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“Movies Are Not A Growth Business,” Admits Movie Studio Owner Jeffrey Katzenberg

Photo via Shutterstock. ©drserg

In 2011, Jeffrey Katzenberg proclaimed that moviegoing audiences would embrace 3-D and would continue to attend theaters despite higher ticket prices. Three years later, it’s obvious that his prediction was a little off.

In 2014, the percentage of moviegoers who choose to watch a film in 3-D will be at its lowest point since 3-D was reintroduced in 2008, and overall movie attendance has crumbled in the United States. In fact, over 200 million less movie tickets were sold in 2013 than in 2003. While it’s true that global box office revenue continues to grow, that has less to do with 3-D and more to do with the vast amount of new screens that have been built in countries like China, which previously did not have screen saturation.

Yesterday, at the Milken Global Conference in Beverly Hills, Katzenberg admitted that 3-D was essentially a stopgap measure to ease the eroding theatrical market. “TV is a growth business. Short form content is a growth business,” Katzenberg said. “Movies are not a growth business.” That’s a bit of a problem because Katzenberg runs a movie studio. And it’s doubly a problem for DreamWorks Animation, which has released 28 animated movies in 16 years, the most that any studio has ever released in such a brief span of time.

So, since that whole 3-D thing didn’t work out quite as planned, what will replace the theatrical experience? Katzenberg has some new ideas on how the movie market will evolve over the course of the next decade:

“I think the model will change and you won’t pay for the window of availability. A movie will come out and you will have 17 days, that’s exactly three weekends, which is 95% of the revenue for 98% of movies. On the 18th day, these movies will be available everywhere ubiquitously and you will pay for the size. A movie screen will be $15. A 75” TV will be $4.00. A smartphone will be $1.99. That enterprise that will exist throughout the world, when that happens, and it will happen, it will reinvent the enterprise of movies.”

During the conference, Katzenberg also offered the most succinct explanation for why DreamWorks has pushed aggressively in non-film directions, such as buying online channels, entering the world of character rights’ management, building entertainment complexes, and making deals for digital TV production. “I wish it was an offense move,” he said, “[but] diversity is essential for us if we want to grow the business. It can’t come fast enough.”

  • Bob Harper

    Movie prices have to come down, plain and simple. It has been a scam to keep raising them as the physical cost of distribution has been decreasing. They are trying to make up for the insane spending budgets they use for marketing. People will give more movies a shot if the ticket prices were dramatically lower. And more people would attend theaters and buy concessions, which makes theater owners happy. But his revelations are not new, Didn’t Disney say “I don’t make pictures to make money, I make money to make pictures.”

    • Sam Sleiman

      Umm, it’s called inflation.

  • Rufus

    Not a growth business? Maybe not at the box office, but it’s a growth business like nothing else if you do it right and focus on the right things.
    Look at Star Wars. Started as one ambitious movie. Now there’s no end in sight to the growth.
    But such ‘wisdom’ is barely a surprise from someone the likes of Katzenberg.

    ‘People are going to see our movie less’ doesn’t necessarily mean people don’t go see movies anymore, it’s just that everyone’s getting drowned in the sea of the exact same thing over and over. Quality of films has arguably also been dropping. Someone prove me wrong. You can say anything you want and find the data to support your claim, no matter what you claim.

    This guy’s a self-fulfilling prophet. Makes me sick. Seems like all he can do is try to analyze what’s currently happening. He has NO insight into the market he’s in. He’s not a visionary. He’s just a suit. A flapping mouth.

    • TStevens

      Well, Star Wars is one movie from 1977 and it is a rare exception in a business where the average film is only around for less than a month. I can not think of a single film or franchise that has done what that one film did. The only film franchises that might come close to the merchandising power of Star Wars would be Toy Story or Cars.

      Regarding the quality of films, it is probably about the same as it has always been. Take a look at any time in film making and you will see that the studios had to make a ton of product to survive. Directors in the silent era were turning out a film a week in some instances and even the great Hitchcock directed upwards of 60 films (not all good). When we discuss the past we rarely bother to consider the numerous flops and fillers that time forgot along the way. As Woody Allen demonstrated in Midnight in Paris, the past always seems to be better than where you are at.

