SpongeBob, “Star Trek” and the Super Bowl have attracted new subscribers to ViacomCBS’s streaming platforms.
The company, led by Shari Redstone, rebranded its long-running streaming service as Paramount+ in March, while also providing it with a slew of new shows, films and sports programming. The company also added content to Pluto, its free streaming service.
The stronger commitment to digital media has created a revenue powerhouse, with streaming sales jumping 65 percent to $816 million in the first quarter, the company reported Thursday. ViacomCBS said it added 6 million new streaming subscribers to both Paramount+ and a smaller streaming service, Showtime, bringing the total to 36 million.
The company doesn’t disclose how many customers are coming to each platform, but the majority have bought Paramount+, a cheaper service at $6 a month with ads, or $10 a month without commercials. ViacomCBS plans to offer a new tier at $5 a month this June in an effort to drive more subscribers. That should help the company sell more ads, offsetting the price drop.
Pluto also saw large gains. It touts 50 million active monthly viewers, nearly double the number it had last year. Unlike Paramount+, Pluto is free and relies entirely on commercials to generate revenue. The popularity of free streamers such as Pluto has enlivened the ad market as brands look for venues beyond traditional TV to promote their wares.
Revenue from advertising on the company’s streaming platforms rose 62 percent to $428 million, while subscription revenues from streaming increased 69 percent to $388 million.
Despite the rapid growth, streaming remains a cost-intensive business and is likely a big money loser. Even Netflix, the industry leader, bled cash for years before achieving true profitability only after it surpassed 200 million subscribers last year.
The company said it will invest more in original series and films for Paramount+, and, in a marked switch from its previous strategy, it plans to hold back more of its own productions for the service, instead of licensing them to other streamers.
In 2019, the company sold rights to “South Park,” one of its most popular franchises, to AT&T’s HBO Max for $500 million for several years. It has also sold shows such as “Tom Clancy’s Jack Ryan” to Amazon Prime Video and “Thirteen Reasons Why” to Netflix. Now, ViacomCBS will try to fill its content pipeline from its own studios.
The focus on streaming highlights the steady decline of the company’s traditional broadcast and cable businesses. Viewership has been dropping, as it has at other TV networks. ViacomCBS still benefited from hosting this year’s Super Bowl and the NCAA basketball tournament. Advertising increased 21 percent, to $2.7 billion, and carriage fees paid by cable operators rose 5 percent, to $2 billion.
Overall, adjusted operating profit at ViacomCBS gained 39 percent, hitting $961 million, and revenue increased 14 percent to $7.4 billion.
In the quarter, the company also took advantage of an unusually frothy market for its stock and issued new shares to raise $2.7 billion in capital. Shares in ViacomCBS had jumped nearly tenfold in the past year.
Most of those gains had come as a result of a heavily leveraged trading strategy from a single investment firm called Archegos Capital Management, led by the investor Bill Hwang. At one point Mr. Hwang was responsible for $20 billion of ViacomCBS stock, or a third of all shares.
It all came tumbling down last month, when lenders demanded their money back. ViacomCBS also suffered as its share price plummeted from a high of $100 to about $38 on Thursday.