTOMER pays for the transmission (the internet). Almost literally, streaming has ONE cost. Content. And, unlike dishes, or STBs, or satellites or cable infrastructure, which are amortized over decades of life; content is consumed in a instant. Once you watch content, it becomes worthless to you. It is furnace into which dollars are shoveled on a daily basis.

And, right now, we know one thing. It costs more to make the content than there are people willing to pay for it. Really that simple. The service is unprofitable because it is selling its only product (content) at a loss.

Now when anyone is able to answer the following question:

X streaming service will be profitable in X year (the common theme seems to be two years from now, but "now" keeps changing) because _______________ will be different." then you have the basis for an informed opinion. Until then meaningless words like "a time of transition" are no substitute.

BTW, Discovery Plus is a part of the larger, money bleeding, TWD streaming group. Saying it is profitable is like saying some failing retailer is because the outlet on 34th street makes money, ignoring all the other stores. And, BTW, doesn't it go out of business in three weeks?

 

[ncted]

Well, they all TRIED to be profitable.

IDK. It sounds to me like they were just trying to build their streaming brand without worrying particularly about profits up until now. Now that they (Paramount in this case) has been successful in step 1, it is time to move on to step 2, make money, which is always the hard part.

 

[ncted]

Streaming has almost literally no distribution costs. The CUSTOMER pays for end-users device (either as smart TV or some kind of dongle like a Fire Stick) and the CUSTOMER pays for the transmission (the internet). Almost literally, streaming has ONE cost. Content. And, unlike dishes, or STBs, or satellites or cable infrastructure, which are amortized over decades of life; content is consumed in a instant. Once you watch content, it becomes worthless to you. It is furnace into which dollars are shoveled on a daily basis.

Yeah, not exactly. If we had access to any streaming vendor's GL, there would be a huge monthly expense for Content Distribution. Whether is is Akamai, some other partner, a home-grown solution, like Netflix has, or a combination of multiple vendors, getting video to customers over IP is quite expensive in relative terms. You are right that content costs are the much bigger expense, but distribution is far from free with streaming. Compared to linear TV over cable or satellite, streaming is far less efficient. Based on my experience running a web video content management system and the associated network costs using Akamai, I would guess at least in the tens of millions of dollars per month for a service the size of Paramount+. Maybe more with UHD thrown in which I didn't have deal with at the time.

Assuming most of these services are cloud-based, we'd also have to throw in the storage and transcoding costs for every piece of content they distribute. If they do this in their own data centers (CBS interactive used to have their own but not sure if they still do), there would still be the capital costs associated with storage and transcoding hardware and software.

YouTube and their associated products like YTTV probably spend the least on this since Alphabet has their own nationwide fiber network that people don't really talk much about and Google has their own public cloud for storage and transcoding. This bypasses a lot of the public internet infrastructure that everyone else has to share and where a lot of the CDNs make their money.

 

[NashGuy]

Some streaming services will go into profitability ( Hulu, Netflix, Discovery+ already there), some will not make it or merge with another.

Yep. And despite impressive subscriber gains for Paramount+ in the past year or so as it has expanded globally, I agree with the equity analyst in the article below who doubts that Paramount+ will ever gain the scale necessary to be profitable. Paramount stock had a horrible day yesterday, down 28%, on the heels of a bad quarterly earnings report as streaming losses continue to mount.

Paramount Should Just Quit Streaming at This Point — Analyst

Wells Fargo suggests "shutting down DTC" and says the company would be better off as an arms dealer, but don't count on it.

www.indiewire.com

This analyst thinks Paramount should immediately bow out of DTC streaming completely to stop the cash bleed. Instead, they should either become a content arms dealer like Sony, making and licensing content out to the bigger players (who are or will be profitable), or to get acquired by one or more of those bigger studios.

This is the same thing I've been saying over and over about both Paramount+ and Peacock. They're too far behind the big boys. At least with Peacock, it's buried within the larger Comcast stock. But Paramount is a pure media company and I suspect that we'll see more and more calls from Wall Street for them to ditch DTC streaming as the losses continue.

 

[KAB]

Tyler Sheridan is not helping Paramount+ economically.