      Katzenberg may be a flapping mouth but he is like every other business owner I have ever met – he is trying to figure out the future of his industry so he can keep the company alive. Like it or not, Katzenberg has been a major player in Hollywood for upwards of 20 years and has created a lot of jobs in the process.

      This is a business like any other though most of us choose to think that it isn’t.

      • Rufus

        How about Lord of the Rings? Granted, PJ kinda’ butchered the Hobbit trilogy (though he almost didn’t….almost), but this is again a correlation between production time and quality.

        Yes, like every other business owner I’ve ever met, save maybe one, he’s trying to predict the future, but like every other business owner I’ve ever met, it looks like they’re shooting in the dark half the time.

        I got nothing to say about creating jobs, that’s great. What isn’t great is that the lack of creative direction from above (which cannot be accurate from Katz since he’s a business owner, not a creative) Laying off in hundreds because of a movie misfire? Not so great. I could’ve told you Guardians weren’t going to take off, as could a lot of creatives.

        Perhaps the reason is that it’s hard for these people to build up trust with creatives, because in business terms, creatives are always seen as a liability unless they are strictly steered by non-creatives. But it seems like most people in his position, he makes a theory and then he sees if his findings can be validated. Why? Reverse engineering of success.

        • Krypton Keeper

          But Lord of the Rings was shot as one movie.

    • I can’t help but defend Katzenberg after reading your comment. I am not a fan of a lot of DreamWorks movies, but he has built an incredible business – three movies a year, a thousand plus jobs for the animation industry, and some of DWA’s movies rival Pixar. At the end of the day though, it’s someone’s job to “analyze what’s currently happening”, acknowledge negative trends, and come up with new strategies in order to make sure their business can be successful.

      In my opinion, DWA stories have been getting better, they’re taking bigger risks, and their graphics certainly are top notch. If movie executives could pick out the creative director who can spot the next Star Wars, I’m sure they’d be doing it. Given some of DWA’s successful franchises, I think Katzenberg has done a fairly good job at that.

      • Rufus

        You know, Interesting. Yes, DWA stories have been improving, but there’s a certain element missing and it’s that while the core quality of their films have improved, one thing remains constant – they look hurried. The sets attest to this too. Obviously, that would have to do with the concentration of films they release. They’re intentionally trying to build franchises first and foremost, while attempting to not sacrifice quality, which is impossible. To be super reductionist, Pixar is Apple (hey, what do you know, it basically is) and Dreamworks is Google. While DWA rakes in more cash because they have more features, their numbers aren’t that insanely significantly higher than Pixar (about 1/3 more) who churns out movie a year (with a four year production cycle, or as it turns out, sometimes longer).

        It’s top-down stuff and the stance to approach.
        It’s the little details that some deem worthless.
        Because a higher concentration of deliberate creative decisions go into Pixar films, the films feel richer, fuller.
        For example, take Shrek. Funny, everyone loves it and remembers it fondly. But that’s because it can be taken at face value. With a story like that you’re not risking that your audience will not suspend disbelief, because people can laugh at the face-value jokes, and yes, listen to them over and over. There’s a bit of an emotional base there, but not too wide.
        Compare that to Monsters Inc, also 2001. Emotionally rich and deeply satisfying with about 30% of the face value jokes that Shrek had.
        The proof is in the numbers too – 529Mil (inc) vs 455Mil (shrk).
        I’m not saying DWA doesn’t belong in the market. I’m just saying – Pixar makes films. DWA makes cartoons.
        I’d be willing to bet that the 25% cut that Pixar takes on profits shows up later on home video and toys because there’s better engagement from the audience. Building emotional bonds is WAY stronger than showing people a good time. Also, Pixar films have a much longer shelf life.
        Here’s a simple test. What would you rather go watch?
        2004’s Incredibles or 2004’s Shrek 2 or Shark Tale?

