Paramount Pictures Q4 Home Entertainment Revenue Declines

Paramount Home Media Distribution Nov. 16 reported fourth-quarter (ended Sept. 30) revenue of $157 million – down 17% from revenue of $190 million from the previous-year period.

Domestic revenue from sales of physical and digital movies and TV shows reached $103 million, compared to $118.5 million last year. International sales totaled $54 million, down 22% from $65.9 million in the previous-year period.

The studio attributed the drop in part to timing of releases and product mix.

Indeed, Book Club, starring Jane Fonda, Diane Keaton, Candice Bergen and Mary Steenburgen, has generated $6.8 million in combined DVD, Blu-ray Disc sales since its Aug. 28 retail release. The title ranks just 54thin sales in 2018, according to The-Numbers.com.

A Quiet Place, the top-performing theatrical horror/thriller in the past decade, ranks 25thon the year with $12.6 million in disc sales.

By comparison, top home entertainment releases in 2017 included Star Trek Beyond, Jack Reacher: Never Go Back and Arrival, among others.

Mission: Impossible – Fallout, Paramount’s top-performing theatrical title of 2018 – and highest grossing title in the franchise – doesn’t reach retail shelves until Dec. 4.

For the fiscal year, Paramount Home Media Distribution sales topped $622 million – down about 27% from $849 million last year.

Viacom CEO: We’re Seeing Incredible Turnaround at Paramount

Among major studios, Paramount Pictures has taken an outsized share of fiscal hits in recent years — only generating its first operating profit since 2015 in March.

Speaking Sept. 12 at Goldman Sachs 27th Annual Communacopia confab in New York, Bob Bakish, CEO of corporate parent Viacom, said Paramount is a very different place today — thanks in part to a trio of theatrical hits and increased television content production, among other initiatives.

Specifically, low budget titles A Quiet Place and romantic comedy Book Club, together with Mission: Impossible – Fallout, the sixth installment in the Tom Cruise-starring franchise, overperformed at the box office – with A Quiet Placeand Book Club now generating significant sellthrough revenue.

Indeed, A Quiet Place grossed more than $188 million domestically, making it the second-highest grossing horror film in the U.S. over the past decade. The film has earned more than $332 million worldwide with a production cost of approximately $20 million.

Released in May 2018, Book Club earned more than $68 million at the domestic box office — more than six times its $10 million acquisition cost. The titles were released in retail (digital and physical) channels on July 10 and Aug. 28, respectively.

“Both those films are killing it in transactions for us right now,” Bakish said.

The executive said that when combined with the global box office of Fallout– the largest in Mission: Impossible franchise history, Paramount has turned the fiscal corner.

“Take those three things together, and there’s no question the [Paramount] mountain is back,” Bakish said.

In addition to movies, Paramount Television has upped content production from nine series on broadcast and online to 16 shows this year and is poised to generate $400 million in revenue.

Notable series include “13 Reasons Why” for Netflix; “The Alienist” for TNT and “Tom Clancy’s Jack Ryan” from Amazon Prime Video. Original movie production for third-party SVOD players has begun with announcements pending, according to Bakish.

“Paramount is not only back in the TV production business, it’s a hit maker,” said Bakish. “It’s a great opportunity.”

What Viacom is not doing is developing a mass market SVOD service to compete with Netflix.

“That business is looking more and more crowded,” Bakish said. “It is a very capital-intensive game if you look what program expenses at those platforms are.”

Instead Viacom is approaching over-the-top video with strategy targeting niche SVOD services such as Noggin.com and distribution through third-party platforms such as Amazon Channels.

“Putting Noggin on Amazon Channels more than doubled subs rather quickly,” Bakish said. “And we’re in the late stages of adding other distributors. We think that’s a very effective strategy.”

Viacom is launching an ad-supported OTT video service featuring library content, and creating third-party licensed content featuring Viacom brands MTV, Nickelodeon, Comedy Central, BET, etc.

