Paramount+ is bulking up before its marriage with HBO Max.
Paramount Skydance is preparing to launch new streaming features designed to drive engagement and increase revenue from viewers as it finalizes its $110 billion acquisition of Warner Bros. Discovery. The deal will give Paramount control of HBO Max and Discovery+.
CEO David Ellison’s company told streaming employees at a town hall this summer that Paramount+ is planning to add a free tier, micro dramas, and new interactive ad formats. Paramount is also preparing to put a comments section in its TikTok-style feed and leverage AI to help it clip videos, according to a screenshot of its streaming initiatives list recently viewed by Business Insider.
These features don’t have specific launch dates yet, a person familiar with Paramount’s strategy said. However, an internal document said several projects related to the free tier are labeled for Q4 and Q1 2027.
Paramount+ is also leaning into short vertical video, which it launched in April, and adding more video podcast segments to grow engagement on mobile and during the day.
The streaming initiatives list, which one tech staffer described as “a living, breathing document,” shows what Paramount’s streaming team has been prioritizing ahead of its WBD merger.
Ellison has looked to remake Paramount, a 114-year-old media firm, by prioritizing tech and hiring executives from companies like Google and Meta. Paramount hopes that buying WBD will give it the scale it needs to rival Netflix and YouTube, though some analysts are skeptical of its chances because of its relatively low streaming viewership share and the combined company’s tens of billions of dollars in debt.
“What Ellison’s doing is very logical,” Rich Greenfield, a media analyst at Lightshed Partners, said of the changes coming to Paramount+. He added that Paramount is “throwing a lot of things at the wall to see what drives engagement.”
How free content can help Paramount+ lift engagement and profits
Paramount’s streaming product updates are designed to either boost engagement or improve monetization — two overarching goals for its business, a person familiar with the company’s strategy said. Growing viewership makes customers less likely to cancel and generates incremental revenue for subscribers on the ad tier.
Paramount+ needs help in both areas.
Nearly 6% of its subscribers canceled in August, according to subscription data firm Antenna. That’s the second-highest rate among major streamers. Antenna also found in a June report that more than a third of Paramount+ users only watched the service lightly — a higher percentage than any of its major paid rivals.
“You need something all the time to keep people entertained,” Greenfield said. “It’s a war for time spent, and you’re chasing the juggernaut in the space, which is YouTube.”
A free tier could help Paramount+ entice new users.
“While Disney+ wants people to visit more often, Paramount+ needs more people to actually come to the house,” said Mike Proulx, a media-focused research director at Forrester.
Paramount is “experimenting with various forms of free content” like short-form video, live channels, and user-generated content, an internal streaming document said.
Before sampling the Paramount+ free tier, users will need to register with their email, which lets the company add them to marketing lists. This “lays the groundwork” for free users to eventually become paying customers, the document said. It added that this process of capturing identities from the free tier could “become the connective tissue between the broader Paramount Ecosystem.”
Free-tier viewers will either be asked to pay after watching a certain number of episodes, or after a certain period of time, the document said, so that users can’t just “binge free content without friction.”
“The goal is to create timely urgency that nudges registered users toward converting to a paid subscription,” the document said.
Others in Hollywood, like Disney, are also exploring adding free tiers as steady streaming price hikes make no-cost options appealing.
‘War of the tech stacks’
Paramount has spent the last year integrating Paramount+ and the free streamer Pluto TV into a single tech platform. That “convergence” project is nearly complete, two people familiar with the change said, meaning that many streaming teams are working on a unified tech stack.
As Paramount merges with WBD, it will also acquire HBO Max and Discovery+. It’s unclear exactly how Paramount will integrate content and features from those streamers, though employees across both companies are bracing for internal competition.
Ellison told staffers in a memo on Monday, sent after settling the lawsuits that were holding up the WBD deal, that Paramount is still thinking through the integration details.
“I know you have questions about what happens next — your role, your team and how we will work day to day,” Ellison told employees. “We don’t have all the answers yet, and I won’t pretend otherwise.”
“I see another internal war of the tech stacks happening,” a veteran WBD streaming employee said about the Paramount acquisition, which comes a few years after WarnerMedia merged with Discovery.
Proulx said that until there’s clarity about how Paramount+ and HBO Max will coexist, Paramount streaming leaders could find themselves “in a bit of product purgatory.”
Read the full article here
