The reorganisation of Paramount's home entertainment operations is the latest move in on-going restructuring and streamlining at all of the major Hollywood studios, and the second time in two years Paramount has reorganised its distribution teams. In 2010, the studio folded the distribution operations of Paramount Digital Entertainment into its television unit, in what was generally perceived to be a cost-saving exercise. However, the resulting silos created between physical and on-demand distribution has meant this structure had to be reconfigured again to better reflect the characteristics of the global home entertainment market.
Paramount follows Warner Bros, Sony Pictures, NBC Universal, Fox and Disney, all of whom have combined or modified their worldwide home entertainment divisions to remove intrinsic internal organisational conflicts when it comes to sales and strategy, and better reflect the technological landscape and consumer market. This is in light of major services such as Netflix, major retailers or global pay TV platforms offering multiple distribution options and requiring multiple products and rights accordingly. In essence these moves will enable the studios to maximise revenues from the mass market channels of TV and physical by presenting more unified distribution strategies on a title-by-title basis.
As IHS Screen Digest has frequently stated, on-demand services and digital platforms will not fill the gap left from the declines in total physical video consumption. The ubiquity of content, together with piracy in local markets, and competition for consumer time and money from different types of entertainment, means the global home entertainment business for movies in 2015 will be $24bn, down from $28bn in 2011. In this tough consumer climate, where consumption and rights splits are becoming very fragmented across several business models across many competing and often conflicting movie platforms, the former studio organisational structure - which had each division operating separately - often resulted in multiple co-existing distribution strategies, as opposed to a fully co-operative one.
Paramount's decision to combine its digital, physical, and television operations indicates a shift towards a more holistic view around the distribution of content to the home and will allow the studio to better manage the inevitable friction between competing distribution channels. Overall, much of the restructuring across studios can be interpreted as a tacit acknowledgement that the successful distribution and licensing of home entertainment content will continue to be a mix of formats and platforms in the near future.