Paramount+ and Showtime should merge as soon as possible to compete with Netflix and other streaming rivals. Data shows why.

• Paramount will soon offer Paramount+ subscribers the option to upgrade to access Showtime.
• It's more of a in-app bundle than a merger, though.

ViacomCBS, which is changing its name to Paramount Global (or simply Paramount), announced on Tuesday during an investor presentation that users will soon be able to upgrade their Paramount+ subscriptions to access Showtime.

The upgraded, ad-free Paramount+ subscription with Showtime included will be the same price as WarnerMedia's HBO Max ($15 a month) and less with ads ($12).

It's an in-app bundle rather than a merger. Showtime's own platform will still be available as a standalone service, which costs $11 a month through a streaming subscription.

This is a step in the right direction.

"Bundling has the potential to drive value proposition at the consumer level to improve what has been a tricky churn environment," said Joe McCormack, senior analyst at the research firm Third Bridge.

But Paramount ultimately needs to combine Paramount+ and Showtime's streaming components.

Paramount has maintained that it wants to give consumers enough optionality between a broad, paid subscription service (Paramount+) and more adult-friendly, premium content (Showtime), and that they target different audiences.

Yet, the approach is costing a lot. The company's stock took a dive on Wednesday after the company missed its earnings projections and laid out its pricey streaming plans, reflecting how Netflix's own subscriber miss last quarter spooked Wall Street.

New data shows why Showtime content should be folded into Paramount+.

Paramount (formerly ViacomCBS) is No. 2 in corporate demand share in the US, behind Disney but ahead of rivals like WarnerMedia, NBCUniversal, and Netflix, according to the data firm Parrot Analytics. The company measures audience demand, which reflects engagement with or the overall popularity of content.

Parrot Analytics defines corporate demand share as the long-term viability of a company's content library if consolidated into one platform.

But when breaking down demand share by platform, Paramount+ is No. 4 when considering its originals and licensed TV series, behind Netflix, Prime Video, and HBO Max. It's No. 7 when accounting for originals only.

This divide between Paramount's corporate demand share and Paramount+'s platform share illustrates how the service would benefit from all of the company Paramount's content being in one place.

Bringing Paramount's content under one roof could bolster its streaming business

Paramount has 56 million subscribers worldwide across its streaming platforms, 32.8 million of which are from Paramount+, the company said on Tuesday. It added 9.4 million subscribers in Q4 2021, 80% of which came from Paramount+.

Showtime, on the other hand, has struggled with keeping subscribers. Data from the analytics company Antenna published last year showed that Showtime's streaming service had a monthly churn rate of over 10% in 2020, the highest rate of any platform aside from Apple TV+.

Still, the network has found success with recent shows like "Yellowjackets" and "Dexter: New Blood," which Parrot Analytics said were the No. 5 and No. 13 most in-demand new shows in the US in Q4.

Paramount+'s "Mayor of Kingstown," and CBS' "CSI: Las Vegas" and "Ghosts" were also among the most popular new shows last quarter.

If Paramount were to offer all of this content exclusively on one streaming service, it would go a long way in helping Paramount+ grow, keep subscribers, and compete in the streaming space.

"If ViacomCBS [Paramount] wants to be a leading player in streaming, they must exclusively place this highly in-demand content catalog onto Paramount+," said Wade Payson-Denney, the Parrot Analytics insights analyst. "Demand for original and exclusively licensed content is a key leading indicator of subscriber growth for SVOD platforms."

The company already experimented with Showtime content on Paramount+ when it made Showtime's "Billions" available on the streamer for a limited time in September.

Paramount likely doesn't want to risk cannibalizing Showtime's subscribers by folding it into Paramount+. HBO Max ran into similar complications when it first launched, as HBO customers were slow to make the transition to Max. But the service saw impressive growth last year thanks partly to buzzy Max and HBO originals, and exclusive Warner Bros. movies.

Paramount should take that leap, too. People close to Showtime have expressed that it feels stagnant as media companies supercharge their content budgets, and that supplying Paramount+ with adult-themed content would chart a new path for the network.

Paramount is also taking advantage of its many brands and partnerships in other ways.

The "South Park" library will move from Max to Paramount+ in 2025 and the show's creators are making exclusive, annual "South Park" movies for the service. Taylor Sheridan, the creator of Paramount Network's hit series "Yellowstone," is developing new shows for Paramount+, including three "Yellowstone" spinoffs.

If Paramount folded Showtime into Paramount+, it would be the logical next step as the company looks to grow its streaming business, with Paramount+ at the center.