        • CrapTastic

          If Pixar is Apple…. Dreamworks is definitely Windows. Not Google. Windows barely functions, full of flaws…but yet still continues to exist.

          If you think the DW movies look rushed, its because they are. Their process goes like this:

          Take ill-formed idea acquired by “Creative Executives”.
          Hire and Fire 20-30 writers, and waste millions of dollars over a few years.
          Use the same character designs and models from previous movies.
          Crap out the actual production of the movie in about 9 months.
          Wash, rinse, repeat.

          They’re in a vicious creative cycle they will never break out of, because they’d have to admit that their executive ‘creative’ structure is flawed. They wont do that.
          And now with the purchase of the ‘Classic Media’ library, and such talented scribes from Bob’s Burger, I’m sure we’re in for the worst we’ve ever seen come from the ol’ Dee-Dubya.

          • Tony

            To be fair, most of the characters in Dragons were already designed when Sanders came in, he just redesigned Toothless. Same deal with Croods. Hopefully in his next project he’ll be able to design the whole movie from the ground up.

        • Love that you said that Pixar is Apple… the comparison works even better since guess who founded both?

  • Anonymous

    “Movies are not a growth business.” Walt Disney found this out in the 1950’s.

  • jamz

    Yea, not when they drop $100,000,000 for advertising

  • Alex Dudley

    I love the man for his ambition, but I think its downright stupid for a movie company to be public where they’re only producing 2-3 films a year, and all it takes is ONE movie to under-perform to send stocks plummeting.
    They should’ve invested in producing TV and digital content from the get go and use that to develop new IPs.

    • Brittany

      That and merchandise, the disney store is always filled with stuff from their recent movies. I couldn’t find plush toys or t-shirts on the official dreamworks website, just a link to DVDs on amazon & some art prints. I found other merchandise online but it was unclear if it was actually supporting the studio, a lot was fan-made..

      • Funkybat

        Dreamworks seems to do most of their merch through outlets like Target or Wal-Mart. I think some stuff was exclusive to Wal-Mart a while back. Since I don’t shop at either of those stores, I have seen zero Dreamworks merch outside of Happy Meal toys. (I did manage to snag a set of those Shrek 4 McDonald’s collectible glasses that had some slight radioactive element in the paint and are now banned!)

        I think Dreamworks is smart to not try to have a “Dreamworks Store” chain along the lines of the Disney Store. The WB Studio Stores folded after a few years and even the Disney Store itself imploded before being sold off and subsequently bought back and rebooted by Disney themselves. Disney can pull it off if they have the right merchandise, but I don’t see any other brand in family entertainment having the draw to make a store chain survive. They should try doing the “pop-up store” thing around period when a big film is opening. If the stores and products sold in them are only available now and then like Brigadoon, it might drive traffic more than an always-there store.

  • Mister Twister

    Those people in suits creep me out. They should stop doing that.

  • BlueBoomPony

    Am I wrong to think the cost versus screen size isn’t that bad of an idea? I’d like to see someone test it.

    • George_Cliff

      What is he going to charge more the closer you sit to your screen too?

      • BlueBoomPony

        Um… No?

  • jonhanson

    I get people who don’t like the movies Katzenberg makes but it’s pretty amazing how everyone here seems to think that they could run a studio better.

    Say what you will about the guy but he’s created one of the most successful animated studios of all time.

  • Um yeah, because Jeffery Katzenberg’s predictions have never been wrong before…On a side note, I find that picture of him looking dead serious while standing next to Alex the Lion pretty hilarious.

  • DangerMaus

    Maybe more people would go to more of his movies if there was actual employment with living wages being created for this generation of Americans, instead of people like him building massive facilities in China and exporting the work because they don’t have to ever worry about workers forming a Union and demanding their fair share of the pie.

    • Chris Sobieniak

      This is why I listen to public radio. You figure it out sooner or later.

    • Coty Ellis

      Thank you so much for actually pointing out the real problem.

