Showtime insiders worry it will struggle against big-spending rivals like Netflix if it doesn't broaden its appeal or shake up its strategy

  • People close to Showtime questioned whether it can thrive without evolving amid rising competition.
  • Showtime values its place as the adult alternative to ViacomCBS’ Paramount Plus.
  • But sources raised concerns about its long-term prospects and “Halo” moving to Paramount Plus.
  • See more stories on Insider’s business page.

By the time Viacom and CBS announced their merger in August 2019, media giants like Disney and WarnerMedia already had plans to jump headfirst into the streaming space. Disney Plus would launch that November, and WarnerMedia’s HBO Max came the following May.

The looming Netflix competitors stirred chatter among staffers at Showtime, the CBS-owned premium-cable network.

One former Showtime employee told Insider that there was talk among staffers about the potential for a marquee streaming service stemming from the Viacom-CBS merger. The former staffer thought it would be good for Showtime’s relevance in a crowded marketplace to be incorporated into that flagship service. There was an air of excitement.

Fast-forward to 2021 and the entire entertainment landscape has changed. 

Disney used Marvel superheroes and Star Wars to sell Disney Plus. WarnerMedia hitched its streaming star to HBO and made the “Game of Thrones” network the namesake of its HBO Max offering. And ViacomCBS launched its own big-bet streamer in Paramount Plus, a rebranded CBS All Access with an expanded library of titles from brands like Nickelodeon and Comedy Central.

But insiders say Showtime — which has its own standalone streaming service and isn’t included in Paramount Plus — feels stuck.

Insider interviewed two former Showtime employees, three people close to the company, and one consultant about the company’s strategy. Some spoke anonymously to protect their business relationships.

The people questioned ViacomCBS’ keeping Showtime as a standalone streamer at a time when competitors are putting much of their resources behind their anchor platforms (internationally, Showtime content will be included in Paramount Plus in places where Showtime doesn’t already have a presence). They wondered how long Showtime could continue a traditional strategy as the media world changes rapidly.

Churn data from the analytics firm Antenna suggests one possible reason for concern about Showtime’s status quo: It seems to have struggled to stop existing streaming subscribers from canceling.

The Antenna data, which spans 2020, was pulled from a variety of opt-in panels like budgeting apps to track purchase and transaction data. It suggested that Showtime’s streaming service had a higher monthly churn rate by the end of 2020, at more than 10%, than competitors like Netflix, Hulu, Disney Plus, and HBO Max (the average rate was 6.4%). The only platform with higher monthly churn than Showtime was Apple TV Plus.

The Antenna data also suggested that Showtime’s churn rate rose steadily through 2020 as competition increased. 

Showtime’s strategy has not seemed to change, however. It is laser-focused on the high-end adult dramas and comedies it built its audience on, two people familiar with its strategy told Insider.

One of the people, a talent-agency source, said Showtime execs seemed to still be thinking in terms of finding their next “Homeland,” or their next family drama to follow “Shameless.”

“They’re looking at things to replace the things they have, rather than thinking about things they already should have,” the person said.

Showtime’s sweet spot has been hour-long, character-driven dramas like “Ray Donovan,” “Shameless,” and “Billions.” One of its more talked-about upcoming series, “The First Lady,” is an anthology in that vein that will chronicle America’s first ladies.

A Showtime spokesperson said the network is meant to be “the adult premium-content provider in the broader ViacomCBS streaming strategy” and added that it “targets an entirely different consumer” than Paramount Plus.

But can Showtime survive as a separate entity without evolving?

The insiders said Showtime hasn’t tried diversifying its content slate with genre, young-adult, and other programming, the way chief rival HBO has with shows like “Game of Thrones” and “Euphoria.”

Showtime spent years developing a series based on the video-game franchise “Halo.”343 Industries

Some insiders were encouraged to see the network was widening its scope when it spent years developing a series based on the sci-fi video-game franchise “Halo.”

But Showtime CEO David Nevins said in February that the show was moving to Paramount Plus for a 2022 debut. 

The shift highlighted the series’ potential to attract broad audiences, Nevins said. But some people close to the company saw it as a blow to Showtime.

“‘Halo’ was the one I think everyone was anticipating to be the game changer,” a person close to the company said. “A lot of people were deeply invested in that show from its very nascent beginnings.”

A second former Showtime staffer also said they felt “Halo” moving was a “bad sign.”

The Showtime spokesperson said that the “Halo” move was a “strategic corporate decision” and argued that genre television was still part of Showtime’s strategy, such as the sci-fi series “The Man Who Fell to Earth,” which moved from Paramount Plus to Showtime, and an ordered “Let the Right One In” pilot (based on the Swedish vampire movie of the same name). 

“‘Halo’ has a broad appeal but a broader, younger appeal,” the spokesperson said. “‘The Man Who Fell to Earth’ is more adult, riskier content that makes sense for Showtime.”

