There may be multiple reasons for the integration of Showtime and Paramount+ but one of them, I believe, is cost-cutting. Looking at the calendar going forward for Showtime original content, it looks pretty sparse.
In the past, there were typically two Sunday night original series from Showtime running with new episodes at any given time. As of this Sunday, there's only one (The Woman in the Wall, which is actually a BBC import). And after that, there's only two more Showtime originals that have been announced for 2024 (A Gentleman in Moscow and The Department). I'm not aware of anything else in the near-term pipeline at Showtime now, other than perhaps a second season of Uncoupled. (Its first season ran on Netflix but Showtime acquired the series.) Lots of Showtime originals that had been in development or even filming got cancelled last year, and then the strikes happened, adding to the content drought.
Meanwhile, Showtime Sports has been shut down (so no more live boxing or MMA), they've killed off their talk shows (Desus & Mero, Ziwe), and some of their past original series have been sold off and aren't even offered by them for on-demand streaming any more (e.g. Shameless, The Man Who Fell to Earth, Nurse Jackie, Masters of Sex, Weeds, City on a Hill, etc.). And on top of that, the only significant movie output deal that Showtime has in place, with the studio A24, is ending soon; new and catalog A24 theatrical films will be airing/streaming on HBO going forward. AFAIK, the only other output deal they have is with Amblin Partners, which will probably release only one or two theatrical films in 2024, after which that output deal ends too.
So it looks like Showtime is being hollowed out. Looks like Paramount is definitely spending less on that brand going forward. So what are they doing to fill in the gaps, at least to some extent? Paramount+ originals like Halo, The Mayor of Kingstown and Sexy Beast.
If I had to guess, I'd bet that their content spending on all of Paramount+ with Showtime (across both brands/tiers) this year won't be any more than it was for just Paramount+ last year. Paramount is just too small and cash poor to run two a la carte services, so they had to collapse them into one.