Paramount is trying to redesign its streaming business before it absorbs HBO Max and Discovery+, with a series of product changes aimed at increasing viewing time, reducing cancellations, and creating new advertising revenue.
The initiatives are part of the technology strategy David Ellison is pursuing at Paramount Skydance as the company prepares to complete its $110 billion acquisition of Warner Bros. Discovery. Once the transaction closes, Paramount will control HBO Max and Discovery+, giving it substantially greater streaming scale but also a far more complicated technology and product integration challenge.
The planned changes include a free tier for Paramount+, short-form “micro dramas,” new interactive advertising formats, comments on its TikTok-style video feed and greater use of artificial intelligence to clip videos, according to an internal streaming initiatives document recently viewed by Business Insider. The initiatives do not yet have firm launch dates, although several projects connected with the free tier are designated for the fourth quarter and first quarter of 2027.
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The strategy represents a broader attempt by Ellison to make Paramount operate more like technology-driven platforms such as Netflix and YouTube, where algorithms, product design, engagement data and rapid experimentation are central to the entertainment business.
Paramount has also been recruiting technology executives from companies including Google and Meta as Ellison places greater emphasis on the underlying technology stack supporting its streaming products.
Rich Greenfield, a media analyst at LightShed Partners, described the approach as logical, while noting that Paramount is effectively testing multiple ideas simultaneously to determine which ones can increase engagement.
“What Ellison’s doing is very logical,” Greenfield said. He added that Paramount is “throwing a lot of things at the wall to see what drives engagement.”
The timing matters because Paramount+ enters the WBD combination with an engagement problem as well as a scale problem. Nearly 6% of Paramount+ subscribers cancelled the service in August, according to subscription data firm Antenna, giving it the second-highest churn rate among major streaming services. Antenna also found in June that more than one-third of Paramount+ users were light viewers of the service, a higher proportion than among its major paid competitors.
That makes the company’s planned product expansion less about adding features for their own sake and more about trying to change the economics of the service.
Paramount Wants More People in The Funnel
The free tier is potentially the most consequential element of the strategy.
Paramount’s objective is not simply to give away programming. The internal document describes free content as a mechanism for attracting users, collecting their email addresses, increasing engagement, and eventually converting some of them into paying subscribers.
Users would have to register before accessing the free Paramount+ offering, allowing the company to capture their identities and add them to its marketing ecosystem. The internal document describes that identity capture as potentially becoming “the connective tissue between the broader Paramount Ecosystem.”
The company also plans to impose limits on how much free content users can consume. Viewers could be asked to subscribe after watching a certain number of episodes or after using the service for a specified period. That would allow Paramount to use free programming as an acquisition tool without allowing users to consume the entire service indefinitely without paying.
“The goal is to create timely urgency that nudges registered users toward converting to a paid subscription,” the document said.
The model reflects a fundamental change in the way streaming companies are thinking about the free-versus-paid divide.
For years, the major streaming platforms largely pursued subscription growth and treated advertising as secondary. As the market has matured, companies have increasingly introduced advertising tiers, price increases, and other mechanisms to extract more revenue from existing audiences.
A free Paramount+ tier would take that logic further. Instead of asking consumers to make a payment decision before experiencing the service, Paramount could build a much larger top-of-funnel audience and then attempt to convert the most engaged users.
Mike Proulx, a media-focused research director at Forrester, said Paramount’s immediate challenge is simply getting more people to use the service.
“While Disney+ wants people to visit more often, Paramount+ needs more people to actually come to the house,” Proulx said.
The company is experimenting with short-form video, live channels and user-generated content as part of that effort.
Paramount launched vertical video in April and is now looking to expand it alongside video podcast segments, particularly to increase daytime and mobile consumption. That is effectively a move toward the consumption model pioneered by YouTube and TikTok, where users can spend substantial amounts of time inside a platform without necessarily arriving with a specific movie or television show in mind.
“You need something all the time to keep people entertained,” Greenfield said. “It’s a war for time spent, and you’re chasing the juggernaut in the space, which is YouTube.”
The competition for time could become more important than the traditional competition for subscribers.
A consumer has only a finite number of hours available for entertainment. Paramount therefore needs to persuade users not only to subscribe, but to spend enough time inside its ecosystem to make the subscription difficult to cancel and its advertising inventory valuable.
The Technology Merger May Be Harder Than The Content Merger
Paramount has spent the past year integrating Paramount+ and Pluto TV onto a unified technology platform. Two people familiar with the process said the “convergence” project is nearly complete, meaning many of the company’s streaming teams now operate on a common technology stack.
That experience could provide a foundation for the much larger integration coming with Warner Bros. Discovery.
But combining Paramount+ with HBO Max and Discovery+ is likely to be considerably more complicated. The companies have different technology platforms, product teams, recommendation systems, advertising infrastructure, content libraries, and customer bases. Deciding which technology becomes the foundation for the combined streaming business could affect both employees and the customer experience.
One veteran WBD streaming employee described the situation as another “internal war of the tech stacks,” referring to the organizational and technology battles that can accompany large media mergers. The concern is that Paramount could spend considerable time integrating systems rather than improving the consumer product.
Proulx warned that until the company establishes how Paramount+ and HBO Max will coexist, its streaming executives could find themselves “in a bit of product purgatory.”
Ellison acknowledged the uncertainty in a memo to employees after the lawsuits delaying the WBD transaction were settled.
“I know you have questions about what happens next, your role, your team and how we will work day to day,” Ellison wrote. “We don’t have all the answers yet, and I won’t pretend otherwise.”
The statement captures one of the central challenges facing the combined company. Paramount is attempting to use technology to become more agile while simultaneously undertaking one of the largest and most complicated integrations in the media industry.
The result could be a significantly larger streaming platform, but scale alone will not solve Paramount’s engagement problem. The free tier, vertical video, micro dramas, interactive advertising and AI-assisted content creation all represent experiments around the same objective: increasing the amount of time consumers spend within Paramount’s ecosystem and finding more ways to monetize that attention.
The WBD acquisition could give the company a much deeper library and a larger subscriber base. But it will also increase its technology costs, integration complexity, and financial obligations, at a time when analysts are already questioning whether Paramount has enough streaming scale to compete with Netflix and YouTube.
That makes the technology strategy more than a product refresh. It is becoming part of the financial case for the merger itself.