Viacom Chief: Paramount Deal With Redbox a Great Opportunity16 Sep, 2009 By: Chris Tribbey
Viacom CEO and President Philippe Dauman said Paramount’s recent agreement with rental kiosk operator Redbox will give the studio crucial information on how its DVDs perform.
“Redbox is obviously resonating with consumers,” he said Sept. 16 at Goldman Sachs Communacopia conference in New York City. “We wanted to try it out. The deal that we entered into gives us many advantages. We get information on all their boxes the rest of the year. We’ll be able to directly test how our titles perform in the Wal-Marts where there’s a Redbox and other markets, to markets where there isn’t a Redbox.”
He added that the agreement for Redbox to destroy DVDs after their rental life is up, instead of selling them used, was key to the deal getting done.
“Rather than litigate this, let’s test it. Consumers like it,” he said, adding that Redbox may need to look at eventually charging more than $1 a day for new release rentals, which is the kiosk operators current across-the-board charge.
The deal with Redbox, signed in late August, calls for titles to be purchased by the kiosk operator on a revenue-sharing basis, and lasts through the end of the year, with the option by the studio to extend it to 2014. The deal could have Redbox paying the studio $575 million over the course of the agreement.
Still talking about DVD, Dauman said that having Paramount Pictures focus on top-tier franchise properties will prove a boon for Paramount Home Entertainment DVDs in the fourth quarter.
“We think that if we focus on the great franchises we have as a brand, we reduce the risk and have greater opportunity, and in a challenged DVD marketplace, those big titles perform better than the mid-tier titles,” he said.
Dauman added that the fourth quarter retailer support for Star Trek and Transformers has already been excellent.
“We probably have the best slate of anybody,” he said. “We’ve got great positioning, great marketing support. These are the kind of titles [consumers] continue to buy. We’re optimistic about it. They’ll do well. We just don’t know how well.”
As for new media, Dauman said that new viewership is great, but content companies need to “find a way to monetize that new viewership.”
“The big challenge for the whole industry over a period of years is to effectively navigate the transition that’s taking place, because this new technology is a great opportunity,” he said. “You can reach people in ways you couldn’t reach them before.
“We need to generate additional revenue resources, and there are ways to do so,” he said, pointing to subscription revenues for premium content and merchandising of content.
He added that targeted branding is important “in a world of infinite choices.”
On the video game side, for the latest “Rock Band” release, Dauman credited the recent price slash of the PlayStation 3 for helping sales, and hopes for the same for Wii owners if an expected price slash for that console comes this month. He added that the company has seen 60 million paid downloads to date for “Rock Band” content to date.