This was not the 2020 that Paramount Pictures was expecting. In fact, they were gearing up for a potentially lucrative box office year. The studio had A QUIET PLACE PART II ready to scare up some serious box office in March and the highly-anticipated Tom Cruise sequel, TOP GUN: MAVERICK, was bound to be one of the biggest hits of the summer. This all changed due to the global pandemic and it forced the studio to push these high-profile releases into 2021 with prospects looking bleak. Paramount Pictures had to rethink their strategy and, in doing so, the studio figured out a way to succeed financially that has allowed the year to not become a major loss.
According to box office analysts via "The Wrap", the studio has earned $450 million so far this year from Q1 releases and selling some of their titles to streamers. The studio, as of this writing, has offloaded at least five of its films to streamers and they include Oscar-bait like Aaron Sorkin's THE TRIAL OF THE CHICAGO 7 for a reported $56 million to Netflix and a standard rom-com like the Issa Rae/Kumail Nanjiani-fronted, THE LOVEBIRDS. That film was also sold to Netflix for a reported $20-30 million. That's only two examples of their strategy and it's one that has worked well for the studio during a time when these entities are trying to figure out the best plan for their releases. One could argue that the sale of THE LOVEBIRDS, for instance, likely paid off more for them because the film's box office longevity wasn't guaranteed. That film hit the streamer during the peak of quarantine and lockdowns so it likely thrived on the platform as consumers were looking for new things to watch at home. THE TRIAL OF THE CHICAGO 7 may have performed well enough with a staggered platform release as it tried to generate Oscar buzz but this strategy is another move that was likely more lucrative in the long run. It's not as if Paramount has been silently doing this but the industry is taking notice and the moves they have been making shine a more positive light on a pretty bleak time for distributors.
Paramount's sell to streamers doesn't stop there. The studio worked out a very lucrative deal with Amazon Studios for Eddie Murphy's COMING 2 AMERICA, which reportedly was as high as $125 million. The sequel will hit the service on December 18, 2020, right in time for the holidays when more people will be home looking for something to watch. COMING 2 AMERICA was sure to be a solid box office player but the studio has been smart about which films to sell-off to streamers. They didn't do this with TOP GUN or A QUIET PLACE because there is just too much domestic and worldwide box office potential to do so. When it comes to these lower-tier releases, this method works best because it prevents a complete and total loss. Paramount Pictures is doing the same with an untitled Ryan Reynolds/Shawn Levy adventure film that has yet to shoot and there is a separate sale on the way for the upcoming Jack Ryan spinoff, WITHOUT REMORSE, starring Michael B. Jordan.
The fact of the matter is, all of these sales add up. Three financial analysts estimate that the combined revenue from Paramount’s offloading and its domestic box office total $450 million. The combined sale prices dwarf the studio’s domestic box office gross from the first quarter of $178.3 million, coming from films like SONIC THE HEDGEHOG ($146 million), LIKE A BOSS ($22.2 million), and THE RHYTHM SECTION ($5.4 million) that managed to open before the pandemic shut down theaters. By comparison, Paramount’s 2019 U.S. box office revenue stood at a dismal $563.9 million, the second-lowest for the studio since 1995 and the second time in three years that the studio’s domestic revenue fell below $600 million. Box office analyst Bruce Nash had this to say about Paramount's strategy:
"So far, I think Paramount has done a good job making the best of a difficult situation. They’re still holding on to the big films like ‘Top Gun: Maverick’ and ‘Quiet Place II’ that they need to get a strong box office performance from but finding some form of replacement for the months of lost revenue that they really needed after the poor results last year."
Paramount has also found another way to lower its risks on pricey projects. In the case of Martin Scorsese’s upcoming THE KILLERS OF THE FLOWER MOON, Apple stepped in to help finance the $200 million-plus period thriller starring Robert De Niro and Leonardo DiCaprio. Apple reportedly threw in over $225 million for the production budget in exchange for the streaming rights, while Paramount will still receive a distribution fee on the theatrical release.
What isn't completely clear is how much profit Paramount Pictures is seeing from the sale of some of these releases but they do save millions in marketing costs while mitigating the risks on projects that might not be guaranteed box office hits. I would say they're in a better position to do this because some of their releases aren't as high-profile as those from Disney or Warner Bros. but at least Paramount is working a method that seems to be doing something for them so far. It's not the ideal box office year for any major studio but at least they're open to doing what is necessary to not take big losses and get some of their product out there for consumers.
Do YOU think this strategy was a smart move for Paramount Pictures? Should other studios follow suit?