Paramount Shells Out More Than $500 Million a Year for Taylor Sheridan Shows – Report

Handmade saddles and bespoke horseshoes don’t come cheap — but as Sheridan told a cattle convention earlier this year, making TV shows that ranchers believe in is why his shows succeed.

www.indiewire.com

 

[SamCdbs]

Paramount Global Stock Plunges After Reporting $1.1 Billion Q1 Loss

Paramount Plus streaming service adds 4.1 million subscribers

www.nexttv.com

Paramount Global stock plunged more than 25% on Thursday after the company announced a $1.1-billion loss for the first quarter.

Subscription revenue for the direct-to-consumer unit rose 50% to $1.11 billion from $742 billion a year ago and ad revenue rose 15% to $398 million. Expenses rose 31% to $2.02 billion.

The company said that ... it was taking a $1.7 billion charge for content that was removed from the services and from abandoned-development and contract-termination costs.

Yep. It simply cost more to produce the product than there are people willing to pay for it. Costing an otherwise highly profitable company to bleed cash at an annualized rate of over $4B/year.

And, despite googled up and out of thin air posts to the contrary, they admit they ARE cutting content production. Less content going forward.

And, despite out of thin air protestations to the contrary, no one can answer the question:

In X years, ______________ is going to be different and make streaming profitable.

 

[NashGuy]

And, despite out of thin air protestations to the contrary, no one can answer the question:

In X years, ______________ is going to be different and make streaming profitable.

Well, as already pointed out here, Netflix and Hulu are already profitable. What will make other big streamers profitable? A few things: increased scale (i.e. more global subs) and reduced churn, increased subscription prices (at least for ad-free plans), fewer competitors as sub-scale streamers/studios drop out or merge, increased ad revenue (some of which will come from licensing library content out to multiple FASTs), and a decrease in total content production/costs.

On that last point, I think it's fair to say that the explosion in scripted series originally sparked by Netflix -- "peak TV" as it's been called -- is unsustainable. I'm not necessarily saying that the total number of hours of new scripted TV content will go all the way back down to what it was in the pre-streaming era but it has to move back in that direction.

 

[SamCdbs]

Well, as already pointed out here, Netflix and Hulu are already profitable.

Netflix is profitable. Hulu is a part of the money bleeding Disney Bundle, and thus is not a thing. Disney streaming is not profitable.

What will make other big streamers profitable? A few things: increased scale (i.e. more global subs)

Yeah, cause they don't have that internet in _________ country yet.

and reduced churn,

"reduced churn" is a goal. This is like saying "my candy factory would be more profitable is people bought more candy". This is a goal, not a reason.

The reality, of course, is churn is why streaming may in fact simply be an unprofitable venture. Binge and drop, binge and drop. Binge and drop.

increased subscription prices (at least for ad-free plans)

Right. The consumer is the big loser in the death of the cable bundle, which protected consumers.

, fewer competitors as sub-scale streamers/studios drop out or merge,

So these big companies have foolishly started streamers that will never be profitable and will die out. Yes, that will happen.

increased ad revenue (some of which will come from licensing library content out to multiple FASTs), and a decrease in total content production/costs.

Production costs are not going down. FAST, and diginets are going to find lots of reruns, but what is the actual value in the 500000th showing of something?

On that last point, I think it's fair to say that the explosion in scripted series originally sparked by Netflix -- "peak TV" as it's been called -- is unsustainable. I'm not necessarily saying that the total number of hours of new scripted TV content will go all the way back down to what it was in the pre-streaming era but it has to move back in that direction.

Correct. There is simply more content being produced than people are willing to pay for. This is why, save only for Netflix, all lose money by the bucketloads. No one has a path to profitability.

But, yes, far less content into the future. Who won the streaming wars? Don't know. But I know who lost. The consumer. TV in 5 years looks a lot more like Pluto than Paramount. Wads of reruns.

 

[Bruce]

I have answer the other questions so many times, nothing will change your mind, even if this new model of Television is so much superior to the old ways, but I will say something to these two-

Right. The consumer is the big loser in the death of the cable bundle, which protected consumers.

It did not protect anyone except the broadcasters and providers.

All the broadcasters did was add Channel after channel, with almost zero new programming, just to get more per sub fees and Advertising Revenue, then all those extra channels would increase the monthly cost.

For example, did FX need to split into 3 channels (or Disney, or any of the others) if the consumer was being protected, Fox ( at the time) could of put all the programming on the main FX without splitting it up.

