Live sports are a significant customer driver for Paramount Global's subscription video-on-demand offerings, and they add promotional and margin value for the company as a whole, Paramount Global CFO Naveen Chopra said.
Paramount+'s presentations of NFL, UEFA Champions and Europa leagues, PGA golf and the upcoming March Madness college basketball tournament serve as a differentiator in the U.S. streaming landscape and help attract new subscribers, the CFO added.
Sports also open the viewing portal to other types of content on the streaming platform, including films, series, news and kids fare. Chopra told investors at a March 15 conference that many of the users that come in for sports become top direct-to-consumer customers once Paramount can "get them into that second piece of content."
Paramount+'s sports holdings are not as robust outside the U.S. Nevertheless, streaming sports holds value in Australia, and the company will kick off coverage of the English Premier League in Central America and Mexico on Paramount+.
Chopra said the EPL product in Mexico will not only lead to subscriber acquisitions but will also give the company "more flexibility in terms of how we price and package our service to maximize ARPU."
Paramount Global's streaming sports game plan is rooted in acquiring rights at reasonable rates, while also being able to leverage the investment across multiple channels and geographies.
The CFO spotlighted distribution deals in the U.K., Ireland, Germany, Austria, Switzerland, Italy and France, where companies in those countries can quickly launch Paramount+ to millions of customers. Under those arrangements, Chopra said Paramount Global is incurring virtually no acquisition costs and will keep churn low via the bundled package. Moreover, he said the distributors provide promotional support for the service and its programming in the attendant markets.
By combining those elements, Chopra said Paramount Global is effectively benefiting from billions of dollars of either cost avoidance or incremental revenue that it can capture over time. "That ultimately leads to margins that are similar to our traditional business," he said.
After finishing 2021 with 56.1 million global streaming subscribers, Paramount Global raised its guidance to 100 million by 2024. At its Feb. 15 investor day, the company forecast streaming revenue would reach $9 million by 2024, up from its original projection of $6 million. Direct-to-consumer streaming investments will jump from $2.2 billion in 2021 to more than $6 billion in 2024.
Chopra at the March 14 investor event reiterated that direct-to-consumer losses will peak in 2023.
Chopra's comments come a few days after Fox Corp. CEO and Chairman Lachlan Murdoch noted that the company would not use its sports rights holdings to drive viewers to its online properties. "We think live sports on broadcast TV is still the greatest opportunity for us to monetize that engagement," Murdoch said.
