With 42 Million Subscribers, ViacomCBS Strikes South Park Deal to Boost Originals

HBO Max may have spent a reported $500 million for the exclusive streaming rights to South Park, but ViacomCBS streamer Paramount+ will soon get a boost of exclusive South Park programming beginning this year. As part of a new six-year deal with ViacomCBS, show creators Trey Parker and Matt Stone will make additional seasons of the irreverent comedy for linear cable network Comedy Central through 2027—which will be its 30th season—and will also develop 14 South Park original movies made exclusively for Paramount+. Two of those films will arrive on Paramount+ in 2021, and subsequent films will premiere twice a year through the duration of the deal. The expansive deal, announced ahead of ViacomCBS’ quarterly earnings Thursday morning, comes as ViacomCBS continues to invest substantially into its growing streaming arm, which the company has repeatedly signaled marks the future of the company. The company is planning to more than double its content expense this year as it looks to make further inroads both in subscriber gains and in streaming advertising, chief financial officer Naveen Chopra said. “Streaming will represent close to 15% of total company revenue in 2021 and will become an even bigger share of revenue next year,” Chopra told investors. “This momentum tells us that our investment thesis is solid and can unlock significant incremental growth … We are bullish about where we can go from here.” ViacomCBS Nabs Historic Pricing As It Completes ‘Off the Hook’ Upfront Talks More than 42 million streaming subscribers That increased investment comes as ViacomCBS’ subscriber numbers and streaming advertising revenue continues to climb. As of the end of ViacomCBS’ second quarter, the company added 6.5 million streaming subscribers, bringing its total subscriber count to more than 42 million; those subscribers brought in $481 million in revenue, up 82% from a year ago. While the company doesn’t break out Paramount+ subscribers specifically, ViacomCBS Bob Bakish said most of that subscriber growth was due to Paramount+, which officially debuted in March and in June introduced an ad-supported tier. Showtime OTT, ViacomCBS’s premium streamer that is offered as a bundle with Paramount+, is becoming less crucial for the company’s overall streaming growth; prior to Paramount+’s relaunch and the ViacomCBS merger, Showtime OTT and CBS All Access were neck-and-neck in streaming subscriptions. Still, the premium service is also recording improvements, counting the quarter as one of its best yet in terms of new sign-ups and its second-best quarter ever in terms of hours watched on the service, Bakish said. At Paramount+, originals and kids programming helped drive that growth. The revival of Nickelodeon series iCarly was the leading acquisition driver in the quarter, followed closely by the UEFA Champion League. On the engagement side, Mark Wahlberg-led action film Infinite, which was rerouted straight to streaming, was one of the top engagement drivers on the service, as were originals like Why Women Kill, and CBS series like Evil (which moved over to Paramount+ after its first season) and NCIS. Among kids programming, well-loved franchises like SpongeBob SquarePants, Rugrats and Paw Patrol unsurprisingly led the programming pack. The average age on Paramount+ continues to get younger as it adds new subscribers, and is now down to 35, two years younger than last quarter, Bakish said. “It's clear Paramount+ is resonating with consumers both in the US and internationally, and that's because it's a differentiated product with real competitive advantages.” Bakish said. “It has something for everyone.” Pluto TV's billion-dollar year As the subscription figures continues to swell, so is the company’s streaming advertising revenue, which is driven by the company’s free, ad-supported streamer Pluto TV. That streaming service counted 52 million monthly active users in the quarter, and revenue at Pluto in grew 169% in the quarter. "We now, in fact, expect Pluto TV to comfortably generate more than $1 billion in revenue this year,” said Bakish. Domestic watch time per monthly active user increased 45% in the quarter, Chopra said, and in the same timeframe, Pluto counted double-digit percentage increase in CPMs increases. Paramount+’s domestic advertising revenue, meanwhile, more than doubled versus a year ago, Chopra said. In all, streaming advertising revenue grew to $502 million in the quarter, more than doubling from the same time a year ago. ViacomCBS is looking to nurture that growth, especially during this year’s upfronts, which saw “very strong demand” overall and “historic levels of linear price increases,” Bakish said. The company focused on driving a “significant volume” of spend toward the company’s digital video inventory, which is made up primarily of Pluto TV inventory and is available to advertisers through ViacomCBS’s EyeQ platform. As advertising revenues on the streaming side continue to swell, ViacomCBS is looking for other ways to boost audiences. To do it, the company will look to leverage linear audiences and entice them to the company’s suite of services. 1883, the prequel to Paramount Network’s hit drama Yellowstone, will premiere two episodes on Paramount Network before moving over to Paramount+, as will creator Taylor Sheridan’s other new project, The Mayor of Kingstown. The same strategy will happen on CBS, where four episodes of the drama SEAL Team will air before shifting exclusively to the streaming service. The Sky's the limit It’s also looking to make further inroads internationally. Paramount+ will get a big European boost with a deal with Comcast-owned British broadcaster Sky, in which Paramount+ will be offered for no additional charge to subscribers to Sky Cinema in the U.K., Ireland, Italy, Germany, Switzerland and Austria, and as an add-on option for other customers in those markets. The deal, which will begin next year, will help bolster Paramount+’s international footprint as it looks to build out a lucrative global customer base. “Not only does it extend important benefits and economics from our legacy business, but it's also a game changer for Paramount+ in these markets by unlocking previously exclusive Sky content for use on Paramount+ and provide Paramount+ with a very significant subscriber base at launch,” Bakish said of the deal.