Changes in Physical Media Generate a “Paragon” of Success

I find it interesting that when someone asks me what I do for a living and I tell them that I’m in the media manufacturing business, they seem to be sad for me, and some, I think, even feel sorry for me. The prevailing attitude about physical media is that the technology is all but dead, gone the way of the 8-track tape, killed by downloads and streaming media. Heck, if I was on the outside looking in, I would feel sorry for me, too. I’m not suggesting that the media business has not changed. On the contrary, it’s actually changed quite dramatically in a very short period of time, but that is good news—the changes have actually benefited Paragon. Let me explain.

When I started in the disc business in 1994 our initial focus was on creating CD masters for replication. The process for creating a “Gold” master was complicated and expensive and not a lot of companies had the skill set or resources to do it in-house, so we were able to carve out a nice little niche. When the price of recordable media and drives dropped, we started duplicating small quantity orders for our clients. Then came the big time—we received our first order for 50 CD-Rs from a software company called Wall Data. That’s when we knew we had a new business direction.
That was essentially the beginning of what would become our core business model for the next 17 years—short run, quick turn media duplication runs. As time progressed we added new capabilities to match the growing demand for short runs. In 1998 we added DVD duplication, and in 2000 we added digital printing for short run custom printed disc packaging. (Since the installation of our first digital press we’ve added or upgraded an additional five digital presses. I like to tell people we are the best, award-winning digital printer you’ve never heard of.) In 2006 we added one of the first digital disc presses installed in the world for decorating short run discs, and just this last year we installed a new 6 color off-set disc press to provide the best quality disc printing in the Northwest.
I know you are asking what all this has to do with the changes in the disc industry and how these changes are “benefiting” Paragon, so I’ll jump right into that. All of our investments and experience over the last 17 years has made us an industry leader in short run media production, and the dramatic changes we are experiencing in the media industry are feeding right into our core competency. Gone are the 100,000-piece orders, replaced with 500-disc runs. The size of orders is shrinking but the number of orders is actually on the rise. Since these industry changes are trending toward short runs with quicker turns, Paragon is actually seeing an uptick in business.
In 2010 we produced over 3 million duplicated discs, 100 discs at a time. Actually, that is not true—I mention that for dramatic sake—our average order is 800 units. But that brings up the point that I want to make next: The future and what it holds for Paragon.
As we have seen over the last few years, the size of the orders have fallen but the volume of orders has actually increased—our clients are ordering less discs at a time but more frequently, and we expect this trend to continue.  To meet this continuing trend, Paragon has aggressively been investing in innovative new technologies to fully automate our production workflow. This enables our clients to order one-off packaged CDs and DVDs for Web fulfillment, Web-enabled pay-per-use video download and streaming services, and customized, on-demand DVD authoring. Our one-off packaged media services are truly a zero inventory model in which the manufacturing process is triggered once an order has been received. When the order is placed for the product, the disc is produced and decorated and the packaging printed in a fully automated workflow. In bringing to bear the latest in digital workflow technology we are able to effectively produce one packaged disc at a time, saving our clients the expense of inventory.
Our most innovative solution is our customized, on-demand DVD authoring tool. Our clients’ customers can now pick and choose episodic video segments online via a Web portal. Once the end user has selected the video segments they are interested in, their personalized DVD content is authored on the fly. The tool incorporates the end user’s personalized and targeted information into the menu assets, the disc decoration and the disc packaging. It’s a fantastic evolution of the DVD experience.
The key to the success and the longevity of physical media comes down to return on investment, and in the case of content distribution, physical media is king. The studios protect their DVD and BD release dates because it generates their largest return, and independent producers rely on physical media to drive a majority of their revenue stream. The physical media business is here to stay for a long time, albeit in smaller run sizes.

Chris Lamb is president of Paragon Media in Seattle. Visit www.paragongroup.com for more information.

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