In yet another move that displays the power shift that is going on in Hollywood. Paramount Pictures has struck a multi-picture deal with streaming giant Netflix Inc. Not too long ago, it was unthinkable that one of the biggest and most prestigious movie studios in the world would give up on the lucrative box office sales in favour of a shared revenue model involving streaming.
The move represents a significant departure for Viacom, which was criticized before by selling Netflix the streaming rights to its most popular Nickelodeon shows several years ago. However as of late, Paramount is coming off a prolonged dry spell and heavy financial losses which make the timing right for a deal. Although it has been ramping up its pipeline of movies and TV shows to turn around the studio, it has still lost nearly $450 million. Paramount executives hope this new deal will stop the bleeding.
Wall Street analysts largely blamed Viacom’s previous management for accelerating the rapid migration of children’s viewership to streaming platforms and away from traditional TV networks. Ratings for Nickelodeon and Viacom’s other television channels faltered — and have never fully recovered.
In recent years, Viacom scaled back the availability of existing TV shows on streaming platforms to encourage viewers to watch TV the old-fashioned way. It removed “The Daily Show With Trevor Noah” from Hulu last year, but the New York-based conglomerate has begun putting together small deals to create new versions of shows for Netflix, Amazon and even the newer service Facebook Watch.
What’s more, Paramount is facing stiffer competition from streaming services like Netflix, Amazon.com and Apple who are collectively spending an astounding $20 billion this year on content. The streaming services are hungry for programming at a time when other major studios, such as Walt Disney Co. and Warner Bros., have been pulling back because they plan to use their content to launch their own streaming services.
The new Netflix deal was different from past arrangements where about eight years ago, Viacom sold Netflix the right to stream episodes of its TV tentpoles such as Nickelodeon’s “SpongeBob SquarePants,” which encouraged the audience flight. This was seen as a bad move for the film studio, giving up valuable rights for a fraction of what they were worth. This time around Paramount will produce a small number of titles exclusively for the streaming company.
The century-old studio also is expanding its slate of theatrical movies. Paramount will release 13 movies to theaters in this fiscal year, up from nine in 2018. Its goal is to release 19 films in 2020.
Meanwhile, Paramount beat analyst expectations for its fiscal fourth quarter by posting its third consecutive quarter of profit. The improvement was due, in large part, to “Mission: Impossible — Fallout,” with Tom Cruise, which generated nearly $800 million in ticket sales worldwide.
The studio also scored with “A Quiet Place,” which cost less than $20 million to make. The John Krasinski-helmed film, starring Emily Blunt, generated $341 million worldwide.
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