Can a technology mindset save Paramount?

With Sunday’s announcement of Skydance’s $8 billion deal to purchase Paramount, the veteran movie maker is entering a new era. And Skydance, controlled by veteran producer David Ellison (son of Oracle founder Larry Ellison), is arguing that embracing technology is the only viable path.

In many ways, Paramount’s struggles mirror what many enterprises are facing today as they try to adapt to current technology. Historically, market share leaders—which Paramount once was—often struggle when technology changes the game. They typically are too slow to change because they don’t want to surrender profits until they have no choice. By then, it’s inevitable that some startup has already grabbed extensive market share, making it difficult for the former leader to regain its prior position.

The question with Paramount is whether embracing technology will be enough for a turnaround, but as it and Skydance merge into what’s currently referred to as “New Paramount”, plans are already afoot.

 During a presentation on its vision for New Paramount, Skydance detailed a series of plans to push technology to accelerate the New Paramount transformation and increase revenue. It said, for example, that it wants to try to “improve the algorithmic recommendation engine to increase viewer engagement time spent on platform, reduce churn and drive lifetime value” as well as optimize various ad technologies.

It also described some cloud initiatives, including unifying cloud providers for all distribution networks, and specified that one unit—Skydance animation—would be building its cloud using Oracle. Generative AI will also be in the mix, it said.

New Paramount’s on-prem operations will be transformed to cloud-based production and hosting infrastructures. But the presentation did not clarify whether that meant that all on-prem would move to the cloud or just a subset. 

In many ways, Paramount “is just another large enterprise that hasn’t invested in modernizing its tech infrastructure,” said Dan Gorman, CEO of Ateliere Creative Technologies, a tech company whose clients include Lionsgate Entertainment and MGM. “If you peel away the nuances, [Paramount] has refused to change and has not invested in any meaningful way to modernize their operations.”

Despite his well-heeled family, David Ellison has earned the title of entertainment producer honestly as CEO of Skydance. As the companies said in their news release: “Skydance brings state-of-the-art interactive and gaming proficiencies, including two in-house game developer studios with industry-leading franchises, such as Skydance’s upcoming console games in Marvel and Star Wars and hit VR game, The Walking Dead. Skydance also brings an exciting partnership with the NFL, which complements the resources of CBS and its local affiliates, creating a premier global multi-sports studio.”

There are many ways technology could help reshape Paramount, from more effectively messaging potential customers by finding people interested in their content to better targeted advertising.

But the biggest weak point for Paramount is how it creates and distributes content—something that can and needs to be fixed by technology, said Hunter Peterson, the VP of content strategy for a digital content production house called 10PM Curfew, which has created content for Amazon, Meta, Hinge, HBO (now Max), Netflix, Hulu, and Dunkin’ Brands. 

Today, Paramount “will take multiple years to get a film out because of a bloated system. It is nigh onto impossible to understand the need [for Paramount’s $200 million production budgets for some recent productions],” Peterson said. “The way that Paramount business has been conducted over the last 2-3 decades is not how business should be conducted today. They simply have too many points of bureaucracy with multiple approvals.”

GenAI today, for example, can reduce or even eliminate the need for expensive on-location shoots, and can also reduce the need for extras, or even for trained animals.

Some have compared the Paramount-Skydance deal to what Steve Jobs did when he took over Pixar. Jobs used technology to vastly accelerate and improve content creation, but changing the course of a firm such as Paramount could be far more difficult.

“To me, it’s not as simple as ‘Paramount needs to be more like a tech company.’ What made Pixar great was not Jobs’ technology, but his facilitation of a better environment, producing groundbreaking animation that had always been the purview of Disney,” said Howard Homonoff, a senior advisor for media strategies at Grant Thornton, a global strategic advisory firm. 

“Even if you create better content, the business model is critical,” Homonoff said. “Paramount suffers from a lack of scale in competing with big tech. They have had decades of relying on a business model that effectively [won’t work today].”

Gorman said Paramount needs new management to force it to rethink almost every element of its operations.

“The media and entertainment industry must undergo a cultural shift to operate like a tech company, as their competition now lies in the tech sector. This requires less focus on traditional entertainment models and a greater emphasis on execution, data and technology. The merger with Skydance is a step in the right direction, but the broader move towards comprehensive tech adoption remains largely absent, posing significant challenges in a sector dominated by innovative streaming companies like Netflix,” Gorman said. “The industry seems to be primarily focused on business restructuring and M&A strategies that often overlook the necessary cultural and technological changes crucial for competing with tech giants.”