Paramount Global (PARAA): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Paramount Global's competitive moat (or lack thereof) right now, and honestly, the media sector in late 2025 is a pressure cooker. We've got the intense rivalry with giants like Netflix and Max eating market share-remember, Paramount+ only grabbed about 1.3% of TV viewing in February 2025-while you're still grappling with $11.78 billion in net debt as of mid-year. The recent Skydance consolidation was a necessary move to control costs, but with customer switching costs near zero and A-list talent demanding $20 million per project, the five forces framework reveals a company fighting on every front to hit that crucial domestic profitability target for Paramount+ this year. Keep reading to see exactly where the pressure points are for this media giant.

Paramount Global (PARAA) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for Paramount Global is significant, primarily driven by the scarcity and high cost of premium creative talent and intellectual property. This force is amplified by the highly consolidated nature of the representation industry.

The talent representation landscape is dominated by a few major players. While the specific figure of three agencies controlling 82% of Hollywood talent is not confirmed, the market is clearly concentrated among giants like Creative Artists Agency (CAA), William Morris Endeavor (WME), and United Talent Agency (UTA). The Celebrity & Sports Agents industry in the US is estimated to reach $16.9 billion in revenue in 2025, growing at an 8.0 percent Compound Annual Growth Rate (CAGR) over the past five years. This indicates that the gatekeepers of talent are themselves a high-value, growing sector.

The compensation demanded by A-list talent directly inflates Paramount Global's production expenses. For straight-to-streaming projects, an A-list actor like Mark Wahlberg is estimated to earn between $20 million and $25 million per project. For rare, high-profile streaming work, the top stars can command between $30 million and $40 million. This high baseline compensation for key talent is a major cost driver.

The cost to create premium, high-quality content remains extremely high, which is a direct cost pressure from content suppliers (creators, producers, and talent). While an exact average cost per hour is not established, specific high-end series costs per episode provide context:

To manage this pressure, Paramount Global is focused on cost control, which is reflected in the broader industry trend. Global content spending is only forecast to increase by a marginal 0.4 percent in 2025, reaching $248 billion. Streaming services, including Paramount+, are expected to account for $95 billion of that spend, or 39 percent of the total. This overall flat growth environment suggests a needed cost control across the industry, which Paramount Global is aiming for as it seeks full-year domestic profitability for Paramount+ in 2025.

The recent acquisition of Skydance Media, which closed on August 7, 2025, for $8 billion, is a direct response to the need to consolidate and bolster the content pipeline while managing costs. The merger brought in a $1.5 billion capital injection to the balance sheet and promised $2 billion in annual cost savings through restructuring and layoffs. This move aims to give the newly formed Paramount Skydance Corporation more leverage against its own suppliers by increasing scale and efficiency, especially as Paramount+ reached 79 million global subscribers in Q1 2025.

The power of these suppliers is demonstrated through several key metrics:

• A-list actor compensation averages in the range of $20 million to $25 million per project for streaming roles.
• The Celebrity & Sports Agents industry revenue is projected at $16.9 billion in 2025.
• The Casting Agencies industry market size is estimated at $1.7 billion in 2025.
• SAG-AFTRA represents approximately 160,000 to 170,000 professional actors as of 2025.
• The merger itself was a $8 billion transaction.

Paramount Global (PARAA) - Porter's Five Forces: Bargaining power of customers

When you look at Paramount Global's customer power, the immediate takeaway is that the consumer holds a lot of the cards right now. This is the reality of the streaming wars: switching costs are incredibly low. You're not locked into a multi-year contract for Paramount+ like you might be for a cable bundle years ago. If the content isn't hitting, you cancel, and you're back to browsing in seconds. Honestly, the market reflects this fluidity; on average, U.S. consumers subscribe to about 3.5 streaming services simultaneously, and some reports suggest the average household pays for four services, though other data points show the average number of paid SVOD services per household dropped slightly to 4.1 in Q2 2025.

This low barrier to exit means Paramount Global has to fight hard for every subscriber, which is evident in their recent subscriber movements. As of Q2 2025, Paramount+ stood at 77.7 million subscribers globally. That number, while substantial, reflected a slight sequential decrease of 1.3 million subscribers from Q1 2025. Executives pointed directly to the expiration of an international hard bundle deal as the primary driver for that dip, which is a clear example of customer choice-or rather, the expiration of a pre-packaged commitment-impacting the top line.

