(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.)
When it comes to business stories over the last few weeks, I couldn’t pull my eyes away from Google’s latest antitrust trial. (For those keeping track, this is Google’s third antitrust trial over the last year or so.) But we haven’t actually gotten a result—closing arguments come at the end of November—so it isn’t quite the “most important” news yet, though the implications of a broken-up Google for media, publishing and, honestly, the entire business community could be profound.
Instead, amidst a wave of layoff news—another depressing wave, sadly—the moves of Paramount Global seemed to stand out. And also signal a lot about shifts in the entertainment industry that pair well with some other stories I’ve had my eye on, like profitability in streaming, the end of Tony Vinciquerra’s run at Sony, and more.
Most Important Story of the Week – The Slow Death of Paramount+?
Let me clarify one of my philosophies:
- I don’t care about CEO changes, not because they don’t matter, but because it’s really tough to predict if the new CEO will succeed or fail. (See an example below!)
- But when it comes to re-orgs, I do think that those move the needle!
How an organization is structured ultimately determines what it can work on and how hard it can focus on its key strategy. The McKinsey “7S” system for analyzing how a company works has “structure” as one of the 7S’s, and I’ve always thought that’s a useful tool to analyze how companies succeed or fail.
It’s easier said than done, of course, since it’s not like companies provide us with an org chart of their corporate re-orgs! Like user experience, we’re often guessing more than we “know” things. (Yes, I love using “data”, but a lot of strategy just doesn’t have some easy data solution to it.)
So does Paramount Global’s latest re-org qualify as “important news”? I would say yes. In this case, we’ve heard about a lot of major jobs disappearing, and all from seemingly the same place. Here’s a quote from The Ankler’s Sean McNulty:
“– Deadline’s initial report that roughly 50% of the streaming group being cut was rescinded, but I’ve heard that individual departments within the division were trimmed by a number not far from that — and some have been dismantled entirely.
– Tina Koyanagi-Rosener and her PAR+ content strategy team were all let go
– The PAR+ Comms group was effectively dissolved, with all of Erin Calhoun’s direct reports laid off (Morgan Seal, Amanda Cary and Deva Kehoe).
– I also saw many posts on LINKEDIN from folks in the streaming Product group who were let go as well.”
I’m sure Paramount Global (and their new not-quite-yet-owners Skydance) will try to emphasize that they’re eliminating redundancies. Operationally, most studios/streamers could reduce redundancies across the board, as painful as that is to say. “Reducing redundancies” is a euphemism for layoffs, of course. Interestingly, I just heard from a source (rare for me) that one of the big streamers has only gotten more and more convoluted in its reporting/org chart. (This isn’t a traditional entertainment-only problem!)
To me, the brutal cut is the Paramount+ content strategy team. If your streamer doesn’t have a content strategy…what does it have?
The focus seems to be on Paramount+ in particular. That’s the division taking most of the losses—the Paramount+ specific job titles—so this does seem like a pullback from that streamer as the focus of Paramount Global. Again, how you structure a company determines what you can focus on and prioritize. Paramount+ is no longer getting that focus.
For Paramount Global, then, the focus isn’t the distribution (Paramount+ or Pluto TV or the studios or broadcast networks) but on making content that will flow to all of them…and others. Content will be made and then end up somewhere, hopefully in a cash-flow-positive direction. That screams to me a lot of shows that go to broadcast or streaming plus cable. And then to other streamers.
Frankly, the data justifies this move. If you look at Nielsen’s The Gauge, neither Paramount+ nor Pluto TV has been growing the way they need to justify the investment:
Yet, their content still works! At one point last month, Paramount-produced shows and films had something like seven of the top 30 slots on Nielsen. They just were often streaming in other places, like Netflix. Heck, if you toss in CBS, Paramount Global owns a ton of the most popular shows. But putting it all on Paramount+ hasn’t moved the needle.
Let me finish with this acknowledgment: this may be a bit hyperbolic. After all, it’s not like Paramount+ is folding up shop tomorrow. Clearly, though, until Paramount Global changes hands next year, Paramount+ is not the priority. Will that be a future, different streamer? Or a revamped Paramount+? We’ll find out, but not for a while.
Almost Most Important Story of the Week – Is Streaming Now… Profitable?
The next two stories almost could have grabbed the top spot in this week’s report. Together, they provide a stark contrast in Hollywood, a true best of times/worst of times vibe.
To summarize the last rounds of earnings reports, most of the (publicly announced) streamers are now profitable.
Here’s Bloomberg’s chart:
We’re just getting started with this issue—looking at streaming becoming profitable, a possible Hollywood recession, Sony’s leadership change, the DirecTV-Dish merger, Disney’s password-sharing crackdown, Only Fans big numbers, and more—but the rest is for paid subscribers of the Entertainment Strategy Guy, so please subscribe! We can only keep doing this great work with your support.
