Paramount’s new owner says he’s building a tech company. Come again?

David Ellison is pitching the new Paramount as a tech company.

David Ellison says the new Paramount will be a “World-Class Media and Technology Enterprise.”He’s Oracle founder Larry Ellison’s son, so he’s definitely got tech connections.But how does that make Paramount a tech company? And does it need to be?

You might think that David Ellison, the Hollywood producer poised to finally acquire Paramount, thinks he is buying a struggling movie studio and television conglomerate.

And you’d be right!

But Ellison says he’s getting more than that for his billions: He’s also buying the building blocks for what will eventually be a “World-Class Media and Technology Enterprise.”

If that sounds familiar, there’s a good reason for that: This spring, I noted that people in David Ellison’s camp were telling journalists that his plan for reviving Paramount involved infusing the company with lots of tech and tech know-how. And the suggestion was that at least some of that was going to be supplied by Oracle, the company founded by his father, Larry Ellison — who is one of the world’s richest men and a primary investor in the new Paramount-to-be.

We’ve heard this before from David Ellison

As I said back in April, the Paramount-powered-by-Oracle pitch doesn’t make sense. And David Ellison isn’t exactly making it now. But he is definitely leaning on the idea that he’s building a media company that is also a tech company.

Here he was on Monday morning, speaking on an investor call to sell the Paramount deal (the text is via a rush transcript):

“We need to transition New Paramount to a world class tech media and technology enterprise. The first thing we need to do is double down on the core competency of storytelling across mediums. But also when you look at the landscape as it exists today, there are a lot of technology companies that are rapidly expanding into media companies, and we believe it is essential for Paramount to be able to expand its technological prowess to be both a media and technology enterprise.”

Ellison then pointed to a slide in his pitch deck pushing his tech plans from the company, which include making its streaming service better, using cloud servers, and using “AI tools to enhance creativity while driving production efficiencies.”

And then Ellison kept going, connecting himself to his father’s friend Steve Jobs, Apple and Pixar, the animation studio Jobs built up and eventually sold to Disney:

“Having had the privilege of being mentored by Steve Jobs and getting to watch him build Pixar from the ground up, one of my favorite quotes that him and [Pixar leader John Lasseter] always had was the art challenges the technology and the technology inspires the art. And [the] belief that understanding of the symbiotic relationship between art and technology is essential to be able to meet this moment in time for storytelling.”

This all sounds great — or at least interesting — in theory. But it’s also a head-scratcher.

That’s partly because David Ellison isn’t a tech mogul. He’s a producer who makes and sells movies and TV shows, more or less like everyone else in the business. (His reps didn’t respond to a request for comment.)

During the call, Ellison touted his success using Oracle’s cloud tech to help build his animation division with Lasseter, and I’ll take his word on that. But this reminds me a bit of the 2015 era when digital publishers like BuzzFeed and Vox Media told investors they weren’t media companies but tech companies that made media. Spoiler: They turned out to be media companies.

The bigger problem with the tech + media pitch isn’t that tech and media aren’t intertwined. They very much are.

The real problem that Paramount — and just about every other big media company — has these days isn’t that its tech isn’t good enough. It’s that its scale isn’t big enough.

Why media companies want you to think of them as tech firms

That’s why you constantly hear about media companies — including Paramount — as potential M&A targets: Investors believe they can’t take on Netflix and YouTube on their own.

That’s also why you constantly hear about streamers trying to bundle themselves together — something both Ellison and Paramount’s previous managers have been openly talking up as well.

So, techifying Paramount’s streaming operations sounds … fine — if Ellison and crew can really do a better job than Paramount’s old guard. But it won’t be adequate.

“Streaming tech across all of legacy media is underwhelming, so they all need an upgrade,” says Lightshed Partners analyst Rich Greenfield, who wrote a prescient note on this theme last week. “However great tech doesn’t matter without massive amounts of content — because you need watch time per user per day to be multiples higher” — because that’s how you would tune a useful algorithm that lets users find shows and movies they want to watch.

All of which tells you why the Paramounts of the world aren’t just struggling against Netflix, which has a deep technological culture married to a deep catalog of content it has been mining for years. It’s also why they’re struggling against the likes of Instagram, YouTube and TikTok, who apply their tech knowledge to unending supplies of content their users supply for little to no cost.

So, under the best-case scenario — one where David Ellison really is a tech wizard or knows how to put tech wizards to work — he’s going to have his work cut out for him. And if he turns out to just be a guy who’s been good at making TV shows and movies? It’s going to be even harder.

Read the original article on Business Insider

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