Kendall Roy's Manic Attempt to Make This FAST Service #1

I wrote about the #3 FAST Service Tubi’s business last week and imagined moves the fictitious Succession media mogul Logan Roy would make if he was in Fox Chairman Rupert Murdoch’s shoes. If you didn’t read it and like spicy takes, I’ll just say that somehow Elon Musk gets involved…Of course, Elon does.

This week, I’m going to examine the key performance indicators (KPIs) of the #2 FAST Service. It's now time for Succession’s manic air to the throne, Kendall Roy, to take the helm and try to make this service a “Real Streaming Wars” contender.

You can refer back to my first post if you want more details on the methodology I used to examine the health of the Top 3 FAST Service businesses. All right, let’s dig in.

#2 FAST Service: Pluto TV

Pluto TV was founded in 2013 as the first FAST service. Viacom bought Pluto in 2019 for $340 million. Viacom's original plans for Pluto TV were just to use it as a marketing tool for its linear brands, distribute its digital content, and upsell its SVOD services like Paramount+ w/ Showtime. Fast forward to 2023, Pluto is now a core part of the combined Paramount Global, reaching 80 million monthly active users.

• MAUs: 80 Million (Rank: #1)

• Time Spent: 0.9% (Rank: #3)

• ARPU: $14 (Rank: #2)

• Revenue: $1.14 Billion (Rank: #2)

• *COGs: -$2 Billion (Rank #2)

• Profitability: -$881 Million

Key Takeaways

The Paramount Global COGs are not just from Pluto, but I included them to highlight how much money they are wasting spending on trying to make their standalone SVOD services such as Paramount+ w/ Showtime, BET+, and Noggin work. This may be unfair, but I believe if Paramount doesn’t take a holistic view of its streaming strategy, and therefore how they are allocating its budget, then they are doomed to fail.

Despite Paramount announcing in their Q2 Earnings that Paramount Global added 700,000 paid subscribers, I’m not convinced these are viable products long-term. They also mentioned that their D2C business unit had a loss of -$424 Million in Q2 alone. Paramount’s total revenue fell -2% year over year due to a weak theatrical slate and an ongoing decline in TV ad revenue. I just don’t see a world where Paramount+ ever competes with Netflix, Disney+, Apple TV, and other viable SVOD services. They have a much smaller war chest of money to throw at producing premium content, paid user acquisition is expensive, and subscription fatigue is growing.

Now here’s where Kendall Roy’s patented manic, but pretty darn entertaining strategic thinking comes in.

Paramount can be a serious streaming competitor if they stop looking at Paramount+ as its flagship product and start prioritizing Pluto TV as the entry point to all of its content. They need to have an aggregator product if they want to compete long-term against the big guys. Their main disadvantage is not owning “the glass,” so they are beholden to their competitors such as Roku and Samsung for distribution.

How could Pluto TV move closer to the glass? Go back to its founding.

An interesting twist would be if Pluto TV’s former Co-founder Ilya Pozin gains traction with his new ambitious startup venture Telly. Telly is a hardware startup that is giving U.S. consumers free dual-screen smart TVs that are fully supported by advertising. Telly reportedly started shipping to beta customers and expects to deliver 500,000 of their proprietary Smart TVs by the end of the year.

If Paramount buys Telly, they will instantly have their own distribution. They will also add a new proprietary ad unit to sell which, like it or not, is a major innovation in the Smart TV space. The new ad unit is connected to the built-in soundbar that has a custom display for showing sports scores, a news sticker, the weather, and more. This would give Paramount another opportunity to surface content from properties like CBS News and Sports.

The TV also features a camera for Zoom, fitness programs, and gaming. Oh yeah, it’s also definitely being used for some serious data mining. Telly will track the content you watch, the services you interact with, and detect “the physical presence of you and any other individuals using the TV at any given time.” This is very invasive and therefore absurdly lucrative data for advertising. By “owning the glass” they can gather all kinds of data and sell it at very high margins.

I know this would be quite the outlandish tech move for the 111-year-old Paramount. The better move for the 2nd oldest studio in the U.S. is to get gobbled up by one of the bigger players, which CEO Bob Bakish hinted at the possibility of last year. In the meantime, Bakish openly talked about Paramount’s willingness to team up with other streamers and become part of a larger bundle.

Kendall’s take was so out there it was dangerously close to a “Shingy.” If you know, you know…

Kendall says it better himself:

What’s Next

• #1 FAST Service

• How FAST becomes the new Television

Well, that was fun. Thinking about strategy from Kendall’s out-of-touch perspective is like the sugar high you get from downing a sleeve of Oreos. Darn delicious while you shove them into your mouth, but the crash reminds you it might be better to do the boring thing and let another company overpay for your assets. Until next week.

🤙 Moffie