Your browser is not supported. Please update it.

21 January 2021

Technology still an afterthought ahead of Paramount+ launch

Paramount+ will join the OTT video ranks across the US, Latin America, and the Nordics in March 2021, marking the realization of a long-held dream for executives on both sides of the now merged ViacomCBS divide – none more so than President and CEO Bob Bakish.

But what do we know about the video technology stack powering Paramount+? Is this ultimately a rebranded and rebuffed CBS All Access with some added Viacom va-va-voom?

Ultimately, the answer is yes, which is precisely why Faultline has reservations about the competitive credibility of Paramount+ entering – or rather reentering – an increasingly congested market. It has plenty of content, but it takes much more than an extensive back catalog of nostalgia to win in this game.

Back in May 2020, when details on ViacomCBS’ forthcoming streaming venture were scarce, Faultline ran the headline ‘ViacomCBS playing with fire by skimping on OTT tech spend’ – in which we also correctly predicted that the service would be called Paramount+ (not a difficult guess, admittedly). At the time, it was clear that technology was an afterthought for ViacomCBS bosses, deciding that – rather than start from scratch – Paramount+ would be built on the established CBS All Access technology platform.

We warned at the time that significant infrastructure changes would be required to reach the type of scale ViacomCBS is targeting, but here we are some eight months later still with no information on whether ViacomCBS is taking this seriously. Well, at least not until Paramount+ gets a proper introduction during ViacomCBS’ next earnings call on February 24.

Our hunt for how and if Paramount+ has changed structurally behind the scenes led us to a handful of ViacomCBS job ads, namely the creation of a new role as SVP of Technology Strategy and Operations, to directly support the CTO, and a vacancy as Director of Technology for Third Party Vendor Management. The latter posting talks about tracking ramp downs, cost savings, and third-party labor consolidation – requirements which don’t exactly scream ambition.

There is also an extensive list of job openings for software engineers at the ViacomCBS Software Development Center based in Warsaw, Poland, suggesting emphasis on in-house software architecting for Paramount+ going forward. This may also have something to do with ViacomCBS restructuring its EMEA operations, placing all AVoD and SVoD operations into a new business unit including the company’s entire digital portfolio. However, Paramount+ is a palpable absentee from the Projects page on the website of the in-house ViacomCBS Tech division.

Given that ViacomCBS is still a relatively new entity and a gigantic one at that, business synergies between the two halves will be an ongoing process. As we said before, technology is often an addendum in these types of financially motivated mergers between two similar companies, so we suspect that the technology stack for Paramount+ looks pretty similar to the one powering CBS All Access.

Ultimately – and unfortunately – the re-merger saga between Viacom and CBS which lasted from September 2016 to December 2019 restricted any potential to get a comprehensive international streaming strategy off the ground. In that sense, executives who dragged their feet and demanded more money – primarily the hungry National Amusements boss Shari Redstone – are intrinsically at fault for any shortcomings that may appear further down the line.

As a content business first and foremost, before being a direct to consumer streaming outfit, ViacomCBS teams will be well versed in content protection. We mention security because we have observed Verimatrix Watermarking and Multi-DRM technologies recently being used to protect a preview for Season 3 of Star Trek: Discovery via CBS All Access. Verimatrix could therefore have a bigger role to play in Paramount+.

A crucial differentiator from SVoD rivals is that Paramount+ will pick up the live sports mantel from CBS All Access, while reportedly boosting the content portfolio from 20,000 to 30,000 titles with the transition from CBS All Access to Paramount+. As a result, although pricing details are TBC, it’s unlikely Paramount+ will cost anything below $9.99 a month at the base level, and will probably introduce tiered packages for things like live sports and other premium content.

A potential blot on the horizon for Paramount+ is a very familiar one for newly launched OTT video services. ViacomCBS has six weeks to sort out negotiations with Roku and Amazon for hardware distribution deals, or risk a repeat of the HBO Max and Peacock debacles that tarnished their respective launches.

CBS All Access had lofty projections of reaching 25 million subs by 2022 (including Showtime), more than tripling from 8 million as of mid-2019. This optimistic forecast was based on the predicted trend that subscribing to ten or more streaming services will be a common occurrence by 2022, rising from an average of three per consumer in 2019.

Well, 2022 is only a year away and ViacomCBS ended 2020 with approximately 18 million paid subscribers across CBS All Access and Showtime, rising from 13.5 million at the start of the year, so that target of 25 million subs by 2022 is still well within reach. ViacomCBS-owned Pluto TV, meanwhile, has seen impressive uptake, registering 28.4 million monthly active users on the AVoD platform as of Q4 2020.

Ostensibly, ViacomCBS does not seem the faintest bit bothered in shaking off its reputation as a business that prioritizes overheads over infrastructure; profit over platform; quality of revenue over quality of experience. Business is business, after all, but this approach may come back to bite ViacomCBS.