This year, Paramount Global (NASDAQ:PARA) plans to increase subscription costs for its Paramount+ streaming service, both in some international markets as well as in the United States. The news comes ahead of the combination of the Paramount+ premium tier and the Showtime linear network into one service, Paramount+ with Showtime.
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The price hike announcement was made at the fourth-quarter earnings call on February 16. The company reported an overall loss in its Direct-to-Consumer segment, despite having witnessed a record 9.9 million Paramount+ subscriber additions during the quarter. The loss can be attributed to content-related expenses and investments in international expansion.
Paramount’s Chief Financial Officer Naveen Chopra said that pricing for the premium tier of Paramount+, which will consist of Showtime content, will increase to $11.99 from $9.99. Meanwhile, prices for the essential tier, not including Showtime programs, will rise by $1 to $5.99. The new prices will be effective upon the launch of the integrated service, expected in the third quarter of 2022.
Streaming Service Price War
It is worth mentioning that Paramount is rather late in announcing a hike in subscription plan costs. Several streaming companies, including Disney (DIS), Netflix (NFLX), and Warner Bros. (WBD), have announced a rise in these prices to support their bottom-line growth.
The overall performance of the streaming business is being marred by a slowdown in advertisement spending due to recession fears. Furthermore, these companies need to continue spending billions on content so as to retain subscribers.
Is PARA Buy or Sell?
Wall Street is sidelined on Paramount, with a Hold consensus rating based on three Buys, one Hold, and three Sells. The average PARA stock price target of $20.71 implies a possible downside of 11.87% from current levels. The stock has gained about 38% so far in 2023.
