What happened

The past several months have been tough ones for the overall market, but they've been downright awful for Paramount Global (PARA -3.94%) investors. Shares of the media outfit are down 47% from March's peak, with investors increasingly realizing how competitive and expensive it is to be in the video entertainment market.

So what

A little over a year ago, streaming companies could seemingly do no wrong. COVID-19 restrictions still had most people trapped at home, where they were hungry for all forms of video entertainment, and streaming in particular. The Paramount+ service saw strong subscriber growth numbers in 2021, as did its free-to-watch platform, Pluto TV. Meanwhile, its CBS network and cable channels, such as Nickelodeon and Comedy Central, were doing well. The company's top line grew 13% to reach $28.6 billion that year, defying the spending headwind other consumer-facing businesses were facing.

Last year, however, was a reckoning of sorts.

As it turns out, simply making content and building platforms to distribute it is no guarantee of a healthy bottom line. Despite revenue growth paired with subscriber growth for the third quarter of last year, operating earnings of $786 million was down 23% year over year, extending a trend seen during the first half of 2022. Investors would have none of it, revolting -- by selling the stock -- for the better part of last year.

As the old saying goes though, nothing lasts forever. Is there any chance Paramount Global can recover in 2023?

Yes. But...

Now what

Be careful of reading too much into 2022's comparison to 2021's numbers. Both were unprecedented and complicated years. They just required lots of content-based spending to drive the artificially high growth for streaming services providers. Most of the industry's major players now say they're planning on reigning in this spending. Indeed, some streaming powerhouses are planning on platform mergers and higher prices as being the only way to achieve fiscal viability in the business.

That's not the path Paramount is taking, however -- at least not yet. Last month, CEO Bob Bakish confirmed he still intends for his company to spend $6 billion on content in 2024, versus 2021's tally of $2 billion. Most of that spending growth is meant to grow its streaming services' subscriber bases.

It's probably the right move, given how its rivals are thinking defensively. It's a strategy that most investors are hyper-sensitive to right now, however, in that it's likely to keep the company's streaming operations in the red for the foreseeable future. To this end, analysts expect this year's per-share earnings to slip again, from 2022's $1.98 to only $1.32. That's tough to build a bullish argument around, particularly when the streaming industry is experiencing growing pains and the economy itself is on the defensive.

For investors who can look beyond the current year, though, the stock's forward-looking price-to-earnings ratio of 14 is relatively cheap, and newcomers are plugging in while the dividend yield's a compelling 5.1%. You could certainly take on riskier long-term prospects.