Two households alike in dignity, once star-crossed Viacom and CBS are now set to enter yet another union, this one perhaps less brief than their last. Their imminent integration raises a number of questions to be answered in the coming days – that of synergies, executive leadership and overarching strategy.
With CBS and Viacom making official Tuesday their plans to once again merge, one particular question, in this age of streaming-service matchups, is what will become of their over-the-top platforms. Viacom and CBS are something near opposites in the streaming sphere. Where CBS has invested in creating a dual paid subscription video-on-demand offering in the form of CBS All Access and Showtime, Viacom’s path has thus far been an inversion of its new partner, primarily pursuing an ad-supported free path after acquiring Pluto TV earlier this year.
CBS All Access’ muscular, albeit insular, platform is made up entirely of shows from its own flagship linear network (the “NCIS” franchise, “The Big Bang Theory,” “The Late Show With Stephen Colbert”) and exclusive, online-only originals (“The Good Fight,” “Star Trek: Discovery,” “Tell Me a Story”), offering a limited-commercial tier for $5.99 a month and an ad-free tier for $9.99 a month. Its sister service, Showtime OTT, is an extension of the premium cable network that features shows such as “Billions” and “Desus & Mero.”
Combined, CBS All Access and Showtime have a healthy paying subscriber base, eight million strong – a goal achieved nearly two years ahead of time, executives there will tell you – with an ambitious target of 25 million subs, not including its international or ad-supported services, by 2020.
CBS’ presence in the ad-supported video realm is less high profile, but consists of a varied portfolio that includes news-focused CBSN, local news-focused CBS Local, CBS Sports HQ and ET Live.
Viacom, meanwhile, headlines its streaming efforts with recently acquired Pluto TV, which is completely ad-supported and free of charge. The service boasts over 150 content suppliers – a wide-ranging lot that includes everything from Bloomberg to Fox Sports to a channel dedicated solely to old episodes of “Wahlburgers” – and a deep library of its own shows and movies from its MTV, Comedy Central, Nickelodeon, BET and Spike brands.
Fresh episodes of shows that air on Viacom’s linear channels come to Pluto TV a whole 18 months later, making it clear that the service’s raison d’etre is not to replace traditional TV watching but to supplement it. Viacom is investing in its growth and attractiveness to viewers; the company has notably shifted its strategy, forgoing licensing its library content to other SVOD services in favor of beefing up Pluto with those properties.
Pluto TV grew to 16 million monthly active users by the end of April, up from the 12 million-plus at the time of its acquisition announcement in January. Bakish said on the company’s Q2 earnings call in May that there would be “tens of millions” of Pluto TV-enabled devices coming online in the following months, expressing bullishness about the platform’s future.
Viacom’s presence in paid subscription services includes kid-friendly Noggin – which has 2.5 million paid subscribers globally – and older-kid-friendly NickHits, plus MTV Hits and Comedy Central Now. The latter three channels can mostly be accessed via services such as Amazon Channels and the forthcoming Apple TV direct-to-consumer platform. Viacom’s primary new effort to gain ground in the direct-to-consumer pay-TV market is its BET-branded streamer, which will launch later in the year.
So what is to happen when the powers that be convene to decide on a new, merged streaming strategy? Mash All Access and Pluto TV together or keep them apart? Pursue SVOD with aggression or harvest advertiser money for AVODs?
Viacom has signaled that its preferred place is in using its studios to provide shows and movies to other platforms – think AwesomenessTV-produced “To All the Boys I’ve Loved Before” for Netflix – as it concentrates on monetizing library content via Pluto TV, which it plans to expand internationally.
CBS, meanwhile, is aggressively pursuing content for its own services, anticipating an $8 billion-plus investment in programming this year.
The Wall Street crowd is split on whether bundling CBS’ and Viacom’s intellectual property – and direct-to-consumer platforms – would be a good idea.
“Mass is better, scale is better – so it’s better if they’re together,” Needham media analyst Laura Martin told Starmovie.
Should CBS All Access harvest Pluto TV for Viacom’s library content, it would mean a product that has the potential to capture an incredibly broad demographic spectrum, from the MTV crowd to “NCIS” loyalists. There are no current indications that that might happen.
Martin sees the two entertainment conglomerates’ brands as being “perfectly complementary,” with synergies to be realized if streaming teams are merged and platforms are consolidated.
Cowen analyst Doug Creutz begs to differ.
“They’re trying to do very different things,” he said, noting the age gap between CBS “NCIS”-watching and Viacom’s Nickelodeon-viewing audiences. He believes that a combined company would keep CBS All Access and Pluto TV on parallel tracks.
“Both of (their) approaches make sense,” he said. “You fit the business model to the business you have.”
Either way, CBS’ online division has the technological infrastructure to withstand the addition of a few extra properties to its existing 38 brands, regardless of how they become integrated. Leadership at the newly named ViacomCBS Inc. will likely spend some time in the coming months mulling a forward-looking digital strategy that can keep and attract subscribers, amid the soon-to-launch streamers from Disney, WarnerMedia and NBCUniversal, not to mention established streaming pure-play Netflix.
Even the strongest players should be primed to keep their elbows out.
“People are willing to lose money to stay in the game,” said Creutz.