Reboot Launches March 4th

A year after the merger of CBS Television and media conglomerate Viacom into ViacomCBS, the company announced that it will be rebranding – and expanding – its CBS All Access streaming service. The move comes as rivals Amazon and Netflix continue to dominate with relative newcomer Disney+ (it’s only a year old as of November, remember?) storms past the older service to reach 73.7 million subscribers compared to the 17.9 million that CBSAA took three years to achieve.

In order to stay competitive in the ongoing Streaming Wars, ViacomCBS announced that the new service, dubbed Paramount+, will launch on March 4 of this year. It will eventually incorporate shows from BET, MTV, Nickelodeon, Paramount Pictures, and other properties in addition to the CBS television catalog that it currently offers. It is that relatively limited offering that has allowed Disney (which owns the “big three” ABC television studio) and relatively latecomer Peacock to lap it in terms of subscribers despite CBSAA’s two year head start. This move is not a surprise as ViacomCBS has given broad announcements regarding their intentions, but the timing and what will be involved have been open ended questions.

A Hard Year, but Boldly Going

Even discounting the year-long pandemic, ViacomCBS has not been delivering for its shareholders having seen its valuation drop from $30 billion to $18.8 since the merger. But, CBSAA has seen its subscriber base increase by nearly 900% from an estimated 2 million around the time that Star Trek: Discovery first aired in 2018 to its current count. While it would be a reach to credit the latest incarnation of Gene Roddenberry’s successful franchise as the source of the streamer’s growth, it IS the focal point of the service and is being treated as such. Viacom is clearly using the franchise as a key building block and it is evidenced by the sheer amount of new Star Trek content being created. Star Trek: Discovery, which just wrapped its third season, will begin production on its fourth season some time later this year and continue its adventures in the 32nd century. Star Trek: Picard will have a second season as confirmed by Jeri Ryan (7 of 9), continuing adventures at the end of the 24th century. While air dates have yet to be released, both shows are expected to beam onto screens before the end of 2021. Meanwhile, Star Trek: Strange New Worlds is apparently the next to begin production within a few months. Filming in Canada, it will cover the earlier voyages of the starship Enterprise under Captain Christopher Pike. And there’s still Star Trek: Section 31 centered around Michelle Yeoh’s dimension and temporally-shifted Captain/Empress Georgiou which has not had its production dates announced. The animated, comedic, yet fully canon Star Trek: Below Decks is also getting a second season with a late 2021 projected screening date.

Expanding Galaxy

What Paramount+ does, as was mentioned above, is greatly expand the library. Content from BET, Comedy Central, Nickelodeon, Smithsonian Channel, Paramount Pictures, Showtime

The smaller stand-alone services including MTV Hits, NickHits (featuring Nickelodeon classics), Comedy Central Now and Noggin will all be rolled into the the rebranded “super service” as it was called by ViacomCBS CEO Bob Bakish in a June 2020 investor conference call. In doing so, it more than doubles the existing 10,000 hours of shows on CBSAA by adding another 15,000 hours. As, Bakish implied, the CBS programming appealed mostly to older audiences and the intent is to attract the younger audiences. Since CBSAA is offers two ad-supported levels in addition to its premium ad-free offering – something which may continue in Paramount+ – audience demographics are important in order to bring in advertising revenue.

The expansion will also affect the streamer’s market as it will become available in Latin America, Australia and Scandinavia. In Canada, CBSAA will be rebranded as Paramount+, but will not get the expanded content until later. There’s an interesting complication there as outside of the United States, Star Trek: Discovery is considered a Netflix Original – even in Canada. This is because Netflix funded the production of the first season, making it a no-risk option for ViacomCBS to produce the show. Since ViacomCBS is rather opaque with its business operations, there is no telling how they will work around the deal with Netflix when they move their streamer into what is currently Netflix territory. Fans of Marvel’s shows which originally appeared on Netflix until cancelled in 2019 might remember how badly that can go.

Even before the reboot, CBSAA’s programming lineup has not remained static. It has been adding some content from the other ViacomCBS brands as well as UEFA (Union of European Football Associations) games. That’s “soccer” to us Americans, “football” to the rest of the planet. The company is also in talks with the NFL to bring some of its games – which it already broadcasts on CBS to the platform as well.

CBSAA currently also has Jordan Peele’s new version of The Twilight Zone which despite critical acclaim is largely overlooked because it resides behind the paywall. Ideally, this series as well as the Star Trek shows will gather wider audiences who may sign up for an expanded streaming service. The adaptation of Stephen King’s The Stand was intended to bring in subscribers but it appears to have underperformed with audiences.

Going forward, Paramount will be getting a new SpongeBob SquarePants series entitled Kamp Koral and, in light of the ongoing pandemic, The SpongeBob Movie: Sponge on the Run will skip the big screen and play exclusively on streaming. ViacomCBS will also be producing five exclusive original series for Paramount+ including a reimagining of MTV’s Behind the Music, a spy drama entitled The Lioness, a revival of BET’s comedy-drama The Game and a ten-episode series based on production of the movie The Godfather. The investor call stated that the quality of the programming was going to be as important – if not moreso – than quantity.

Out the Airlock or Not

Like Disney, AT&T and other corporations which took on large amounts of debt to fund their mergers, ViacomCBS is in the same boat. It sold off its CNET media group for $500 million last year as it was not a core asset in the new company which is focussing on its content production. The money earned from that sale pales in comparison to the $19.7 billion in debt it carries – an amount which is roughly equal to its current valuation, and that is a precarious situation for any company. It its currently attempting to sell off it’s Simon & Schuster book publishing division, and cancelled its attempt to sell the CBS headquarters building in New York City in March after hoping for a price tag greater than $1 billion.

But, in closing down the standalone subscription services such as Noggin, MTV hits and etc., it won’t be competing with itself. Warner Bros made the same move in shutting down its DCU service late last year. Viacom acquired PlutoTV, an ad-supported free service months before the merger with CBS. PlutoTV is delivered by Comcast and other cable services and offers much of the same content as Paramount+ will, but it is viewed as a success at 22 million subscribers allowing it to reach audiences in parallel and upsell them to the streaming service.

Poised for Success?

In his June call, ViacomCBS head Bakish had predicted a combined 16 million subscribers for Showtime AND CBSAA, at the end of the year, CBSAA had achieved 17.9 million on its own. The largest unanswered question is whether Paramount+ will continue the same $5.99 limited ad level and the $9.99 monthly ad-free subscription rate of CBSAA, or whether they will try to cite the extra content as justification for a rate hike. While the current price is below Warner Bros’ HBO Max monthly rate of $14.99 and they are on-par with NCBUniversal’s Peacock ad-free tier of $10 per month, they face stiff competition from Disney+ and it’s monthly $6.99 rate. The number of subscribers to the various streaming services (referred to as Subscription Video on Demand (SVOD)) is expected to increase to over 600 million globally by 2025. Currently, Netflix, Amazon and Disney dominate the market, far dwarfing the competition with Peacock and CBSAA closely matched in fifth place (sixth, if you consider Disney-owned Hulu a separate entity) and ahead of HBO Max and Apple. It is still early in the Streaming Wars and things will no doubt change – with or without an ongoing pandemic – but it is clear that ViacomCBS intends to be competitive, even if it is not dominant.

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