This is an interesting bug because it is only happening on BeginPlay. I guess that there is some order of operations that the camera manager uses during creation that will stop if the game is paused. Perhaps a fix could be to
4. PIE in the game
Result: the viewport does not update, but the print log of the camera location does.
Expected: The camera arm moves around the player pawn as the animations and other effects in the game are paused.
To see the expected behavior, remove the Pause Game call from begin play and move it to a debug key to flip on a toggle, like this. You will then see when you press P, you can still move the camera around but not the player pawn. This is the expected behavior. [Image Removed]
There's no existing public thread on this issue, so head over to Questions & Answers just mention UE-134031 in the post.