Saturday, September 11, 2021

Paramount Pictures To Replace CEO, Move Away from Theatrical Releases

Transformers production studio, Paramount Pictures, is getting a new CEO. Jim Gianopulos has effectively been forced out of Paramount Pictures as Chairman and CEO and will be replaced with current Nickelodeon President Brian Robbins. Gianopulos took over Paramount in 2017 after the previous year, which included badly performing Transformers: The Last Knight, was a bad year for the company. He shifted the company to focus on tighter budget movies (like Bumblebee) and projects that would have potential low cost, high reward like A Quiet Place.  In addition, he built up Paramount TV's production slate so net result was profitable years for Paramount.

What makes this interesting isn't that some CEO is being replaced. Its why the replacement is occurring. The change is due to ViacomCBS Chairperson Shari Redstone's desire to push all content created by the company to benefit Paramount+ and their related streaming services (soon to launch SkyShowtime in Europe for example). Part of this plan includes no longer releasing films in theaters but instead onto the streaming services and at a reduced production cost. Most direct to streaming films are around $100 million or less while theatrical releases tend to be $150 million or more.  A plan that Gianopulous doesn't agree with but one Robbins is just fine with since his entire career has been in the realm of television.

ViacomCBS owns Paramount Pictures, Nickelodeon, CBS, Paramount+, MTV, BET, The CW, and more. They have also entered a content sharing relationship with Comcast, who owns NBC, Universal Pictures, Dreamworks and more. Suffice it to say, the company has gone all in on streaming.  Due to COVID, almost all the studios have shifted their revenues streams to rely much more heavily on streaming services over theatrical to the point that many films either go straight to streaming, release to streaming and theatrical on the same day, or only spend a few weeks exclusively in theaters before being released to a streaming service.

All indications are these changes will become a permanent fixture of how movies will be released from now on with treatment depending on movie or franchise. So for example, Shari was angry expensive films like Top Gun: Maverick and Mission: Impossible were moved to 2022. She was counting on those movies reaching Paramount+ before year end to help boosts its revenues and now that will be delayed as doubtful star Tom Cruise's contract allows for them to release it to streaming first or they risk getting sued like Disney has been for its Black Widow release.

So why should Transformers fans care? For one, Hasbro Studio's production and distribution deal with Paramount expires in 2022.  For another, direct to streaming means a reduced production budget for a typical Transformers movie ($100M vs $200M), which has the potential to end live action Transformers films as those transformation sequences, robot modes, and action does not come cheap. It could also mark the beginning of the end of big budget "summer" films entirely if the goal is direct to streaming  with no concern over theatrical release becomes an across the board norm beyond Paramount.

However, it should be noted this is currently theoretical as the changes at the top with Paramount winding down its theatrical releases (or at least significantly reducing them) will take a few years to settle due to actor and director contracts. Also, assuming recovery from COVID eventually occurs at the theatrical level, could change their mind as the studios ultimately will follow where ever the money is.

For the present, this doesn't give Hasbro much time or information to make a decision on continuing the partnership when their Paramount contract expires. Its also not clear where ownership would lie of existing Transformers films if they try to move to another studio. Split ownership of movies between studios always tends to become messy as its a leverage point with a competitor.

What if Hasbro decides to move? Well the options are thin thanks to all the mergers. If can't stay with Paramount due to them insisting on direct to streaming (along with expected budget constraints), the studios that now remain are Disney, Warner Bros., Sony/Columbia, Universal, Lionsgate and MGM.  Disney is out because they only are interested in producing content they 100% own. Lionsgate is too small to handle their budget and production needs. MGM is about to potentially be acquired by Amazon who likely will want direct to streaming also.

What remains is AT&T/Warner Bros, Sony/Columbia, and Comcast/Universal. Of those, WB has been badly managed for years (see complete inability to compete with Marvel), and the Viacom-Comcast relationship may evolve eventually into a merger re-creating the original problem (assuming anti-trust concerns even allow a merger).  That really just leaves Sony. Transformers where created in Japan. Sony is a Japanese owned company. Have to admit the idea on the surface at least has a certain coming home feel to it.

In the short term, none of this has an impact on Transformers: Rise of the Beasts. The movie is in production, contracts have been signed (likely with awareness of how streaming is changing theatrical releases), and it budget has been approved. What this could impact is Transformers starting in 2023.

The animated movie may now be in jeopardy as rule one of incoming studio presidents is usually to cancel previous projects (where able if financially feasible or contracts allow it) as they do not want the previous "administration" to get credit for successes. Will Hasbro stay with Paramount or move studios? Will Hasbro will have to re-evaluate its theatrical ambitions and instead shift its focus exclusively to streaming?  To early to know any of these and other questions about Transformers theatrical future after Transformers 7 but I suspect changes are coming.

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