Milken Conference: Jeffrey Katzenberg Predicts 'Reinvented' Movie Distribution Within Ten Years

Paul Jeffers
Jeffrey Katzenberg

"It has changed dramatically and it continues to change. It's not a growth business," the DreamWorks Animation CEO tells a crowd, also calling out his company's efforts to diversify its offerings.

Change can mean progress, but sometimes it is not a choice. That is the view of DreamWorks Animation CEO Jeffrey Katzenberg, who appeared during a Milken Institute Global Conference panel on Monday saying that business and technological changes are happening so fast, his company has to innovate to survive.

"The fact is our core business is pretty changed," said Katzenberg. "So diversification right now is necessary for us if we want to grow the business."

Katzenberg said that is why DWA is rushing to expand into television with its own cable and digital channels -- and into location-based entertainment in the U.S., China and elsewhere -- by partnering in theme park and other commercial attractions: "We can't do it fast enough."

The traditional business of making movies is especially challenging right now, added Katzenberg: "It has changed dramatically and it continues to change. It's not a growth business."

What is growing, he added, is digital and short-form content and new ways to make, market and distribute. "The stakeholders today are entrapped in an enterprise that can't get out of its own way," said Katzenberg. "The fact is movies have never been more popular, watched by more people around the world than ever, but for it to really grow it needs to break out of these windows that have existed for a long time."

Katzenberg said it may take 10 more years to really see change, and when that comes movies will stay in theaters for about 17 days, or three weekends, and then become available on every other form of distribution, on all devices, immediately. He predicted that consumers won't pay based on the "windows," but by the devices on which it is watched. "What will happen, and it will happen I think, is we will actually kind of reinvent the enterprise of movies," said Katzenberg, to an audible gasp in the Beverly Hilton's ballroom.

"That stopped the room dead," he quipped.

Gregg Maffei, CEO of Liberty Media Corp., agreed that change has become an urgent matter and that means doing things that may not have been done and aren't guaranteed to be successful. "I believe you've got to show innovation, risk-taking," said Maffei. "You've got to walk the walk. Liberty has to show people it is not going to be the same. The culture embraces change."

Maffei said first a company, especially when public, has to show that it can be successful and make money, and then the markets will give it the opportunity to take some risk. He said he has learned about moving with the times from his boss, John Malone, the legendary investor who is Liberty chairman. "We describe John Malone as having a frictionless mind," said Maffei, "that can turn on a dime. But you also sometimes have to remind him people also have to turn on a dime."

Another panelist, Starwood Capital Group chairman and CEO Barry Sternlicht, said that even in his business a lot of the spirit of creativity in a company starts with the leader "and how he asks for and rewards innovation and celebrates the nontraditional thinkers."

In the future, said Sternlicht, that is going to be aided by the huge amounts of data now available and the growing ability to sort that data to see trends and act on that information. "You're going to have to do things that are off the wall to get that extra return for shareholders," added Sternlicht.

As an example of growth, Katzenberg cited Netflix, an entity that first frightened traditional studios and distributors -- including the major pay TV services like HBO. Instead, he said, Netflix created new opportunities instead of diminishing the value to anybody else on the food chain.

Maffei said big cable distributors made Netflix possible because of their "failure to create TV everywhere," while their fast-moving competitor capitalized on it. Maffei cited Netflix as one of the few distributors to become big not on the strength of its content, but on the building around smart distribution. Why didn't those cable giants see it coming? "When you're the incumbent and making billions of dollars, you don't want [change] to come. You not looking at that. You're looking at other opportunities."

Katzenberg said you never know where good ideas will come from and often they arise out of daily life, or in his case travel. He said it was a trip to Africa that led to The Lion King when he worked at Disney and a trip to Madagascar that inspired the creation of Kung Fu Panda.

"What we learn in our business is that ideas, inspiration come from everyday experiences," said Katzenberg. "From people you meet. I hope an idea comes out of this conference."

The panel was moderated by Betty Liu, anchor for Bloomberg Television. It also included Tom Wyatt, CEO of Knowledge Universe U.S.