Showtime CEO David Nevins.Evan Agostini/Invision/AP

Showtime is facing more competition as rivals like HBO and Apple court premium content

Big spenders like Netflix, HBO, and Apple are sizing up more of the kinds of dramas and other content that Showtime wants.

Credit Suisse analysts wrote in a March report that they were concerned about “Viacom’s resource limitations.” They expect the company to spend $4 billion on streaming content by 2024 (between its various services) compared to Netflix’s $22.5 billion, Disney’s $15 billion, and HBO Max’s $10 billion-plus.

Those close to the company said that while producers and rights holders regularly pitch to Showtime, the network doesn’t have the budget of some of its competitors and has to be more selective. It can compete for only a handful of projects a year.

“A chronic problem which continues to plague Showtime is a lack of investment,” a person close to the company said. “You’ve got Netflix out there outspending everyone, and you’ve got WarnerMedia lining up the entire organization behind HBO Max almost in a brutal way. They’re playing for keeps. … You have to be really really committed to your streaming strategy, and that means spending money and lining up the organization in a way that promises to accomplish the goal.”

“In terms of content, we’re competitive,” the Showtime spokesperson said, citing “The Man Who Fell to Earth” and “The First Lady.” “We have great projects coming down the pike in both the scripted and unscripted realm.”

Showtime has also said its “boutique” — as in small, creator-focused — operation is an advantage because the company can rally around its original series, unlike platforms like Netflix where there’s a perception that projects can get lost among the barrage of new releases.

“They definitely are creator-friendly if you have a show that works on their platform,” a person who has worked with Showtime said. “The narrow nature of their development and what they pick up and proceed with gives them a lot of ability to go one-on-one with their creators.” 

Still, Showtime has few overall deals with creators and isn’t pursuing them, as platforms like Netflix and Amazon offer creators big checks and blank canvases with which to create whatever they want. The handful of deals it has stem from other projects, like its first-look deal with “Black Monday” showrunner Regina Hall and pact with “Billions” cocreators Brian Koppelman and David Levien. 

Lena Waithe, the writer-producer behind “The Chi,” signed an overall deal with Showtime in 2018 but moved a year later to Amazon Prime Video, where she developed the horror anthology series “Them.”

“They didn’t see the value in her being an auteur,” the talent-agency source said.

The “Shameless” series finale aired on Sunday.Showtime

Data shows Showtime has grown alongside the marketplace, but churn is a challenge

Even without a broadened purview, Showtime has been a steady workhorse for ViacomCBS.

Showtime’s streaming service expanded its audience and maintained its share of overall US streaming subscribers in 2020, as new competitors like Peacock and HBO Max entered the marketplace, a January report from Antenna showed. 

But Showtime didn’t meaningfully grow market share the way Disney Plus and HBO Max did. 

Antenna

ViacomCBS does not report subscriber numbers for Showtime.

“Showtime is doing very well,” ViacomCBS CEO Bob Bakish said at a conference in March. “Probably the reason it is, is it is a distinct play. It is edgier. It is more risk taking.”

The first former staffer said this is exactly why Paramount Plus should leverage Showtime content.

“Paramount Plus needs adult-themed content, and that should be Showtime’s role to fill,” this person said.

But Showtime will continue operating as it has, even as competitors like HBO diversify their content to expand their reach. 

“The fact is that brands matter, and Showtime stands out as the only pure-play premium service for sophisticated, surprising, culture-moving content,” Nevins said during ViacomCBS’ investor day in February.

But some insiders are not convinced that it can hold that space indefinitely.

“Showtime is a mixed bag,” the first former staffer argued. “There’s good brand awareness, but I feel that the network has recently lost some pizzazz. It doesn’t have the same cultural weight it had five to 10 years ago.”

Showtime’s strategy does protect legacy distribution through traditional pay-TV services, though, said Stephen Beck of management consultancy cg42. WarnerMedia, by contrast, spent months hammering out deals with cable providers to give existing HBO subscribers access to HBO Max ahead of the service’s launch.

The Showtime spokesperson said streaming viewership was up 77% year-over-year from 2019 to 2020 but didn’t elaborate on how the company counts viewership.

“Momentum has continued this year, driven by ‘Your Honor’ and the final season of ‘Shameless,'” the spokesperson said.

Looking ahead, Beck, the consultant, said to expect Showtime to continue licensing to other services and position itself as a supplement to anchor platforms like Amazon Prime Video. Showtime’s biggest challenge is that it’s a rather expensive add-on at $11 per month (slightly cheaper when bundled with Paramount Plus). And the high rate of churn is concerning, too, he said.

“Living in the middle becomes a very difficult thing to execute long term,” Beck said, referring to the strategy for both Showtime and Paramount Plus.

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