While Sony and Apollo’s $26 billion all cash offer for Paramount last week turned heads for its potential impact on the streaming market, Sony’s desire to expand its video gaming empire is seen as the linchpin for a successful merger, according to one analyst.
Paramount has been on the block for several years now but since the first hints of a sale emerged, the streaming market has tightened, with consolidation and shareholder demands for real profits driving the market, which is contending with higher interest rates and fickle viewers.
Despite its legacy, Paramount is having to compete with much larger players in the industry like Netflix, Disney+ and Prime Video and its size is forcing it to find a larger benefactor. That’s the conclusion from Ben Woods video analyst with MIDiA Research.
“Paramount’s future hinges on being part of a much bigger (and more diversified) entertainment company,” Woods said. “With chief executive Bob Bakish leaving to make way for three division-level executives, Paramount appears to be clearing its decks ahead of an acquisition-shaped sea change.”
One of Paramount’s chief attractions is its extensive IP which includes its film franchises from Indiana Jones and Mission Impossible to its TV networks which include CBS, Nickelodeon, Comedy Central and MTV as well as its broadcast rights to soccer’s Premier League. Extending this IP to Sony’s Playstation gaming platform could be the deciding factor that tips the scales in Sony’s favor.
The breadth of possibilities enabled by a combined Sony-Paramount entity could boost Sony’s subscriber base, enhancing the company’s presence as a diversified media company across multiple platforms.
“Sony could leverage its large gaming subscription base, its impressive music library, its Paramount-boosted TV / movie roster, and even CBS’s sports partnerships to offer a unique subscription offering across various media types appealing to various demographics,” Woods added. “One clear distribution opportunity would come from packaging up Paramount Plus with PlayStation Plus and targeting PlayStation Network’s near 130 million users.
“Having all this content under one umbrella in one app—ad-supported tier—could help bolster overall engagement with Sony’s IP and give it a bigger presence in today’s fiercely competitive attention economy,” he concluded. “So far, Sony has struggled to fully realie the power of transforming its games, movies, hardware, and music businesses into a united force. Paramount could well be the binding agent it needs to bring this cross-entertainment promise to bear.”
Read Tadesse's report here.
