Paramount Has a New Plan to Beat Peacock - Will it Work?

Earlier this week, Paramount announced it will be merging its flagship streaming service Paramount+ with Showtime and renaming the resulting app "Paramount + with Showtime".

Yuck for the name, but as a business move, this is a very interesting one that changes the kind of programming the app offers from just on-demand titles to what's known in the TV industry as linear content. Which really means content you have to wait to watch, like old-school TV content.

I covered the state of streaming apps a few weeks ago and it showed Paramount+ growing a lot in 2022 but that it isn't one of the most downloaded apps. Peacock has tight command of that.

But when we look beyond the downloads we see a slightly different picture, and that could be why the two are merging.

Looking beyond downloads means revenue, a metric that "grounds" growth.

Paramount+ and Peacock have been locked in competition since the two got into streaming, but while Peacock has the upper hand when it comes to downloads, Paramount seems to be able to monetize its users much better.

In part, this has to do with Peacock's free tier, but that's not as lucrative these days.

In terms of revenue, Paramount ended 2022 with $146M in net revenue and Peacock with $148M. More, yes, but! When you bring downloads into the equation, everything flips. Paramount+ is monetizing twice as many users, or if we look at it from a pure revenue standpoint, is able to get twice as much money from each of its users.

That's massive!

So, how's this relevant to the merger? Easy - merging an old-fashioned stream of TV content will give users more reason to download Paramount+. And with its ability to monetize well, every download counts.

Unlike cable, where channels come in bundles and both Paramount and NBC are likely in the same bundle and competing for viewership, having to pay per app means a paying user of Paramount+ is more likely to not be a paying user of Peacock. So, good for the bottom line and for hurting the competition.

Sounds like a win-win to me. I just hope they rethink the name... From a pure marketing perspective, such a long name won't give Paramount a lot of opportunity for ASO. Something to keep in mind.