Why the ‘New Paramount’ is placing AI creation at is core

Yesterday, Skydance Media CEO David Ellison outlined his??vision for Paramount Global as a rebooted?technology-media hybrid company.?This follows on from Paramount finally agreeing to merge with Ellison’s Skydance Media in a new combined entity??–– currently being referred to as “new Paramount”. The deal, which was announced by?Paramount?on Sunday, values the combined entity at??$28 billion (over three times the current market cap of Paramount Global). The deal has effectively closed the loop on a long running M&A story, with the clash of disruptor versus legacy content provider at its heart.?MIDiA has previously identified Paramount's IP bank?and streaming services (subscription-based Paramount+ and Pluto TV) as a key part of the appeal for the digitally native Sky Dance Media. Now, however, Ellison has played another card –– a vision of ‘new Paramount’ as tech enabler for media.?

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“The art challenges the technology –– and the technology challenges the art”

In yesterday’s presentation, Ellison delivered the above quote from Apple founder Steve Jobs to identify the delta between media and tech, and how the two should build upon each other. As well as citing the increased use of algorithmic search to drive engagement and the adoption of emerging ad tech to drive the ad revenues that have traditionally underpinned Paramount’s financial health, Ellison identified AI as a tool to "turbocharge" content growth. For the first time, a studio head has actually called out the growth opportunity behind AI, rather that fretting about the disruptive implications of the emerging technology.

The use of Jobs’ words is instructive, both in reframing investor expectations around the positioning of the new entity, and in recognising that media creation and distribution does not operate in a consumer vacuum. AI is now embedding itself into the fabric of entertainment, and best-in-class entertainment for digital audiences will need to reflect this new reality. And this is where Paramount’s IP bank comes into its own. MIDiA has previously argued for the reimagining of IP as licensed building blocks for brand promotion and incremental?third way monetisation?opportunities. Ellison has effectively announced that new Paramount is now open for business in the?digital first media fusion era of the 2020s. Equally exciting is the recognition that the technology will help shape?and be?shaped by what this becomes.?

To stream or not to stream, that remains the question

New Paramount’s underlying problem, however, remains being able to execute this pivot at speed. Time is against the business straddling traditional TV, film, and striving to compete in the highly competitive streaming economy. Paramount’s IP bank is mortgaged to its streaming investments, and any third way monetisation revenue will take time to materialise. In the interim, Ellison needs to continue to define the tech north star that will now drive corporate strategy, while streamlining operations to support investments for growth going forwards.?

After all the paramount importance for investors is profitability.

Ultimately, the success (or otherwise) of the reboot depends on this yardstick.