    • Funkybat

      A bit tengentical but a good point. Going out to the movies has become more expensive than it once was, even adjusting for inflation. Even if you sneak in your own snacks, the ticket prices alone are pretty high for first-run films in most areas of the country. It’s almost always $11-$13 a pop for a non-3D film wherever I go, and has been for several years, so I wouldn’t be surprised if an increase is in the wings soon.

      Even “middle class” people have more expenses month-to-month than ever. People who haven’t totally ruined their credit yet are living off debt, and a lot of people who once made “a decent living” (whatever that really means) have spent the last half-decade living varying degrees of much lower income lifestyles. Even Netflix is a budget item that might get cut for some folks.

      When the price of seeing a movie in the theater is closer to what it was proportionally in the 70s or 80s, and/or people are making more money in general, you will see a rise in theater attendance, MAYBE. Home TVs the size of 1980s stadium Jumbotrons are going to make even that less tenable.

  • Brittany

    Katzenberg admitted in the 80’s that Disney needed to make better films after The Black Cauldron. But now he panics every time his movies aren’t hits, after mediocre Sinbad & Spirit he blamed 2D animation rather than admitting the movies weren’t great. Turbo & Peabody aren’t epic classics, they weren’t memorable or visually impressive, just silly romps. Dragon 2 is going to be a hit because the original was beautiful & offered a creative new world, so people responded. Croods also showed a whole new world & had a beautiful story & it didn’t flop. He shouldn’t give up on movies, but I think he’s right about expanding into short-form animation, internet tv is the future. Peabody could’ve been a better series than a movie I think.

  • dto

    these guys don’t know anything anymore they are trying to adapt and hold on keep their empire going, the new school understands the future more and theres lots of growth. Their ideas and models from the beginning are so rigid, then they blame the outside but it’s really their lack of foresight and understanding of the audience and the medium. Come on, someone seriously OK’ed the title for a movie called “EPIC”. It’s not the audience or the chefs, it’s the managers.

    • Funkybat

      It would have made sense if the film named “Epic” actually was.

      I don’t know why every studio that “adapts” William Joyce’s books seems hell-bent to removing 90% of what makes his art his. His character designs are so uniquely appealing, but other than Robots and Rolie Polie Olie you would be hard-pressed to recognize any of his film adaptations as at all connected to him.

  • Rufus

    In the case of HTTYD, it’s the amazingly versatile appeal of Chris Sanders’ character design/direction, who’s a Disney alumnus, responsible for the latest Disney animated feature I actually periodically return to – Lilo & Stitch. That said, HTTYD felt throttled too – especially if you compare Chris’ drawings to the final designs/look of the film.

    Wonder what the breakup with Disney was about, seems like he’d always had a knack for accentuating sexiness in character design, whereas Disney conserves the sexiness until it blows up in their face *COUGH*HannaMontana*COUGH*
    But I don’t disagree that sexy girls don’t necessarily belong in family films.

    And yes, Antz was great.

    • wgan

      correct me if i was wrong, the majority of character design is done by Nico Marlet who I consider one of the best out there, Chris only did Night Fury which you can tell the clear distinction from the rest of the characters, but the two different styles work very well to each other and server the movie perfect the way its meant to be.

      • Rufus

        You’re right.
        Same can’t be said for the Croods. They felt…crude. Not in an appealing way though.

  • John A

    Most of the movies I’ve seen over the past year were worth their $1.00 redbox charge, not much more.

  • IamSam

    People don’t go to the movies as much because they are TOO expensive. 10 years ago I went 1-2 a week. Now it is 1-2 months. They need to reign in movie costs. How is it that technology is making TV look so much better on a budget and movies budget are continuing to go up.

    Hollywood would keeps trying to make its money back by upping the ticket price. Hey dummies! How about bring ticket prices down and get more people to flock to the movie?

    Cost of movies should be going down as well considering the availability of technology. I don’t understand how they can make Despicable Me for 69 Mill and then 71 mi for the 2nd. Pixar though great has gone up in price exponentially. From Toy Story 1 (30 Mil) to Ratattouille (150 Mil?) 10 years difference between the 2. Did inflation go up that much? That is craziness.
    IT is Hollywood’s fault for raising costs and not having the for-site to lower prices at the box office.

