Faced with a 75% decline is its core business, Paragon reinvents itself.
There are few scenarios in business that would be as daunting as having to face the reality that over 75% of your core business has evaporated in 3 short years; and yet that is exactly what The Paragon Group, Inc had to endure. A leader for over 21 years in the video duplication industry, Paragon was at its pinnacle. The only fully JVC licensed provider in the Northwest, Paragon invested millions of dollars in VHS duplication technology, including high speed Sony Sprinters, Systech tape loaders, and automated VHS packaging equipment. VHS, from its inception and through most of the '90s, enjoyed sky-rocketing growth and market share, having vanquished its only competitor in the consumer electronic industry, Sony Betamax. Paragon was along for the ride, thriving in the Northwest. But change, ever constant, was on the horizon.
Even before the VHS market boom, its successor was already in development. In 1979 Sony and Philips collaborated on a new optical technology for the consumer audio industry, CD-DA, compact disc - digital audio, the precursor to DVD. Bolstered by the incredible success of CD-DA Sony and Philip adapted their disc technology for use as a data storage device in the late '80s creating the CD-ROM.
Thankfully for Paragon, these new technologies did not go unnoticed by George Ricci, Chairman and CEO of Paragon. Ricci, a veteran from Columbia Pictures, began working on a new business model that would integrate the emerging recordable disc technology with his existing enterprise. "We knew this was a business segment we needed to be in" says Ricci. "There wasn't a clear delineation between VHS and CD at the time but the industry was abuzz about optical media and the implications of what it would mean for the entertainment industry and we wanted to be in the middle of it".
To give himself a leg up in that regard Ricci decided to acquire Optical Data Resources, Inc., one of the nations first commercial disc duplication companies, in 1994. He patiently nurtured his new investment, and its founder, Chris Lamb, a young, energetic but inexperienced entrepreneur. Providing seed capital and executive management guidance Ricci moved the disc company forward all the while managing and growing his VHS business.
The beginning of the end for VHS came in 1997 when the giant consumer electronic companies defined the standards for a new optical disc, DVD. Even though VHS would still enjoy several more years of sustainted growth, the writing was on the wall. DVDs were cheaper to produce and the end product was far superior to tape.
With ODR as the foundation Ricci set out to implement his vision of a digital media duplication company, focusing on short run, quick turn services. In some respects he was a little early to market as the technology was not fully developed to support a digital end to end solution. His first round of implantation was a fully web enabled order portal called ExpressCD.com in 1997. Conceptually the portal would enable a client to place a disc order from anywhere around the globe 24/7 and digitally upload their content but as broadband was still in its infancy the market was limited to a few so Ricci decided to pull back and wait for the technology to catch up. In the mean time Ricci continued to put additional pieces in place through acquisition and product development including acquiring The Paragon Group, Inc and PacDubs, Inc.
In early 2000 a partnership was developed between Paragon and Xerox to use their latest digital production printers. This piece of the puzzle enabled Paragon to provide all the printed components in house further reducing project turn times while at the same time lowering the over all costs of the product. Additionally to help existing clients migrate their existing tape libraries to DVD Paragon has installed 3 full DVD authoring suites.
In the last 12 months Paragon has been putting the finishing touches on its digital workflow by investing over 1.5 million dollars in new production equipment and infrastructure including the first Tapematic 2Print on the west coast. The 2Print is a fully digital disc decoration printer eliminating the need for film and plates.
Now one of the nation's largest disc duplication companies with facilities in Portland, OR and Chicago, IL Paragon is once gain enjoying the ride. 2006 saw double digit growth making it Paragon's best year ever and 2007 is on track to top that. Not bad considering their core business from just a few years ago, video duplication, is down a staggering 75%. Today, if you walk through Paragon's warehouse, you'll see the remnants of their VHS business, pallet wrapped equipment waiting its final demise and who is to tell how long it will be before their disc equipment will be faced with the same fate. Not to be caught off guard, Ricci will tell you that he is already looking for the next emerging technology that will secure Paragon's future.
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