The customer's power isn't just about choosing which subscription to keep; it's also about where they spend their time and money across the entire media ecosystem. This is why the traditional side of the business is under such pressure. The ongoing cord-cutting trend is a direct exercise of customer bargaining power against the old model. For Q2 2025, Paramount Global's Traditional TV media revenue fell 6% year-over-year, landing at $4.01 billion. That decline is the market voting with its wallet against linear delivery.

Even on the digital advertising front, where Paramount Global is trying to grow, customer choice dictates pricing. The Direct-to-Consumer (DTC) advertising revenue, which includes Paramount+ and Pluto TV, came in at $494 million for Q2 2025. This figure represented a 4% decline from the prior year. The reason, as management noted, was lower cost-per-thousand impressions (CPMs) due to increased ad inventory supply across connected TV, meaning advertisers have more choices and can demand lower prices, which trickles down to Paramount Global's top line.

However, the customer power dynamic shifts slightly when dealing with the legacy distribution layer. While individual consumers can easily switch streaming services, the large distributors-the cable and satellite providers-still hold significant sway over access to Paramount Global's linear assets. We see this play out in carriage negotiations. Major distributors, even as they shed subscribers, still renew agreements, but they are now leveraging that position to demand more favorable terms, specifically pushing for inclusion of the Paramount+ service within their existing packages. This forces Paramount Global to balance the declining value of linear carriage fees against the strategic need for broad distribution of its flagship streaming product.

Here is a summary of the key financial pressures driven by customer choice in Q2 2025:

The ability for a viewer to easily move between services, or simply cancel one, forces Paramount Global to constantly prove value through hit content and competitive pricing structures. Finance: review the Q3 churn projections against the Q2 1.3 million subscriber loss by next Tuesday.

Paramount Global (PARAA) - Porter's Five Forces: Competitive rivalry

You're looking at a battlefield, not a marketplace, when assessing competitive rivalry for Paramount Global (PARAA) right now. Honestly, the intensity is off the charts. The core issue here is that Paramount+ is fighting for scraps against giants. Rivalry is extremely intense with Netflix, Disney+, and Warner Bros. Discovery (Max) leading the charge. This isn't just about subscriber counts; it's about share of attention, which is the real currency in streaming today.

The numbers from early 2025 really drive this home. Paramount+ accounted for only 1.3% of all TV viewing in February 2025, putting it far behind rivals like Netflix, Disney, and Amazon's Prime Video. To give you context on the overall landscape, total streaming captured 43.5% of all TV usage in February 2025, while traditional broadcast and cable combined held 44.4%. Even within the streaming pack, Max notched a 6% month-over-month increase in viewership share in March 2025, thanks to hits like The White Lotus. The top 10 most-watched streaming titles in March 2025 were spread across seven different platforms, showing how fragmented and competitive the audience is.

Still, Paramount Global is making a determined pivot, and you can see the financial commitment in the Q2 2025 results. The company is burdened by $11.78 billion in net debt as of June 30, 2025, which means every strategic move needs to generate cash flow quickly. That said, the streaming segment is showing traction. Streaming revenue grew 15% to $2.16 billion in Q2 2025, showing a strong pivot away from linear decline. This revenue growth was supported by a 23% surge in Paramount+ subscription revenue year-over-year. The critical financial target Paramount Global has set is achieving domestic profitability for Paramount+ in 2025; management reiterated this expectation, making it a make-or-break goal for the year.

Here's a quick look at the Q2 2025 segment performance to show where the pressure points are:

The rivalry is also playing out in engagement metrics, where Paramount+ is fighting to keep viewers glued to the screen. While the platform lost subscribers, the remaining base is watching more. You can see this in the engagement data:

• Paramount+ watch time per subscriber increased by 11% year-over-year in Q2 2025.
• Global average revenue per user (ARPU) for Paramount+ grew by 9% year-over-year in Q2 2025.
• The service ended Q2 2025 with 77.7 million global subscribers, a sequential drop of 1.3 million subscribers, largely due to an international bundle expiration.
• The DTC segment improved its adjusted OIBDA by $131 million year-over-year in Q2 2025, moving from a loss to a $157 million profit.

The pressure to deliver that full-year domestic profitability is immense, especially with that $11.78 billion debt load hanging over the balance sheet. Finance: draft the 13-week cash flow view by Friday to track progress against that debt servicing.

Paramount Global (PARAA) - Porter's Five Forces: Threat of substitutes

You're looking at the landscape of attention, and honestly, it's fragmented into a million pieces, making Paramount Global's premium content fight for every second. The threat of substitutes here isn't just another streamer; it's everything else that captures a viewer's time and wallet. This is where the real pressure mounts on your subscription video-on-demand (SVOD) and linear television revenue streams.