    Japan with the higher cost of living can make a full animated movie for 30 million. (Captain Harlock) and the cheapest Pixar can do now is 200 Million. I know Pixar is great quality but I don’t think it is 170 Million dollars better looking than Captain Harlock or even 110 million dollars better than Despciable Me.

  • Chris Sobieniak

    This is why I will always miss 35mm. It’s not the same.

  • Steve

    “Movies Are Not a Growth Business for Dreamworks”

    Fixed that for you. 2013 was a BANNER year for animated films at the box office.

    • Googamp32

      Need I remind you that 2013 was the year of “Free Birds”, “Planes”, and “Escape From Planet Earth”?

  • Chris Sobieniak

    I miss the days when a cinema looked like this…

    It’s true though they’ve practically ruined it with those prices and sterile aesthetic at play in these places.

  • Krypton Keeper

    Funny, Frozen made over a BILLION in theaters by staying there for weeks. Maybe he’s pissed that his assembly line produced animated flops can’t do as well.

    • Well played sir

      Funny how that worked out isn’t it. :)

  • Nice try but….

    Dreamworks will never be the creative powerhouse or produce films with the heart and appeal that Pixar and Disney make. Oh yes, they’ll occasionally have successes like ‘How to Train your Dragon’, but out of sheer coincidence, not from design.
    The “Creative Executives” at Dreamworks are so completely clueless about what makes a good movie, and the other executives and Jeffrey are too arrogant to admit that their methods are flawed. They are doomed to make mediocre film after mediocre film and chug along just surviving. Unless the magical combination of ‘Hot Stuff’ with ‘Bobs Burgers’ writers turns out to be cinematic gold. I’m betting not so much.
    Dreamworks will always be an ‘Executive Driven’ studio versus a ‘Creative Driven’ one. Thats their fatal flaw. Movies made by committee and focus groups that are supposed to please everyone, end up in pleasing nobody. They’re not making bad films… They’re making films people are indifferent about. Thats actually worse.

  • John Paul Cassidy

    Count me in as a strong supporter of MR. PEABODY & SHERMAN! It’s a great film that really didn’t deserve such a bad rap (considering the positive word-of-mouth it’s gotten), much less underperform at the box-office. It’s easily the best movie adaptation of a Jay Ward series (let’s face it; these kinds of characters work best in 100% animation, rather than partly/wholly live-action), and the title characters *look* and, for the most part, *act* like their originals! And even the movie’s detractors can at least agree that this movie is vastly preferable to Disney’s UNDERDOG IN NAME ONLY.

    True, marketing should’ve been stronger. Though I did like the promo that made DOCTOR WHO references! They should’ve played that in the US more. (Speaking of which, although I really liked Ty Burrell, I always thought Peabody should’ve been voiced by David Tennant!) And notice that there wasn’t as much merchandising as there should’ve been! I mean, come on! I wanted Peabody toys and such. :)

    • Funkybat

      I’m willing to give it a try, bu there were a lot of elements of the film that the trailer revealed that were too far removed from the source material. I doubt it was as bad as the trailer made it look, and I’m sure I’ll catch it when it hits Netflix, but like most of Dreamworks recent films, there just wasn’t enough there to make me go to the theater. (I am glad I went to see The Croods on the big screen though, I probably wouldn’t have been as blown away by that movie if I’d seen it for the first time at home.)

  • Funkybat

    That’s the real problem, runaway pricing by the content owners. The studios are charging the theater chains too much, especially since they essentially FORCED the operators to eat the cost of the digital conversion. They should have cut in half what they charged exhibitors after that whole headache. The studios are playing “heads I win, tails you lose” with the exhibitors, and like gas station owners, they get the rap of “bad guy” for the less-educated members of the public while getting almost none of the money.

