Combined subscriptions to the CBS All Access and Showtime over-the-top (OTT) streaming services continue to increase so quickly that CBS has boosted the projection for subscribers to the two services to 25 million by 2022 from its prior forecast of 16 million by that year, according to Joseph Ianniello, CBS president and acting CEO.
“By getting in early, we now have clear evidence that these services are working and as they continue to scale, we are outperforming our expectations as well as the targets we previously laid out for you,” he told analysts Feb. 14 on an earnings call for the company’s fourth quarter (ended Dec. 31).
CBS already attracted a combined 8 million subscribers from the two direct-to-consumer (D2C) services, ahead of its original forecast, he said, noting: “We originally told you we would hit that mark by the end of 2020. Then, last year, we accelerated our commitment and said we [would] hit that by the end of 2019. Now, we are announcing that we have already crossed 8 million subscribers nearly two years ahead of our original schedule.”
The projections for 2022 don’t even include any subscribers from the company’s international D2C platforms he said “represent a significant additional opportunity for us, and it doesn’t include our rapidly growing ad-supported direct-to-consumer channels including CBSN, CBSN Local, CBS Sports HQ and ET Live, all of which are contributing to make CBS All Access a unique and more robust content offering.”
In addition to the huge number of D2C subscribers that already signed up for the CBS and Showtime streaming services, the company is enjoying “another early mover advantage in direct-to-consumer and that is rich data, which gives us valuable intelligence about the subscriber journey,” he pointed out, adding: “We are hearing loud and clear that, in addition to watching our content on-demand and outside the home, our subscribers love our premium content and they want more of it, so our focus is squarely on delivering that to them.”
To that end, with CBS All Access, the company went from three original programs in 2017 to seven originals in 2018 and, in 2019, “we’ll be adding four more to get us to 11 — nearly quadruple the number we had just two years ago,” he told analysts.
Showtime OTT, meanwhile, will be expanding its slate of original programming also, increasing the number of documentary series, “adding premium boxing events and launching a weekly talk show — Desus & Mero — for the very first time,” he said. In total, Showtime will produce 30% more hours of original programming in 2019 than it did last year, he noted, adding the “rich data” at the company’s disposal “allows us to drill down and learn more and more about our viewer’s preferences,” which is “very valuable to our content creators and to our advertising clients as well.”
As CBS boosts the amount of premium content it creates, the company is “deliberately pursuing a two-pronged monetization strategy,” he said, explaining: “First and foremost, we are building our in-house direct-to-consumer services. And second, we are benefiting from the lucrative business of licensing our content to third parties.” Selling Star Trek: Discovery to Netflix internationally while streaming it exclusively here in the U.S. on CBS All Access is “emblematic of this strategy and provides for interesting opportunities for us going forward,” he said.
CBS will end 2019 “by coming full circle” on its All Access original series by launching a new Star Trek show starring Patrick Stewart as captain John Luc Picard, the same role the actor played in Star Wars: The Next Generation.
The company reported fourth-quarter revenue grew 3% from the prior Q4 to $4.02 billion, helped by ad revenue increasing 7% and affiliate and subscription fee revenue growing 11%, it said. CBS, meanwhile, swung to a $561 million profit ($1.50 a share) from a $41 million loss (10 cents a share).