Leaner times may be ahead for Paramount+. At the Edinburgh TV Festival, Paramount+ Chairman and CEO David Nevins didn’t shy away from talking about his company’s struggles to maintain the budgets needed for large-scale scripted TV shows, according to Television. International Business.
“We’re in a correction, we can’t just promise spectacle and that’s not what television needs,” Nevins said. “Costs are going up and we’re in a bad spot now with supply chain costs, everything you do costs more. There’s also a lot of production and that means talent [costs] keep going up.
The amount of scripted television Nevins presides over demonstrates the issues Paramount faces. Sci-fi shows like “Star Trek: Strange New Worlds” and “Halo” both require huge special effects budgets. Period pieces such as the “Yellowstone” prequel “1883” need money for historical costumes and sets that must be built on site.
Nevins also chairs the TV slate at Showtime, where shows like “Billions” with big ensemble cast and big stars like Paul Giamatti also require a big financial investment.
Nevins points to similar cost-cutting ventures at HBO Max and Netflix, but these two companies are currently pursuing very different strategies when it comes to their scripted TV budgets. Warner Bros. Discovery has slashed HBO Max, nixed Max Originals, canceled movies for tax deductions, and tried to get more revenue from its films by ensuring they get theatrical releases.
Netflix has taken a much softer approach. Instead of cut-and-burn tactics, the company suspended growing its budget for new content. That budget was supposed to drop from $17 billion in 2021, but the company decided to keep that amount where it is, instead of cutting it or increasing it. When Netflix’s planned ad-supported tier launches in early 2023, it could generate enough revenue to drive Netflix’s content budget up again.
So what does this mean for the future of streaming scripted TV? It depends on the services you are looking at. Amazon has spent $250 million on the development rights to “The Lord of the Rings: The Rings of Power,” and at least another $400 million for the first season alone. NBCUniversal recently announced that it has doubled its 2021 content spending for its Peacock streaming service from $1.5 billion to $3 billion in 2022. Obviously, not all streamers are cutting their budget veils.
Paramount’s announcement should not be taken as a sign that the company is in dire financial straits. “Top Gun: Maverick” continues to be a financial juggernaut and should give Paramount+ a big boost whenever it hits the streamer. Paramount also recently announced a deal to bundle a Paramount+ subscription with all Walmart+ subscriptions, which could bring millions of additional viewers to the platform.
However, if bigger budget shows like “Halo” end up not getting more seasons, this budget streamlining will surely be one of the reasons.