Viacom’s content strategy
As viewing content online using video streaming services like Netflix (NFLX) becomes increasingly popular, media companies like Viacom (VIAB) and Time Warner (TWX) are rethinking their content strategies.
This trend has also forced pay-TV operators like Charter Communications (CHTR) to look at skinny bundles that cater to different audiences. There have been reports indicating that Charter is working on a skinny bundle that would exclude sports.
A skinny bundle that excludes sports would mean that Charter can offer such a skinny bundle at a low cost to its viewers. Viacom stated at its fiscal 2Q17 earnings call that it believed that there was a market for such skinny bundles. It also noted that the company is looking at offering its content on such bundles.
Viacom’s Paramount television studio
As a part of catering to this changing media landscape, Viacom launched its Paramount television studio in 2014 and this has been a huge success. The studio was created to produce premium content for cable companies and SVOD (subscription video-on-demand) services like Netflix. The studio’s 13 Reasons Why, which streams on Netflix, has already proven to be extremely popular among viewers.
As a result, Viacom sees the value in content production for video streaming services and cable companies as an opportunity because these are less capital-intensive but offer higher returns. Viacom’s television content production has also resulted in higher content licensing revenues. In fiscal 2Q17, Viacom saw content licensing revenues of $347 million, or 45% higher year-over-year.