Paramount+'s AI Pivot: Can Scalable Personalization Secure Streaming Supremacy?

The streaming wars are entering a new phase, and Paramount+ is betting big on artificial intelligence to transform itself into a tech-driven media powerhouse. With declining linear TV revenues and intensifying competition from Netflix and Disney+, the platform's recent AI partnerships and strategic shifts—particularly under the leadership of Skydance Media's David Ellison—suggest a bold vision to dominate through scalable, personalized content production. Here's why investors should pay attention.

The AI-Driven Playbook: Shoppable TV and Kids' Content

Paramount+ is deploying AI not just for cost savings but to unlock entirely new revenue streams. Take its partnership with Shopsense AI, which enables viewers to scan QR codes during shows like The Talk or the CMT Music Awards to purchase on-screen products. This “shoppable TV” feature isn't just a gimmick: it turns passive viewing into an e-commerce opportunity. The AI platform dynamically updates product recommendations post-broadcast, ensuring relevance long after the show ends.

The initiative aligns with a broader trend: NBCUniversal's Virtual Concessions, launched for the 2024 Paris Olympics, similarly used QR codes to sell merchandise. For Paramount+, this could be a template for monetizing its vast library of hit shows like Yellowstone and Star Trek.

Meanwhile, Paramount+ is using generative AI to curate themed content for kids—think Space Exploration or Secret Worlds—by analyzing its library to surface lesser-known titles. While human editors still validate recommendations, the AI reduces curation costs and boosts discovery. Research shows households with kids have lower churn rates, making this a smart retention play.

The Skydance Effect: AI as a “Turbocharger” for Content

The pending acquisition by Skydance Media, now part of Activision Blizzard's (ATVI) empire, is central to Paramount+'s AI ambitions. Ellison's vision is to turn the company into a “technology-media hybrid”, leveraging AI for everything from scriptwriting to ad targeting. The goal? To “turbocharge” content growth while cutting costs.

Paramount's stock (PARA) has lagged behind Disney (DIS) and Netflix (NFLX) in 2024, but its AI bets could reshape that trajectory.

Key areas of focus include:
1. Algorithmic Content Discovery: Smarter recommendations to boost engagement.
2. Ad Tech Innovation: AI-driven ad targeting to increase CPMs (revenue per thousand impressions).
3. Content Creation: Using AI to accelerate workflows, from drafting scripts to post-production.

Paramount+'s CTO, Phil Wiser, recently emphasized AI's role in “derivative works” (e.g., repurposing content for AR experiences) and personalized marketing, such as its Paramount Ads Manager platform. This tool, built with Waymark's generative AI, lets small businesses create ads for Paramount+ and Pluto TV at scale—a $200M revenue generator for media partners like Fox and Scripps.

The Competitive Edge: Data-Driven Efficiency vs. Creative Risk

The stakes are high. Streaming giants like Netflix and Disney+ are also doubling down on AI, but Paramount+'s focus on operational scalability and niche monetization (e.g., kids' retention, shoppable TV) could carve out a unique advantage. The company's goal to achieve U.S. profitability by 2025 hinges on AI-driven efficiencies: lower content acquisition costs, reduced churn, and new revenue streams.

Yet risks linger. Balancing AI's speed with human oversight is critical—poor recommendations or ads could backfire. Regulatory hurdles (e.g., the Trump lawsuit over CBS edits) also loom. Still, the long-term bet is clear: AI could turn Paramount+'s massive library into a self-sustaining content engine, where data, not just dollars, fuels hits like Tulsa King and Yellowstone.

Investing in the AI Media Play

For investors, Paramount+ represents a high-risk, high-reward play on AI-driven media innovation. The stock trades at a discount to peers, but its AI partnerships and strategic pivot under Skydance suggest a turnaround could be underway. Key catalysts to watch:
- Profitability Milestones: U.S. EBITDA positivity by 2025.
- Content ROI: Whether AI-curated kids' collections and shoppable TV boost retention and ARPU (average revenue per user).
- Ad Revenue Growth: Success of the Ads Manager and geo-targeting tools.

While execution is far from assured, Paramount+'s moves position it to rival Netflix's algorithmic dominance and Disney's IP portfolio—if it can marry tech with creativity. For investors willing to bet on a media company reborn, PARA could be a core holding in a portfolio targeting the next era of entertainment.

Final call: Paramount+'s AI strategy is audacious but coherent. The question isn't whether AI will reshape media—it's who will do it best. Right now, PARA has a shot.