ViacomCBS preparing a supersized streaming service – report

Go big or go home seems to be the mantra in this phase of the streaming era, marked by the entry into the direct-to-consumer arena by major media companies such as Disney, NBCUniversal and WarnerMedia.

Count ViacomCBS as the latest to give the nod to going big. According to CNBC, ViacomCBS is developing a new streaming service that will combine content from its various programming and media properties, including movies from Paramount Pictures, Viacom cable channels and CBS All Access, the subscription OTT service that CBS launched in the fall of 2014.

According to the report, ViacomCBS is considering a model featuring both ad-supported and ad-free subscription tiers that would feature shows from Viacom's cable properties, including Nickelodeon, BET, MTV, Comedy Central and premium service Showtime. It would also explore a way to weave in Pluto TV, the free, ad-supported streaming service that Viacom acquired last year for $340 million.

A name for the new offering is still in the works. But the plan is to offer a "base service" for less than $10 per month, CNBC said, noting that ViacomCBS intends to shed more light on the plan and updated subscriber figures for the company's existing streaming services on its February 20 earnings call.

CBS All Access, a service that features exclusive original series such as Star Trek: Discovery and Star Trek: Picard, currently sells for $5.99 per month with ads or $9.99 per month with no commercials. The standalone, OTT-delivered version of Showtime costs $10.99 per month. Prior to the combination with CBS, Viacom introduced a few smaller OTT subscription services, including Noggin, a $7.99 per month service for preschoolers.

Word of the expanded streaming strategy emerges more than two months after CBS and Viacom completed their merger. When the deal was announced last August, CBS and Viacom reasoned that the combo would put them in better position to compete amid the rise and popularity of direct-to-consumer streaming services being spurred on by the ongoing erosion of the traditional pay-TV market.

The DTC market is surging as media giants throw their hats into a ring that's been dominated by Netflix, Amazon and Hulu, which is now majority-owned by Disney. Disney introduced Disney+ late last year and now counts about 28.6 million subs, while Apple launched Apple TV+ on November 1, 2019. Meanwhile, NBCUniversal (Peacock) and Warner Media (HBO Max) are set to launch new streaming services later this year.

Now that Viacom and CBS have combined, the "biggest unresolved issue" is how the new company would allocate investments on Showtime and CBS All Access, Michael Nathanson, analyst with MoffettNathanson, noted last month when he initiated ViacomCBS with a "neutral" rating. "For CBS All Access, the question is one of survival (and business rationale) against the entry of much deeper pocketed rivals."

While there are costs and revenue synergies to be realized by the combined company, "the structural pressures facing the industry will negatively weigh on the newco's basic and premium cable networks as cord cutting and the attendant pressures likely accelerate," Nathanson added.

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— Jeff Baumgartner, Senior Editor, Light Reading