Executives at Paramount Global say a price increase for its flagship streaming service Paramount Plus is probably going to happen soon — and the company is already raising subscription fees in some territories.
On a conference call with investors and reporters earlier this month, Paramount Global Chief Financial Officer Naveen Chopra said the media company is exploring “opportunities to increase price on Paramount Plus,” and that executives have some cursory plans to “do that in the future.”
“I think it’s fair to say that pricing is moving higher across the industry — you see that with a number of competing services,” Chopra continued. “And we think that means we have room to increase price and ultimately drive [average revenue per user, or ARPU] while preserving our value position relative to others.”
Paramount Plus currently starts at $5 a month for a limited amount of live content (like some major sports events) and a vast catalog of on-demand content from the Paramount Global library of shows and movies, including programs and films from Paramount Pictures, CBS, Nickelodeon, MTV, Comedy Central and BET. Streamers can pay $10 a month to remove commercials from most on-demand shows and movies, and to unlock a live feed of their local CBS station or affiliate. Showtime content is available within Paramount Plus for a separate charge.
Like other streaming services, Paramount Plus has two strategies to lock in customers: The service offers annual pricing across its subscription tiers, which gives customers a slight discount on the overall price of Paramount Plus (and Showtime, if it’s added on) if they pre-pay for a year’s worth of service. Paramount also has partnerships with Walmart and T-Mobile that allows customers of those companies to get extended free access to the ad-supported Paramount Plus plan.
The $5 a month price point for Paramount Plus coupled with other incentives helped add 4.6 million customers to the streaming service over the last quarter. Across all its streaming properties — which includes Showtime and some smaller services like BET Plus and Noggin — Paramount Global has 67 million worldwide subscribers.
But, like other streaming services, Paramount Plus is spending a lot on content. While its direct-to-consumer segment brought in $1.226 billion in revenue last quarter, the company spent $1.569 billion on content production, distribution and marketing across its streaming services during that same time frame. Overall, Paramount Global lost $343 million on its streaming endeavors in the three-month period that ended September 30.
Earlier this month, Paramount Global said it would raise prices on its Canadian consumers over the next few weeks. New subscribers of the Paramount Plus ad-supported plain will be asked to pay CA $10 a month (about US $7.50 per month). Previously, the tier was priced at CA $5.99 per month (about US $4.50 per month). Current subscribers won’t be exempt from the price increase: From now until December 1, Paramount Plus will raise their fee to match the new rate on their renewal date.
Paramount Global is not alone in raising prices to offset higher operating costs: Netflix has steadily raised its fees over the last few years, with its current base subscription charged at $15.50 per month (a cheaper, ad-supported plan was introduced this month). The Walt Disney Company is planning to raise prices at its commercial-free Disney Plus service and its general entertainment streamer Hulu in December.