Bakish says its “part promotion, part revenue,” with digital initiatives produced under Viacom Digital Studios, which launched nine months ago.

“We’re feeling very good about the momentum we have going into the [current] fourth quarter. We are very focused on operating the assets we already own. It’s a quest for scale both inside and outside the company,” he said.

 

 

 

Paramount Pictures Ups Q3 Profit

Paramount Pictures Aug. 9 reported third-quarter (ended June 30) operating income of $44 million, which was up 388% from operating income of $9 million during the previous-year period. Revenue declined about 9% to $772 million from $847 million last year.

Paramount Home Media Distribution reported revenue of $119 million, which was down 45% from revenue of $218 million.Home entertainment declines reflected the mix and number of titles in release. Domestic and international home entertainment revenue decreased 47% and 41%, respectively.

Significant current-year home entertainment releases included, Daddy’s Home 2 , compared to Star Trek Beyond, Jack Reacher: Never Go Back and Arrival in the prior year.

The studio attributed the overall revenue drop to a 33% decline in international revenue to $308 million. Domestic revenue increased 20% to $464 million.

Theatrical revenue dropped 21% to $208 million principally due to lower carryover revenue. Domestic theatrical revenue grew 58%, driven by the strong performance of current quarter releases A Quiet Place and Book Club, while international theatrical revenue decreased 58%, reflecting comparisons against the release of Transformers: The Last Knight and Ghost in the Shell in the prior year quarter.

Regardless, Paramount Pictures has improved adjusted operating income in six consecutive quarters and was profitable in the second and third quarters of fiscal 2018.

“Paramount is revitalized, with outstanding box office performance and growing television production revenues driving substantial gains in profitability,” Bob Bakish, CEO of corporate parent Viacom, said in a statement.

Indeed, A Quiet Place has grossed more than $188 million domestically to date, making it the second-highest grossing horror film in the U.S. over the past decade. The film has so far earned more than $332 million at the worldwide box office at a production cost of approximately $20 million.

Released in May 2018, Book Club has gone on to earn more than $68 million to date at the domestic box office — more than six times its acquisition cost of $10 million.

The current fourth-quarter release of Mission: Impossible – Fallout grossed nearly $330 million globally in its first two weekends – the biggest opening ever for the franchise.

 

Mission Impossible: Saving MoviePass

Helios and Matheson Analytics, parent of fiscally-challenged theatrical subscription ticket service MoviePass, saw its stock close July 30 at 80 cents per share – less than a week after issuing a reverse-stock split aimed at buttressing the stock above the Nasdaq $1 minimum.

The stock finished down 60% from its opening of $2 per share after a weekend that saw additional service outages affect subscribers attempting to see Paramount Pictures’ summer blockbuster, Mission: Impossible – Fallout.

Therein lies the problem with the MoviePass business model: enabling subscribers daily access to a theatrical screening for a monthly $9.95 fee.

MoviePass pays exhibitors face value for each ticket used by subs. Chains such as AMC Theatres and Regal Cinemas have seen notable increases in moviegoers taking advantage of “free” access. It’s a win-win for everyone – except MoviePass, which is hemorrhaging money footing the bill.

The service last week had to take out an emergency $6 million loan to keep its merchant vendor facilitator operating (i.e. paying theaters).

With Mission: Impossible –Fallout winning the three-day box office (through July 29), MoviePass was left with the money-losing option of paying for myriad tickets or restricting subscribers access in some markets.

The service employs “surge pricing” in an attempt to offset subscriber demand for select titles – an option MoviePass realized wouldn’t generate the revenue required to pay for Fallout.

“We are sorry to users having issues checking-in this evening,” the service Tweeted on July 28. “Some users have reported issues with card-based check-ins and we are working towards a fix on this technical issue. In the meantime, all e-ticketing remains fully functional.”

According to Business Insider, Mitch Lowe, president of MoviePass, held an “all hands on deck” meeting July 30 telling staffers the service’s app would not be accommodating major theatrical releases in the near future due to funding issues.