Streaming dominated Thursday’s CBS conference call with analysts to discuss first-quarter results.
While the quarter did not quite meet Wall Street expectations, CBS All Access and Showtime marked a seventh straight quarter of dynamic growth, and CBS digital chief Jim Lanzone joined the call to offer more color on the company’s plans. While Disney, WarnerMedia, Apple and NBCUniversal are all readying new streaming launches, the CBS team emphasized their experience in the streaming space, dating back to carriage of the Final Four in the 2000s, the Super Bowl in 2011 and the launch of CBS All Access in 2014.
“There are a certain number of seats on this rocket ship,” Lanzone said of the hotly contested marketplace. “If we play this right, there’s definitely a seat for us on that ship.”
CBS All Access and Showtime are projected by the company to have a combined 25 million subscribers by 2022. They saw a 71% gain in the quarter, the biggest subscriber jump in their brief history.
Asked about whether the company would consider merging or more tightly bundling the two services, both executives demurred. Lanzone said there would be no “back-end” reason to make such a move, so the main consideration would be in terms of marketing the services and acquiring customers. But “we already offer them as up-sells to the user base,” he said. “So far, to date, the user bases are differentiated somewhat.” Even so, he did acknowledge, “We are looking at it.”
Acting CEO Joe Ianniello was a bit firmer in support of the status quo. “The consumer wants optionality, we’re giving them optionality,” he said. “If we combine them, we feel we could have less subscribers.”
As it continues to push subscription services, the company has also been rolling out free, ad-supported ones like CBS Sports HQ and an Entertainment Tonight-branded offering.
“I definitely believe AVOD is here to stay,” Lanzone said. “I think you will see us try to press our advantage and launch in more categories,” with two new services being contemplated in as-yet-unidentified areas. The executive also noted that advertising is a potent element of CBS All Access, even though it is a subscription service. Its basic tier, which includes ads, is still preferred by two-thirds of its millions of subscribers.
Joe Ianniello, the acting CEO of CBS whose contract was recently extended through year-end, has engineered many of the distribution deals designed to infuse the balance sheet with much-needed cash as streaming has boomed. Apple in March announced Apple TV+, its soon-to-launch subscription service, which will feature a smattering of original shows but also an Amazon-like gateway to third-party streaming apps, including those of CBS.
While he described Apple as in some ways “just another player,” given the multitude of distribution options out there, Ianniello said it should be a significant boost to subscription growth. In terms of licensing, the company is now producing 80 shows across a multitude of platforms, from subscription streaming to traditional broadcast and cable. As to determining whether a show should be kept in-house or licensed to a third party — a hot topic in media circles given the streaming imperative — Ianniello reiterated past commentary that the internal review process is rigorous.
“We know what the show costs per episode, we put it thru an analysis,” Ianniello said. “We’re going to continue to evaluate it, franchise by franchise.”
Asked about the chance of lowering the price point of CBS All Access, which starts at $6 a month, Ianniello replied, “We think the price is pretty low already. … It’s a hell of a value proposition for consumers.” He added, “Could we go lower? Could we go faster? We could debate that, but we like what we’re seeing.”
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