“Networks are a key part of our structure. We believe in their value to consumers and partners, so we are not fast tracking any plans to pivot away from linear. The relationship they bring to audiences and distributors is key to our future ambitions.” These are the words of Dan Fahy, Senior VP and Head of Emerging Business a ViacomCBS Networks UK, when asked if ViacomCBS would consider ditching linear channels if app viewing on its direct-to-consumer streaming services became the main way people watch ViacomCBS content. Fahy was speaking at Connected TV World Summit last month and his emphatic commitment to linear channels mirrored that of Discovery, which also made it plain how much it values channels and the Pay TV bundles they are part of. You can see what Discovery thinks about the future of linear channels here.
Fahy made it clear how ViacomCBS views its diversity as a strength, with the studio/programming group spanning free and pay, basic and premium, and digital-first as well as traditional distribution within its portfolio. “We have a unique position in the rapidly evolving media landscape,” he said, also noting the wide range of content in the group spanning films and series, scripted and unscripted, drama, documentaries, reality, comedy, music and sport.
ViacomCBS brands include Paramount, Miramax, CBS, Nickelodeon, MTV, Comedy Central and Channel 5 – the UK public service commercial broadcaster that is enjoying stellar figures, with share of viewing up 9% across all day parts in the year to June and up 22% among all ABC1 viewers in peak. Pluto TV is the AVOD/FAST (free ad supported streaming TV service) that saw minutes of viewing per user grow 93% YoY to May and total minutes served via the platform grow by 167% in the same period. As of Q1, this service had 50 million active users.
And there is Paramount+, the direct-to-consumer subscription streaming service that morphed out of CBS All Access (which was one of the first D2C services, launched in 2014) and which is now live in the USA, Canada, Nordics and Latin America, with Australia scheduled for an August opening. There is an end-2021 target of 25 markets for Paramount+ and a 45-market target for the close of 2022. Paramount+ is not the only ViacomCBS subscription streaming service: others include MTV Play (a lower priced mobile first access point to MTV) and Noggin, a Nick spin-off – both available in the UK.
ViacomCBS had 36m streaming subscribers in total in Q1, including 6m that were added in the previous quarter, mostly thanks to Paramount+, with domestic U.S. leading the growth of this important D2C launch. The average age of new streaming subscribers was reduced by six years in Q1, “reflecting the content we are adding including kids’ content, MTV and also sport, which is a big area of focus for us in the U.S. and Australia and has very attractive demographics,” Fahy explained.
All streaming revenues at ViacomCBS grew 65% YoY to Q1 2021 “with the expectation of further acceleration beyond that on both subscription and advertising revenue,” Fahy reported. 15% of total revenue at ViacomCBS now comes from streaming.
Fahy listed the drivers behind this streaming growth, including the fact that ViacomCBS is one of the largest content producers anywhere, with close to 900 series in production today, globally. The company is producing 53,000 content hours per year and 36 new original series are planned for Paramount+ this year, rising to 60 original series in 2022.
“Our production activity and infrastructure spans 25 countries and one-third of it is produced in international markets, so we have an enormous content production platform to launch and sustain our streaming ambitions,” Fahy declared. The international version of Paramount+ will have 1,000 films, 3,000 episodes of kids’ content, 1,000 episodes of reality content and 2,500 hours of CBS Showtime covering series, drama and sitcoms, etc.
“This is a significant volume of top-quality content, but more importantly there is a rich vein of loved intellectual property running through these volumes that give us terrific flexibility and options to build further into certain franchises and brands,” the executive told the [online] Connected TV Summit audience. ViacomCBS is spending $15 billion a year on content and has raised $2.7 billion from the market and sold its publishing division for a further $2.2 billion to ensure it has the deep pockets needed to compete. “ViacomCBS is at the top table of content investment and has an appetite for more”, Fahy declared.
Despite the confident appraisal of why the media owner is set for streaming growth, Fahy made it clear that all three pillars of the ViacomCBS business – networks, studios and streaming – are part of the future strategy. He reviewed the company’s [traditional] Pay TV business in the UK & Ireland where brands like MTV and Nick Jr reach 14 million homes and all its flagship brands have been on Sky’s Pay Lite streaming service, NOW (called NOW TV until a March rebrand) since launch.
“We have a significant licensing business in the UK: Paramount Pictures is a central piece of Sky Cinema in the UK,” he pointed out, adding that Showtime is a content provider for Sky Atlantic and CBS output “makes up a significant percentage of the schedules on Sky Crime and Sky Witness (two Sky owned channels). “Sky is the custodian [in the UK] of much of our premium and pay output and is a highly valued and key partner of ours,” Fahy added. ViacomCBS also licenses content to BritBox (the SVOD service created by ITV and the BBC, and which also features Channel 4 content).
As Fahy took the time to list ViacomCBS’s third-party licensing, it was clear that his company sees this ‘traditional’ business as an important future revenue source, despite the growth of its own streaming services, and this is significant given the potential now for all studio/programming groups with D2C offers to start favouring their own services with their own productions. The analyst firm Ampere Analysis has performed some number crunching that shows the number of D2C subscribers a studio needs before it becomes possible to fully replace licensing and pay channel revenues (if they wanted to go down this road).
As with Discovery, ViacomCBS wants to partner with distributors to help grow its streaming services, especially internationally, where Fahy acknowledged that the company cannot always ‘go it alone’. “Local market partnerships can be key to streaming go-to-market strategies in many major markets. We take enormous pride in our partnerships with distributors.”
Fahy said the combination of free, premium and pay services allows Viacom to reach more audiences at a variety of price points in most of the markets where it operates, achieving what he calls “full funnel customer engagement” – something he thinks is a unique strength for ViacomCBS. “On the pay and premium side in the UK, we are focused on working with our Pay TV partners to continue to build reach and value into Pay and Pay Lite homes. Our partnerships with Sky, Virgin Media and Amazon, for example, are very strong and strategic, and between them we are present in the majority of homes that are willing to pay for content in the UK.”
In short, ViacomCBS intends to grow it free-to-air business, nurture its Pay TV distribution partnerships, work with digital-first ‘Pay TV’ aggregators, and grow its direct streaming services in parallel.
Focusing on UK streaming in particular, Fahy said the focus is to grow the free streaming footprint through My5 (Channel 5’s BVOD service) and Pluto TV, and he is confident each offer can secure its own segment in the free marketplace. “My5 is the best version of the revitalised Channel 5 portfolio and Pluto TV is a partnership-focused platform pursuing a younger and more SVOD focused audience,” he explained. “Having this strong free TV foundational layer is a huge advantage to activities in the Pay and Premium space and we know that building this foundation will provide a terrific future platform for reach and for funneling people into Pay streaming,” Fahy said.