All the Providers did was keep increasing the price to well above inflation every year, then the box fees, DVR fees, then the Broadcast Channel fees, the the RSN fees.

That advertised monthly fee became $40-50 more a month.

Streaming protects consumers more because you are not forced to support channels ( per sub fees) that you will never watch.

Discovery suite of Channels, never and I am not forced to get Discovery+.

RSN, will never watch the Florida teams, so not forced to get the Bally app.

AMC, not for me.

The consumer. TV in 5 years looks a lot more like Pluto than Paramount. Wads of reruns.

That is what Cable/Satellite TV looks like now, all those channels and the vast majority of content is reruns.

 

[SamCdbs]

The bundle protects the consumer. Huge amounts of content. Enough for everyone, and at one low price.

The "but look at all the money I save" argument vis the unprofitable streaming industry vis the consumer has three main flaws:

- The idea that you only "pay for what you want" is only valid if you like every single thing on a streamer. Let's look a soccer. I don't like soccer. But Paramount, ESPN, Apple and Peacock all make me pay for it. As streaming continues its (probably futile) quest to make money, sports, which cannot be binged and dropped and thus is churn's only antidote, becomes the outsized thing it will use. And, most "streaming only" cord-switchers switched to get away from sports and its costs. In streaming, you are paying for more content you don't watch than you did in the bundle.

- Yes, in the bundle, the protected consumer paid a little, often fractions of a cent, for content they didn't like. The newsflash here is, so did everyone else. I paid a little for things you liked, you paid a little for things I did. And both things got made. Writ large, across the nation, that meant a plethora of content. And the second newsflash here is, really not many things actually appeal to enough people to reach the critical threshold of getting made. And thus, with the consumer unprotected, content, as noted above and you will find the same across the entire media industry, simply is no longer going to be made.

- Most people are not out to save every cent they can. Most people want the content they want, and they want it to continue to be produced.

We have been outsmarted by Big Media, and left unprotected. In 5 years we will mostly argue about which rerun wad is best here, and the sports board will be filled with newsflashes that an actual ball game or two might viewable this week.

 

[ncted]

The bundle protects the consumer. Huge amounts of content. Enough for everyone, and at one low price.

 

[ncted]

Yes, in the bundle, the protected consumer paid a little, often fractions of a cent, for content they didn't like.

For me, it was never about paying a little for a few things I wasn't interested in. It was about paying more and more and more for stuff that no one watched, just to add incremental revenue to a smaller and smaller number of large media companies. If things had remained affordable or even somewhere in the same universe as inflation, I probably would've been perfectly happy to continue to subscribe to cable or satellite, but that did not happen. Prices went up and up, often more than once per year, and they continue to do so.

My parents are currently paying around $160/month for Spectrum TV's standard package with a couple of STBs. I pay ~$135/month for YTTV, YouTube Premium, Netflix UHD, Disney+, Hulu ad-free, Paramount+ ad-free, Peacock ad-free, and AppleTV+. No wonder people are dropping cable in droves.

Now, I would argue that there is too much content right now. if there are people out there who are struggling to find things to watch, they are either very picky, or they need to find something else to do with their time. All these streaming companies have overspent just to try to build market share. The need to pull back, slow things down, and find a sane approach to making the business model work.

 

[NashGuy]

But, yes, far less content into the future. Who won the streaming wars? Don't know. But I know who lost. The consumer. TV in 5 years looks a lot more like Pluto than Paramount. Wads of reruns.

Not going to respond to each of your points or, to be honest, even read though all of it. I'll just respond to the last one by saying that "wads of reruns" is what a lot of cable TV has always been. But cable TV requires a subscription fee while FAST apps like Pluto are free.

 

[meStevo]

Mom still has DirecTV, guess she's winning:

 

[NYDutch]

Mom still has DirecTV, guess she's winning:

View attachment 162073

DTV still charges an HD fee???

 

[Mr Tony]

DTV still charges an HD fee???

They've been billing it that way for years but if I recall its part of the "advanced receiver" fees (like the Hopper has a DVR fee)

 

[Jimbo]

DTV still charges an HD fee???

Essentially, YES ....
They call it an Advanced Recvr fee now.

Its the same 3 services mentioned above grouped together for a $23 recvr fee (Recvr, DVR and HD)