User-Generated Content (UGC) remains a colossal substitute, primarily through platforms like YouTube. As of mid-2025, YouTube boasts approximately 2.70 billion monthly active users, with projections suggesting it could reach 2.85 billion by the end of the year. This massive, always-on ecosystem, fueled by creators and short-form content, directly siphons time away from professionally produced, premium programming offered by Paramount Global's services.

The global gaming market is another significant time-sink, pulling in enormous consumer spending. Estimates for the total market size in 2025 vary, showing the scale of this competition. For instance, one forecast places the market at $269.06 billion for 2025, while another suggests a figure closer to $188.8 billion. This spending on interactive entertainment represents dollars and hours that are definitively not spent on Paramount Global's content library.

Directly competing in the video space is Free Ad-Supported Streaming Television (FAST), which is a powerful substitute because it costs the consumer nothing upfront. Paramount Global owns Pluto TV, which is a major player in this segment, reporting over 80 million monthly active users globally based on its last reported figures. While this ownership provides an internal hedge, the existence of a large, free alternative puts downward pressure on the willingness of consumers to pay for Paramount+ subscriptions.

Social media, particularly short-form video, is relentlessly competing for the attention of younger demographics. YouTube's platform sees over 122 million daily active users, with the 25-34 age group representing a significant portion of its traffic, at figures like 28.42% or 21.7% depending on the specific data set. This constant stream of bite-sized content trains users to expect immediate gratification, which challenges the binge-watching or appointment viewing model of traditional and premium streaming.

Consumers are definitely experiencing subscription fatigue, which makes acquiring new, long-term paying customers increasingly difficult. You see this pressure reflected in spending habits and cancellation intentions across the board. It's a clear sign that the perceived value proposition is under intense scrutiny.

• The average U.S. household spends approximately $69 per month on four paid streaming services combined in 2025.
• 90% of Americans with SVOD services plan to cancel due to rising costs.
• 41% of consumers surveyed state that the content available on SVOD isn't worth the price, an increase from 2024.
• 40% of global respondents have already cancelled video-on-demand services due to cost.

The market is forcing a choice: either offer compelling value through bundling or lean into the ad-supported model where Paramount Global already has a foothold with Pluto TV. Finance: draft 13-week cash view by Friday.

Paramount Global (PARAA) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for a new player trying to take on Paramount Global in late 2025. Honestly, the hurdles are still massive, but technology is starting to chip away at the old moats.

Initial capital requirements are a huge barrier; Paramount's 2023 content costs were stated at $7.2 billion. To put that in perspective against the competition, Paramount Global's total content spend across all platforms was reported at approximately $15.4 billion in 2023, and for 2024, the company's projected spend was $15.1 billion among the top six media spenders. That level of upfront cash commitment immediately filters out most potential entrants.

Established global distribution networks (linear and streaming) are difficult for newcomers to replicate. Paramount Global, as of 2024, operated over 170 networks and reached approximately 700 million subscribers across 180 countries. Building that physical and digital footprint from scratch is a multi-decade, multi-billion dollar undertaking.

The company owns an extensive library of iconic intellectual property (IP) like CBS and Nickelodeon. This library is a fortress of sunk costs and proven value. By the time of the Skydance Media merger announcement in 2024, this library was estimated to contain 4,000 to 4,500 films and 200,000 television episodes. This content depth provides a constant, low-cost supply for Paramount+ and linear channels.

New entrants leveraging generative AI could erode content moats, lowering production barriers. The technology is advancing fast, which is a risk to established IP moats. The global market for AI in media and entertainment was estimated at $25.98 billion in 2024 and is projected to grow to $33.68 billion in 2025. This rapid investment signals that AI tools could drastically lower the cost and time needed to generate some forms of content, potentially making it easier for nimble, AI-native competitors to launch with a lower initial content budget.

The media industry is consolidating, with streaming platforms expected to reduce from 200 to about 50 by 2025. The current ecosystem is still highly fragmented, with reports noting more than 200 streaming platforms globally, but the trend is clearly toward fewer, larger players. This consolidation means that while it's hard to start, the remaining few established players might be easier to acquire or partner with than trying to build a competitor from zero.

Here's a quick look at the scale of the barriers Paramount Global currently benefits from:

Still, the threat is evolving, meaning new entrants might focus on specific, high-leverage areas:

• Focusing on niche, AI-generated content volume.
• Targeting distribution via major Internet provider bundles.
• Acquiring smaller, specialized content libraries cheaply.
• Leveraging new regulatory environments for mergers.

Finance: draft 13-week cash view by Friday.