Just as the first episode of the highly anticipated Star Trek Picard Season 3 was released on Paramount Plus, the streaming service announced a price hike. Interestingly, the news about the increase in subscription rate was dropped during Paramount Global’s 2022 Q4 Earnings call, despite the record-breaking subscription growth for Paramount Plus in the quarter.
In the earnings call, Paramount Global CEO Bob Bakish admitted that 2023 would likely not be a profitable year for the firm owing to the merger of Showtime and Paramount Plus. To elaborate, the streaming service added over 9.9 million subscribers in 2022 Q4, bringing the total number of subscribers to 56 million.
Additionally, Paramount Global had much success owing to its box-office hits like Top Gun Maverick and Sonic the Hedgehog 2, amongst others. Meanwhile, series like 1923 and Criminal Minds Evolution were also hit for them. However, the firm’s stock price took a hit of around 5 percent since the earnings call due to possible reasons like missing annual revenue targets by $40 million and the upcoming investments due to the merger.
Paramount Plus Price Increase – New Subscription Prices, Reasons For Price Hike, And More
In the earnings call, Paramount Global’s Chief Financial Officer Naveen Chopra announced that the subscription price of the two tiers would increase by $1 and $2, respectively. The ad-supported essential plan will increase from $4.99 to $5.99 monthly. Meanwhile, the ad-free premium plan will go from $9.99 to $11.99 per month. It must be noted that the premium tier will also include the Showtime integration and local live CBS stations.
As of now, it is not clear if Showtime will be available to bundle with the essential tier. Furthermore, Paramount Plus did not reveal any particular timeline for the price hike’s implementation. However, it is expected to go live with the launch of Paramount Plus Showtime, which is expected to be early in Q3 2023. The new price will be effective for existing users of the platform as well.
Why Did They Raise The Subscription Fee?
According to CEO Bob Bakish’s statement from the earnings call, Paramount Global will utilize Paramount Plus and its integration with Showtime to boost revenue. He stated: “Subscriptions are important, and the number of subscribers will continue to grow in 2023, but the real focus is revenue. Revenue at scale is critical to building a profitable streaming business. Across the globe, we will pursue this first and foremost by leveraging our compelling content.”
Furthermore, the 59-year-old New Jersey native added:
“We’ll also drive revenue growth with price increases. We all know streaming represents incredible value for consumers. And the Paramount+ offering is far from the industry price leader. We are on the value end of the pricing spectrum. And so in 2023, we will raise the price, both for Paramount+ Premium and Essential, both in the U.S. and select international markets.”
This price hike is likely to ease off the financial load due to their content restructuring owing to the Showtime and Paramount Plus merger, as well as their expected push for international expansion with the streaming service.
In the earnings call, Paramount Global CFO revealed that the merger with Showtime would cost them $289 million. Furthermore, The Hollywood Reporter claimed that the firm would also expect an impairment charge of $1.3 billion to $1.5 billion, of which some could be utilized as a tax write-off. With the massive cost behind the firm’s content restructuring and Showtime merger, it is clear why the entertainment conglomerate decided to increase the subscription fee of Paramount Plus.
- This article was updated on February 17th, 2023