Amid the latest reports on Paramount’s on-again, off-again, and on-again merger talks with Skydance, significant news also emerged regarding Paramount’s streaming division. Paramount and Warner Bros. are said to be exploring a deal to combine their two streaming platforms into a single service that could compete more effectively with offerings from the streaming giants Netflix and Disney.
Currently, both Max and Paramount+ struggle to contain “churn,” the phenomenon of a user signing up for a service to see a specific event (an awards show, a sporting event) only to later cancel their subscription once the event has concluded.
A key factor in minimizing churn is to offer an ever-increasing array of programming, so there is always a new program or event to tempt fickle users to keep their subscriptions. To this end, Paramount has already been exploring partnership options with NBCUniversal, potentially combining Paramount+ with Peacock.
A potential merger between Paramount+ and Max reflects the current reality of the streaming environment. The pandemic-era boom in streaming has evaporated. At that time, the goal of most studios and streamers was to invest heavily to build up an install base of subscribers. Teasers and bundles abounded, luring new users to sign on to these new services.
Since then, the bill for these investments has come due, with most services struggling to find a profitable business model that can keep most of their audience while limiting the costs. Most platforms have either increased subscription rates, such as Netflix and Disney or sought economies of scale through mergers with competitors.
With research indicating that consumers have subscribed to an average of three streaming services, the second-tier platforms are actively seeking a path to be part of a larger streaming service that can survive in the long term.