How Paramount+ and Peacock Could Succeed in Streaming After All

One longstanding question of the streaming wars has been whether the proverbial lightweights among the major combatants namely Paramount+ and Peacock could truly fight in the same weight class as the business heavyweights.

With subscriber bases a fraction of the size of Disney+, and far smaller even than that of middleweight competitor Warner Bros. Discovery, it has long seemed that the two services were not long for this world. Indeed, VIP+ questioned at the start of this year whether their parents, Paramount Global and NBCUniversal, respectively, should be in the direct-to-consumer business at all given the challenges and pain seemingly required to achieve the necessary scale for success.

But achieving that scale, or at least attempting to achieve it the way these companies have been, may no longer be necessary. As the landscape of the entertainment business has shifted dramatically this year, a new potential path forward for Paramount+ and Peacock is becoming clearer.

Much of that way forward is tied to the end of the peak TV era, which fueled the birth of these platforms in the first place. While the heady streaming gold rush made it seem logical to spend exorbitantly on a flood of premium content, in hindsight it never really made sense for every studio to try to build robust slates of prestige direct-to-consumer programming.

The output of Paramount+ and Peacock was always more trickle than flood anyway. Between 2020 and 2022, Paramount+ released just 94 unique series (including those it put out as CBS All Access), while Peacock released 119; in the same window, (HBO) Max produced 174, while Disney+ and Hulu released a combined 241.

Now that every studio has declared its intent to pull back on content spending, theres even less need for the smaller players to invest heavily in premium programming. Paramount+ and Peacock would benefit far more by leaning into their strengths, which the former already seems to have realized: Its been cutting down on expensive dramas outside of Star Trek and Yellowstone spinoffs, by far its most popular properties.

But perhaps these platforms greatest strength lies in their strong ties to their corporate parents linear TV operations. Peacock and Paramount+ offer livestreams of users local NBC and CBS affiliates, respectively, including the crown jewel of linear TV NFL broadcasts and other live sports.

Its no coincidence, then, that the services biggest months of subscriber sign-ups were tied to major sporting events, per data from Antenna. The biggest spikes for both Paramount+ and Peacock occurred when their respective broadcast sibling aired that years Super Bowl, and moments accompanied by NFL games are responsible for 10 of the 15 spikes identified in the past two years, Antenna analysts wrote in a recent report.

Not only that, Beyond NFL football, Antenna data indicates a diverse set of live sports including the Olympics, UEFA, the [FIFA] World Cup, and more driving acquisition for both Paramount+ and Peacock, the report added.

This is indicative of the two platforms key target audience: cord-cutters who still want to watch linear content, particularly live sports. Rather than using prestige TV to lure audiences into a package that includes this content, Paramount and NBCU should therefore be looking to acquire sports fans and use a smaller slate of original scripted content to keep those users in between major sporting events.

Doing so should help reduce the massive expenses these companies have been sinking into streaming and thus reduce the levels of subscriber scale needed to justify their spending.

Indeed, direct-to-consumer losses at Paramount and NBCU are already narrowing, thanks to reduced content spending (due in large part to this years talent strikes) as well as the revenue-boosting strategies the companies have pursued. Paramount, for one, now expects its investment in streaming to peak ahead of schedule, which was music to Wall Streets ears (at least temporarily).

In the current market, keeping expenses under control will be more significant to success in streaming than massive subscriber bases. If Paramount+ and Peacock can walk this fine line by playing to their strengths and recentering their content strategies, they may be able to stay in the game after all or at least until their parents become MA targets.