Businessmodel of Paramount Pictures

Customer Segments

Paramount principally produces content for consumption by the mass consumer market. The Company has a varied portfolio of movie and television properties that cater to a broad range of consumers. This includes Nickelodeon television content aimed at children, mainstream motion picture releases such as the Star Trek franchise, and micro-budget pictures targeted at niche audiences.

The Company also sells and licenses its movie and television content to broadcast television networks, cinema chains, streaming and on-demand service providers, and other digital media providers. Paramount provides content to customers around the world.

In 2015 it was ranked last among Hollywood’s six largest film studios, with a US market share of less than 6%.

Value Propositions

Paramount is among the largest, most recognisable production studios in the world, with its brand associated with quality content.

The Company provides a broad range of media to suit all demographics, including blockbuster features, micro-budget pictures, children’s television programming, apps and games.

The Company’s content is accessible around the world and across multiple channels, spanning box office viewings, physical DVD sales, digital downloads and on-demand platforms.

Channels

Paramount’s media content is available through multiple channels. Its new movie content is available firstly to consumers across various cinema chains, before being released in the form of DVDs and Blu-rays available from online retailers and physical stores and digital downloads such as from iTunes or Amazon.

The Company makes selected movie and television content available to users through streaming and on-demand services such as Netflix, while television programming is also presented across Paramount’s proprietary broadcast networks, paid television broadcasts and free television networks.

Paramount has recently launched a YouTube channel, Paramount Vault, through which users can view movie clips as well as full-length features free of charge. Beyond the consumer market, Paramount’s customers, including broadcast networks and streaming services, deal directly with the Company.

Customer Relationships

Paramount’s consumer customers can access Paramount’s content through various channels on a self-service basis. While consumers have no direct interaction with the studio itself, corporate customers receive direct attention from the Company and are given a greater degree of personal care.

Paramount interacts with its customers through various marketing and social media channels. This includes accounts with Facebook, Twitter, as well as through opening days and studio tours that allow customers to directly interact with the Company.

Key Activities

Paramount is a large movie and television production studio. It operates through eight separate divisions: Paramount Digital Entertainment, which Provides digital entertainment service via apps and technology platforms such as gaming consoles, social media and mobile devices; Paramount Home Media Distribution, which oversee the Company’s home entertainment, digital and television distribution activities worldwide, on behalf of Paramount Pictures, Paramount Animation, Paramount Vantage, Paramount Classics, Insurge Pictures, MTV, Nickelodeon, Comedy Central and CBS and applicable licensing and servicing of certain DreamWorks Animation titles; Paramount Pictures International, which is responsible for marketing and distributing Paramount movies to audiences around the world; Paramount Licensing, which handles worldwide licensing and consumer products for all Paramount properties; Paramount Studio Group, which provides production facilities for feature films, television shows and commercials on the Company’s 65-acre Hollywood lot; Worldwide Television Distribution, which is responsible for distributing Paramount Pictures’ content to streaming and on-demand platforms, pay television networks and free television broadcasters; Paramount Famous Productions, which develops and produces prequels, sequels and remakes based on Paramount properties; and Paramount Parks and Resorts, which oversees the licensing and creative design of theme parks, restaurants and attractions based on Paramount properties.

Key Partners

Paramount has key partnerships with a number of partners, including with financiers, marketing partners, content partners, co-production partners, and distribution partners. The Company collaborates with investors who help to finance the Company’s slate of feature-length releases. This includes a recent partnership with China’s Ali Pictures, which saw the Chinese media company invest in upcoming Paramount motion pictures ‘Teenage Mutant Ninja Turtles: Out of the Shadows’ and ‘Star Trek Beyond’ and provide support and services during their production.

Paramount has also partnered with art networking site Talenthouse as part of its ‘Teenage Mutant Ninja Turtles: Out of the Shadows’ production, inviting its users to design a sewer access covers inspired by the franchise. Paramount regularly uses partnerships like this to promote its latest releases, including partnerships with Digital Cinema Media and Texas to promote the most recent Transformers movie and with Big Red to promote ‘Terminator Genisys’. The Company has also partners with Hewlett Packard on the development of its most recent Star Trek picture, with the computer company designing futuristic concept technologies for the film.

Paramount has a key partnership with toy manufacturer Hasbro, under which it is licensed to produce media content based on the toy company’s products. This includes a recent deal that saw Paramount agree to collaborate with Hasbro’s Allspark Pictures in the development of features based on Hasbro brands G.I. Joe, Micronauts, Visionaries, M.A.S.K. and ROM. Additionally, Paramount has various distribution partnerships, including recent tie-ups with theatre chain IMAX and with multi-platform digital media network Rightster.

Key Resources

Paramount’s key resources are its brand name and reputation, its catalogue of motion picture and television content, its broadcast network properties – including Nickelodeon, MTV, Comedy Central and CBS, its partnerships and its personnel.

The Company’s physical studio space, located on a 65-acre lot in Hollywood, is also a key resource, both in terms of proprietary content production and revenue generated from renting out studio facilities.

Cost Structure

Paramount principally incurs costs in relation to the production of media content, the distribution of media content, and the development and presentation of advertising and marketing campaigns.

The Company also accrues costs in relation to the operation of its large studio lot, as well as the retention of its personnel. Paramount was reported to employ around 2,000 people in 2013. The Company has, however, since made a series of lay-offs.

Revenue Streams

Paramount generates revenue through the production, sale and distribution of original content and other proprietary content. Where other studios depend on big box office sales to generate revenue, Paramount produces a varied slate of content, comprising lower budget films, high-profile blockbusters and a range television content.

Paramount monetises its motion picture content in various ways. Primarily it distributes its pictures across cinemas worldwide, generating revenue in the form of box office sales. Following this the Company sells its content to consumers in the form of DVDs, Blu-rays and digital downloads through various physical and online channels. Paramount has also introduced new distribution models in recent years, notably releasing selected movies on streaming services such as Netflix shortly after their cinemas release, with streaming platforms paying a licence fee. Paramount has also sought to generate revenue from its historic properties by sharing content on its Paramount Vault YouTube channel free of charge, including a number of full-length movies. The Company generates revenue through YouTube advertising and through sales generated by its YouTube content.

In addition to its feature-length productions, Paramount operates several broadcast television networks, including Nickelodeon, MTV and Comedy Central. These activities generate revenue through the sale of advertising space and through the licensing of its programming content with streaming and on-demand services. Paramount also generates revenue through various merchandising and licensing activities, including in relation to theme parks and attractions, the licensing and sale of other digital media products, including apps and games, and rental of studio space at its large Hollywood production lot.