The gutting of Showtime’s slate as it folds into Paramount+ is a Wall Street-pleasing purge — and a sign of the times
Higher prices, fewer shows and more franchise spin-offs: The bill for peak TV is coming due, and media companies are hoping they can pass on the cost to consumers and shareholders. Paramount Global’s announcement that it could write down as much as $1.5 billion in content this year as it merges Paramount+ and Showtime is just the latest sign of the newly cost-conscious stage of the streaming revolution, experts and analysts told TheWrap.
Paramount is just one of many media companies looking to rationalize their portfolios: Consider Disney’s Hulu dilemma or Warner Bros. Discovery’s pending plan to combine HBO Max and Discovery+. But Paramount may be moving the most decisively to scale back a famous brand from the era of cable TV to bolster its direct-to-consumer business and cut costs, as investors grow impatient with streaming losses. Like many of its peers, Paramount has also pledged 2023 will be a year of “peak investment,” with red ink subsiding in the future.
Combining Paramount’s two big subscription offerings, which means Showtime won’t need its own apps or marketing plan, will yield Paramount some $700 million in annual savings — a large part of the anticipated savings for the year, executives said Thursday in a call to discuss its fourth-quarter earnings and financial outlook for 2023. Crucially, the new Paramount+ With Showtime will require fewer fresh series and movies to lure new subscribers and retain existing ones. Those that get the green light will likely fall into already familiar franchises.
“Leaning on franchises allows Paramount to cut costs and lean on their strongest content,” stated streaming analyst Dan Rayburn. “There won’t be much breadth and depth, but you’ll have surefire hits.”
Stretching the franchise
The franchise model is “one that has worked exceptionally well for CBS in the broadcast world,” said Samba TV senior vice president Dallas Lawrence, and Paramount has carried it into streaming with “Star Trek” and the Taylor Sheridan universe spun out of “Yellowstone.” He noted that “nearly one in four Paramount+ viewers are only watching Taylor Sheridan-backed projects.”
However, not every hit show or movie can become a franchise, and the strategy may have long-term risks.
Paramount can point to the success of “Criminal Minds” as the franchise strategy at work. Yet attempted network television spin-offs “Suspect Behavior” and “Beyond Borders” were canceled after one season and two seasons, respectively. Delivering reruns of the same adventures sans marquee characters won’t always click with audiences.
One reason the Sheridan-produced shows have a following is that they are generally quite different from each other and offer elements beyond “Hey, it’s a Taylor Sheridan show!”
“Tulsa King” is a comedic crime melodrama featuring Sylvester Stallone as a fish-out-of-water gangster, “1923” is a Western pitting Helen Mirren and Harrison Ford against Timothy Dalton, while “Mayor of Kingstown” is a grim, dark Jeremy Renner drama about the modern-day incarceration industrial complex. “Yellowstone” itself is a modern-day play on “King Lear” — not unlike “Empire” and “Succession” — set in a modern–day cattle ranching family. Audiences can watch new episodes of any or all of these installments and not feel like they watched several loose variations of the same show.
The challenge with the franchise-heavy strategy is that there’s little in the Showtime library that resembles the Sheridan-verse’s formula. Audiences love “Yellowjackets,” but that doesn’t mean they want an origin story prequel or a loosely connected spin-off. We’ll see if the planned “Billions” spin-offs or “Dexter” prequel deliver.
After all, for every “Law & Order: Special Victims Unit,” there’s a “24: Legacy.”
“Paramount doesn’t have the capital that Netflix or Disney is spending for new content,” noted Hatem Dhiab, a managing partner at Gerber Kawasaki Wealth and Investment Management. “Hence why they need to focus on hits.” The downside, he added: “That becomes stale eventually.”
Past “Peak TV”
Studios have stressed that this year will mark the peak in content spending, and Paramount was no exception. That could help sell the billion-dollar-plus write-down to Wall Street as a one-off cost before streaming profits arrive. It’s becoming clear that content for content’s sake — dare we bring up Paramount+’s “mountain of entertainment” slogan? — isn’t enough to get subscribers to stick around. The times require smarter, leaner strategies.
Investors have figured this out, after years of pressuring studios to be more like Netflix and chase subscriber counts. However, fewer experiments and an increased reliance on franchises run the risk of milking existing IP to diminishing returns. And the strategy could lead to Paramount unwittingly passing on the next “Yellowstone” or “Yellowjackets.” Every franchise began life as an original idea.
“It’s the old Hollywood playbook, rely on previous hits and try to redo and capitalize [on them],” said Dhiab. “You need to invest in quality content and be willing to fail.”
Paramount correctly noted that franchise plays are essentially “giving the audience what it wants.” But sometimes one must give the audience what they didn’t realize they wanted. If Paramount misses, there could be more write-downs ahead.
Before joining The Wrap, Scott Mendelson got his industry start in 2008 with a self-piloted film blog titled "Mendelson's Memos." In 2013, he was recruited to write for Forbes.com where he wrote almost exclusively for nearly a decade. In that time he published copious in-depth analytical and editorialized entertainment industry articles specializing in (but not exclusively focused upon) theatrical box office. A well-known industry pundit, Mendelson has appeared on numerous podcasts and been featured as a talking head on NPR, CNN, Fox and BBC.