Paramount Global (PARA 1.44%) recently announced it will expand its on-demand streaming service, Paramount+, to several more European countries. The premium offering will be available in France on Dec. 1, followed by Germany, Austria, and Switzerland on Dec. 8. With this latest expansion, Paramount+ is opening up an opportunity to reach millions more customers in Europe -- just as long as it can avoid the struggles that other U.S.-based streaming services have run into there.

Room for growth

In its latest quarterly earnings report, Paramount Global revealed it has 63.3 million customers across its various direct-to-consumer (DTC) global services, of which Paramount+ accounts for 43 million subscribers. The company has achieved that number by moving beyond its domestic borders, expanding into such countries as Australia and Canada along with parts of Europe, including Ireland and Italy. Paramount Global, however, has still broader ambitions; it wants to reach 100 million DTC customers by the end of 2024.

Europe offers potential

Europe is a ripe market for streaming businesses eager to expand. In 2022, it is anticipated the global subscription video-on-demand (SVOD) market will generate almost $81 billion in revenue, of which $13.5 billion will come from Europe. And given that Europe's SVOD income is expected to reach $26 billion by 2027, now is certainly a good time for Paramount+ to establish a greater footprint in the region.

Paramount+ is not the first streamer to move into Europe. Warner Bros. Discovery's HBO GO (the precursor to HBO Max) first arrived on the continent in 2011, and Walt Disney's Disney+ debuted in the Netherlands at the same time as it launched in the U.S. and Canada. However, both companies have since experienced friction on the continent, which highlights some of the pitfalls that Paramount+ will surely want to avoid.

Commitments to regional rules

Paramount Global has announced that, starting in 2024, it will make Paramount+ the exclusive streaming home for its movies once they've ended their theatrical runs. In the U.S. and many other markets, that window is 45 days. But in France -- a nation with strong protections for cultural institutions -- subscription video-on-demand platforms have to wait at least 36 months before they show theatrically released films. (Netflix has been granted a special dispensation of 15 months.)

Walt Disney caused somewhat of a stir earlier this year when it scrubbed plans for a French theatrical release of its upcoming animation Strange World, instead opting to debut the movie on Disney+ in the country. A French lobbying group, the National Cinema Federation, came out against the move, accusing Walt Disney of using Strange World as a bargaining chip against local media operators. For its part, Walt Disney claims the 36-month window is "anti-consumer" and creates more opportunities for film piracy.

It is unclear how Paramount Global will navigate these issues when it looks to stream its movies in France, but that's not the only challenge it could face as it expands further across Europe. The EU Audiovisual Media Services Directive insists streamers must offer at least 30% regional content on their platforms. That guidance has been interpreted in a patchwork of ways across the continent, but Germany and France have both adopted the minimum threshold.

Netflix and Amazon have both met the 30% requirement in key markets, but Walt Disney is reportedly failing to meet its commitments. HBO Max had managed 25% localized output, but, due to cost-cutting measures, Warner Bros. Discovery has since shut down many of its localized productions in Europe, suggesting it will also struggle to meet EU expectations.

It's unclear when or if the EU will force streaming companies into greater compliance on the 30% regional content rule, but with France pushing for a higher threshold of 60%, it's only likely to become a more pressing issue.

For Paramount Global, there are lessons to be had from how its rivals have handled their expansions. Investors should watch what Paramount Global says about its regional content commitments, as well as its streaming movie plans in France. If the company can lay out a clear plan -- and doesn't rankle local interest groups or lawmakers -- then it could certainly reap the rewards.