  • Funkybat

    Some theater chains try to make the lobby areas interesting, some succeed more than others. Problem is, they view most of the wall real estate as a chance to put up more posters of upcoming “product.” In old-time movie palaces, the frames for posters were exclusively on the exterior of the building and maybe the entryway foyer. You didn’t see posters in the lobby, it was usually curtains and wallpaper and wall sconces of plaster statues and all manner of stuff to make you feel like you were in some kind of temple of cinema.

    The rise of television turned theaters from the 60s onward into generic boxes. The multiplexes of the late 90s and 2000s are definitely an improvement on the terrible shoeboxes of the 60s, 70s and 80s, but even the nicest ones don’t try to do anything special with the decor in the individual auditoriums. They want it nice and bland so you will focus on the screen filled with ads, rather than the architecture.

  • Funkybat

    I remember “Father of the Pride” the animated TV series based off of Sigfried & Roy’s white lions. I never saw it, but from what I’ve heard, even if it hadn’t been whammied by the real-life incident between Roy and the tiger, the show wasn’t exactly a comedy classic. I wish Dreamworks had kept going with their various ventures, they were trying a little of everything at first; live action, TV (animated and live action) and of course 2D and 3D features. Road to El Dorado was a beautiful and funny film, but after 3 or 4 disappointments they just gave up on 2D. I keep waiting for them to revisit it one of these days, but I guess unless Disney’s 2D revival turned into a money printer they have no interest.

    The “Tubo FAST” show has some pretty kick-ass designs and animation, but that’s more to do with Titmouse’s artistry than the original property. I was hoping for more cool limited animation from their “Dreamworks TV” initiative, but it looks more like 2000s-era Flash toons.

    • DangerMaus

      Wow. I never thought I would ever see anyone saying anything positive about Road to El Dorado. BTW, I agree with you. I think that film doesn’t get enough credit.

      SPIRIT wasn’t quite as good, but I still liked that film. I know a lot of people think it is formulaic but I actually think they took a risk in making a film where the main characters have naturalistic behaviors and were not heavily anthropomorphized. Also, there aren’t any animated films, that I can remember, that actually put the U.S Cavalry in an unsympathetic light. That one did so it gets points from me just for that alone.

      Their TV fare hasn’t been very impressive and, so far, it looks like that losing streak is going to continue.

  • Honeydew Studios

    Interesting. This wouldn’t be a bad model for movie distribution. Fast tracking the availability of movies to consumer devices, however, may accelerate the decline of theatrical ticket sales, and leave us with only boutique theatres for those willing to pay a lot of money for an experience that is fast becoming rivalled by home theatres.

  • “TV is a growth business.” Ha. Ha. Ha. What a disconnected thing to say. I have friends whose kids didn’t even know they could watch their favorite shows at a specific time on the TV. They had been waiting for them to show up on Youtube!
    “Personal entertainment could be a growth business,” is perhaps a more accurate statement.

  • Ahmad

    Nothing new! The Lumiere brothers said more than a hundred years ago “the cinema is an invention without any future”… And technology will prove this!

  • T Lerms

    I liked the bare-bones cattle cars better.
    Twenty years ago, I saw movies down the street from my house for 3$
    Now, in that same town, the cheapest movie will run around 13$
    Ten dollars more per movie,
    But wages certainly haven’t gone up to match!

  • Kristen Ramirez

    All of that is coming from the man who cut the advertising to The Rescuers Down Under a week after the film was released all because it under performed against Home Alone and the same man who pretty much almost killed 2D animation just because Shrek 2 was huge hit and Sinbad: Legend of the Seven Seas under performed.

    I know some are going to defend him and I won’t argue with them but I’m sorry this person has caused some pretty good damage not just to Disney but to DreamWorks Animation and it sickens me.

    If a movie under performs at the box office it can be one of two reasons:

    1. The movie had advertisement that was poor and/or non-existent.

    2. If the story is not appealing to the audience.

    Need I bring up that a lot of people were laid off because HTTYD 2 under performed on it’s opening weekend, he repeated The Rescuers Down Under all over again.

    Also I feel like the whole 2-3 movies a year seems a bit overwhelming, I mean talk about quantity over quality. This is why a lot the more recent films under performed.

    DreamWorks give your animators a break.