‘Last of Us’ Ratings Highlight Different Approaches to Streaming for Paramount, Warner Bros. Discovery

Another week, and another jump in ratings for “The Last of Us.” The video game adaptation series on HBO and HBO Max drew 8.1 million viewers across both platforms last week, and it’s a good bet the upcoming Season 1 finale will beat those impressive numbers.

HBO Max is not the only service to see big benefits from its content slate recently, as Paramount+ has also seen impressive growth in recent months. In the fourth quarter of 2022, Paramount+ added almost 10 million new subscribers, aided by international launches in a number of different territories around the world. Hit series like “1923” and “Tulsa King,” as well as top franchises like Star Trek and Halo have helped the service become one of the fastest-growing in the industry.

At a time when many other major media companies with streaming services are struggling to find a way forward, Paramount+ and HBO Max are surging. Neither is profitable for its parent company as of yet, but both Paramount and Warner Bros. Discovery have clear plans in place to achieve streaming profitability in the next few years.

Those plans, however, are very different. One of the reasons HBO is able to draw so many viewers to shows like “The Last of Us” or “House of the Dragon” is its strategy of airing episodes simultaneously on streaming and linear TV. These series have a scheduled air time on HBO, and become available to stream on HBO Max at the same time.

Paramount could choose to follow this strategy as well, taking advantage of potential advertising revenues on its premium channel Paramount Network. But it has taken a different path, choosing to keep its original series on Paramount+, though it frequently airs first episodes of shows like “Mayor of Kingstown” and “Tulsa King” on the channel. This helps drive users to Paramount+, but at the cost of garnering larger, cross-platform audiences as HBO likes to do.

Then there’s the question of mergers. When Discovery acquired WarnerMedia in spring of 2022, talk immediately began about combining discovery+ and HBO Max into one streaming service. WBD got as far as settling on the name “Max” for the new service and setting spring 2023 as its launch date. But in early February the company changed course, announcing that while it would still be moving a large portion of discovery+ content onto HBO Max, the services would remain separate.

WBD CEO David Zaslav explained that the pivot was done to ensure that the company continued to serve distinctly different segments of its streaming audience. Cost-conscious discovery+ users were much more likely to churn away from a service that would likely have run $20 per month or more.

“For those that have {discovery+} right now, the churn is very low and it’s profitable,” he said. “Many of those people are going to want to move up to a bigger product, more robust with a bigger offering. Our strategy is ‘no sub left behind. We have profitable subscribers that are very happy with the product offering of discovery+. Why would we shut that off?”

Once again, that is not the strategy Paramount is pursuing. The company announced in late January that it would be integrating Showtime, another of its premium cable channels that has a sibling on-demand streaming service in SHOWTIME, into Paramount+ in a new bundle called “Paramount+ with SHOWTIME.” Speaking at the Morgan Stanley Technology, Media and Telecom Conference on March 8, Paramount CEO Bob Bakish didn’t sound too concerned that SHOWTIME fans would be scared off by such a merger.

“It’s what I called win-win-win,” Bakish said, pulling out his best Michael Scott quote to describe the impending integration. “It’s a win for consumers because the product is going to be fundamentally better than Showtime. I mean you’re going to get ‘1923’ on it, you’ll get ‘Tulsa King’ as part of your Showtime subscription. It’s just going to be a bigger, broader product.”

In fairness, there is a distinct difference between the two potential mergers. SHOWTIME costs $10.99 per month to subscribe to on its own, whereas the most expensive tier of Paramount+ is currently cheaper at $9.99. As stated above Max would have come to at least $20 per month, which would have been a big sticker shock to discovery+ users who are used to paying $5 or $7 per month for their service.

Still, it’s hard to ignore the confidence with which Paramount is proceeding in its plans to combine SHOWTIME and Paramount+. The company is so assured of success that it reportedly turned down a $3 billion offer to sell SHOWTIME to an undisclosed third party. Bakish confirmed the offer in his discussions with analysts at the Morgan Stanley TMT conference, and made clear the company thinks SHOWTIME is more valuable to the company in the long run.

“The reality is, [the offer] wasn’t that interesting to us because if you compare that price, and it’s been rumored in the press, but I’m not going to say it,” the CEO intoned. “If you compare that to our internal business plan, the reality is our internal plan is far more value-creating when you take the base earnings and the synergies. It just didn’t make sense to divest SHOWTIME anywhere near that price. So it’s a pretty high bar.”

Between the high ratings for series like “The Last of Us,” and the big subscriber jumps for Paramount+, both companies are seeing their strategies pay off for now. Which will see continued success in the future is another question. WBD and Paramount are both heavily focused on developing more content from successful franchises, so perhaps they’ll both continue to reap greater streaming rewards, despite their divergent strategies.

As the streaming industry continues to evolve, there’s room for more than one path to success. But HBO Max and Paramount+ are taking very different routes to get to the top of the profitability mountain, and it will be fascinating to see which will prove the swifter in the near future.