Paramount Global (PARA): Among the Best Streaming Service Stocks to Buy According to Analysts

Paramount Global (PARA) has been making waves in the streaming market, with its Paramount+ service standing out among competitors. The company's strategic approach to content licensing, bundling, and original content offerings has contributed to its competitive advantage and driven subscriber acquisition and retention. In this article, we will explore the factors that make Paramount Global's streaming service stand out, the role of original content in driving subscriber growth, and the potential risks associated with the company's strategy.

Paramount+ has achieved notable success with its streaming originals, which held a 5.8% share of US demand in Q3 2024, compared to just a 2.0% supply share. This 2.8x demand-to-supply ratio was second only to Apple TV+ (3.2x) among the eight premium SVODs for the quarter. Hit franchises like Star Trek and Taylor Sheridan's various series serve as key drivers of subscriber acquisition, according to Parrot Analytics' Streaming Economics system. These original content offerings contribute to the overall valuation of Paramount Global by attracting and retaining subscribers, which in turn generates revenue through subscription fees. Additionally, these series can be licensed to other streaming platforms, providing an additional revenue stream for the company.

Paramount Global's strategic approach to content licensing and bundling has contributed to its competitive advantage in the streaming market. The company maximizes licensing revenue by leveraging its extensive library of popular content, such as "Yellowstone" on Peacock. By licensing content, Paramount Global can monetize its library without having to invest in producing new content for every platform. Additionally, Paramount Global has a bundling agreement with Walmart+, which allows it to reach a larger audience without having to invest in marketing and customer acquisition costs. This strategy helps Paramount Global tap into Walmart's existing customer base and increase its subscriber numbers.

However, there are potential risks associated with Paramount Global's strategy. Balancing the trade-off between licensing revenue and SVOD exclusivity is crucial. If Paramount Global focuses too much on licensing revenue, it may miss out on the opportunity to attract more subscribers by keeping popular content exclusive to Paramount+. Additionally, relying heavily on content licensing to third-party platforms can make Paramount Global vulnerable to changes in those platforms' strategies or subscriber numbers. If a platform decides to drop a licensed show or its subscriber base declines, it could negatively impact Paramount Global's revenue. Limited bundling opportunities may also pose a challenge, as expanding bundling opportunities could help Paramount Global reach a larger audience and improve its competitive position in the streaming market.

In conclusion, Paramount Global's streaming service, Paramount+, stands out among its competitors due to its strong original content offerings, strategic approach to content licensing and bundling, and global expansion. However, the company must address potential risks associated with its strategy, such as balancing licensing revenue and SVOD exclusivity, reducing dependence on third-party platforms, and expanding bundling opportunities. By successfully navigating these challenges, Paramount Global can maintain its competitive edge in the streaming market and drive sustained long-term value for its shareholders.