Paramount continues replication with Technicolor

PHYSICAL: Studio ends talks with Sony, Fox for distribution partnership

By Marcy Magiera -- Video Business, 10/21/2009

OCT. 21 | PHYSICAL: Paramount Home Entertainment renewed its replication and DVD services agreements with Technicolor, ending its consideration of a physical distribution partnership with another studio.

Paramount in early summer was talking to Sony Pictures Home Entertainment, 20th Century Fox Home Entertainment, and possibly others, about a limited partnership for physical fulfillment of its product, including such tasks as replication, shipping and returns processing. Instead, it has renewed and restructured its deal with Technicolor, its replicator since 2002.

“We are looking for the most efficient way to go to market,” said PHE president Dennis Maguire. The new multi-year deal extension tasks Technicolor with helping the studio realize cost efficiencies in areas such as shipping, raw materials sourcing and timely inventory replenishment to retail, Maguire said.

Technicolor is Paramount’s worldwide replicator for both standard DVD and Blu-ray Disc. In addition, it provides distribution services, including mastering, packaging and returns processing, for the studio in the U.S. and Canada.

The new multi-year deal also covers lines distributed by Paramount, including MTV Network Properties, CBS, PBS, Hasbro and DreamWorks Animation, Maguire said.

The commitment to Technicolor comes a week after Maguire’s ascension to worldwide president of PHE. He previously was international president of the studio division.

Paramount, like other studios, is seeking to squeeze costs as it grapples with the maturation of the DVD market, which has seen consumer sales fall by about 16% year-to-date. Though sales of the Blu-ray high-def format grew 83% in the same period, and VOD and digital formats combined grew by 20%, none of the newer formats are large enough yet to counterbalance the DVD decline.

Paramount is distributing four of the biggest home entertainment releases of the fourth quarter: Star Trek, G.I. Joe: The Rise of Cobra, DreamWorks Animation’s Monsters vs. Aliens and DreamWorks Studios’ Transformers: Revenge of the Fallen.

“Technicolor has been and remains a strategically important service partner to Paramount, and we are happy to continue our relationship,” Brad Grey, chairman and CEO of Paramount Pictures, said in a statement. “As we navigate the changing home entertainment environment, this new deal is a forward-looking redesign of how we work together, allowing Paramount Home Entertainment and Technicolor to globally maximize efficiencies while still providing our customers with the highest quality product and service.”

Frederic Rose, chairman and CEO of Technicolor parent Thomson, stated: “We are pleased to extend our existing DVD service agreements with Paramount, a long-time customer. This contract is a clear sign of Thomson’s strength and market leading position in the industry. This agreement also serves to further confirm our expanded partnership with Paramount, which was strengthened earlier this year with our announcement to create a state-of-the art post-production facility on Paramount’s Hollywood lot.”