Shares of many streaming-related companies were dragged down after market leader Netflix Inc (NASDAQ:NFLX) reported April 19 a loss in quarterly subscribers for the first time in over 10 years.
With several companies reporting gains in the same quarter, it could be better for the streaming market than originally feared.
What Happened: Paramount Global (NASDAQ:PARA) (NASDAQ:PARAA) reported first-quarter financial results before the market open Tuesday.
The company posted revenue of $7.3 billion in the first quarter, a 1% year-over-year decline. The highlight of the report was the company’s strength in the direct-to-consumer category, which includes its streaming platform Paramount+.
Paramount reported first-quarter direct-to-consumer revenue of $1.1 billion, which was up 82% year-over-year. DTC advertising revenue hit $347 million, up 59% year-over-year. DTC subscriber revenue hit $742 million, up 95% year-over-year.
Paramount ended the first quarter with 62 million global streaming subscribers. In the quarter, the company added 6.8 million Paramount+ subscribers. Paramount+ had around 40 million subscribers to end the first quarter.
The company cited “Halo,” “1883,” “Star Trek Picard,” live events and National Football League games as the key items that helped with Paramount+ engagement and new subscribers.
The growth in the first quarter follows a fourth quarter that the company said saw Paramount+ operate as the fastest-growing SVOD service in the U.S.
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Why It’s Important: In the first quarter, Netflix reported a loss of 200,000 subscribers, its first decline in net subscribers in over 10 years. The company ended the first quarter with 221.6 million subscribers to remain the market leader.
While many expected other streaming companies to report losses in the first quarter, several have reported gains.
Warner Bros. Discovery (NASDAQ:WBD) reported 76.8 million subscribers for its HBO and HBO Max units and saw a gain of 1.8 million U.S. subscribers in the first quarter. HBO and HBO Max have added 12.8 million subscribers over the last 12 months.
A recent study suggests that streaming platform usage hit 30% of American television viewers in March, the highest since Nielsen began tracking the category.
While Netflix had a sizable first mover advantage and leadership role, it now faces a saturation point in the U.S.
Companies like Warner Bros. Discovery and Paramount have some competitive advantages over Netflix, with their blockbuster movies releasing simultaneously on streaming platforms with theaters or hitting their own platforms first. Paramount also has live sports, which is not a current Netflix feature.
While the first quarter was bad for Netflix, it looks like there is still growth opportunity in streaming both domestically and internationally for several companies.
PARA Price Action: Paramount shares were down 2.02% to $29.66 Tuesday afternoon, according to Benzinga Pro.
The Paramount Pictures gate in Hollywood. Photo by Coolcaesar via Wikimedia.
