With subscription growth slowing, streamers are turning to live sports in order to up their game.
When Skydance finalized its purchase of Paramount in August, many wondered how CEO David Ellison would revitalize the company. Four days later, they got their answer: sports.
The company wasted no time inking a seven-year streaming deal with Ultimate Fighting Championship. At $7.7 billion, the package cost nearly as much as the Paramount purchase itself and allows Paramount to stream 43 fights a year plus broadcast select marquee bouts on CBS.
“Paramount had a really strong fall and spring sports calendar, but really light in the summer,” Ellison said during an interview at last month’s Bloomberg Screentime event. The UFC deal, he explained, will give them “a year-long sports strategy” by offering more regular big name events.
Sports is a major cog in Ellison’s strategy to cash in on his risky strategy of buying Paramount. He is instituting huge staffing cuts, overhauling the renowned CBS news operation and launching a takeover bid for rival Warner Brothers Discovery.
Key to his success will be building up Paramount+, the company’s lagging streaming platform. Broadcast revenue is drying up, and Paramount+, its intended replacement, has struggled to gain traction. Ellison needs to quickly grow subscription numbers, something he plans to do by spending big on new content. The UFC deal is the best example of this.
(Paramount Skydance did not respond to requests for comment for this story.)
The service has about 77 million subscribers, according to their most recent earnings report, a slight dip from the previous quarter. This puts them in a distant fourth place behind competitors like Netflix (300 million subscribers), Disney (183 million between Disney+ and Hulu), and Warner Bros’s Max (about 125 million), according to the respective companies’s recent earnings reports.
The move is part of a broader trend of streamers spending big on live sports, once the cornerstone of broadcasting. Amazon and YouTube have each spent billions in recent years to stream NFL games. And this fall marked the start of a 10 year, $27 billion deal between the NBA and NBC that the network hopes will boost viewership on Peacock, its streaming platform that is trailing far behind even Paramount+.
Paramount is on unsteady footing. Last year, the company lost $6.19 billion, according to SEC filings, though analysts estimate they may eke out a small $650 million profit this year. Company-wide revenue was down 1% in 2024 to $29.2 billion and is expected to fall again this year as it works to transition from broadcast to streaming.
The company’s stock price is up 28% since the merger.
Paramount+ needs must-see content to draw in – and keep – viewers. UFC may be just the kick that it needs.
The price could draw in fans, according to Day Rayburn, an independent streaming analyst who studies the industry. Currently, viewers who want to watch a fight have to shell out $80 per match on pay-per-view. For them, Paramount+, which offers every fight for 12.99 per month, is a steal.
“That’s a no brainer for someone who’s interested in UFC content,” Rayburn said.
The deal is a good fit for Paramount, said Matt Davis, who runs a YouTube channel called “Shall I Stream It?”. He’s seen his videos about Paramount+ get more clicks around football season, a sign that sports are a big draw for the platform already.
“People are willing to put out money if they’re a sports fan,” he said. “If this is their one and only way to watch every game in their league, this is going to be the thing that will get them to sign up.”
Paramount doesn’t just want people to sign up – it needs them to stay. The company has struggled recently with “churn,” a measure of how many subscribers cancel their service. Paramount+’s churn rate was above 5% in June, according to subscription research firm Antenna. That’s slightly higher than the rate for streamers overall and well above the 2% to 3% Netflix and Disney+ have.
The UFC deal, which offers viewers two or three fights a month, might help bring down that churn rate.
“It’s not a sport that’s focused on a league that controls the matches,” said Andrew Dougherty, an analyst at Ampere Analytics. “It’s one-off events, more or less, that draw viewers in. I think having those over the course of the year, at least for those fans, would keep them subscribed and not turn away.”
A home run or a hail mary?
Not everyone is convinced the deal is worth the price.
“Paramount+ has tons of sports, better sports than what they’re throwing money at right now,” said Laura Martin, an analyst at Needham & Company. She questioned whether the deal adds much value to Paramount’s current sports lineup.
And there’s no guarantee fans who sign up initially will stay, as viewers who subscribe for sports often cancel soon after. One report found that churn was twice as high for users who signed up during the NFL season, according to data from Samsung Ad’s “State of CTV” report.
At times, it can be hard to gauge what drives subscriptions.
“None of these companies, not a single one, even the public ones, ever disclose to us what their engagement rate is or what pieces of content keep viewers on their platform,” said Rayburn.
Even if the deal does ultimately bring in subscribers, it could take time to pay off. Analysts at J.P. Morgan estimated that Paramount would need to sign up about 6 million new customers in the first year to break even.
“That UFC deal, I would suspect, is going to be a negative to cash flow and potentially streaming profitability” in the near-term, said Matthew Dolgin, an analyst at Morningstar who covers the company.
Davis, the Youtuber, believes we’ll see more streamers adding more live sports to their line-ups in the near future.
“I think one of the final threads from the cable industry was sports, and we’re finally seeing that thread cut,” he said. “That’s kind of the last horizon of streaming.”