Exclusive Interview—Part 2: DreamWorks Animation’s Jeffrey Katzenberg

PREMIUM: In part two of our exclusive interview, DreamWorks Animation CEO Jeffrey Katzenberg tells us how his studio is finding countless opportunities for quality content.

TV KIDS: What has been the strategy as DWA has made a shift towards being a multiplatform media company as opposed to being a studio that releases a few films a year?
KATZENBERG: We made the decision close to three years ago for a number of reasons that were specific to that moment in time.

At the time we had arrived at brandhood. For many of us who met and worked together at Disney in the ’80s, one of the things we recognized is how powerful a brand can be and how it actually creates opportunities to repurpose your company and your IP into many different facets of media and entertainment.

Three years ago, we were at a threshold: we either had to become part of a big company that had all of these verticals or we had to do it ourselves. We went through that dance and got to the point that there really wasn’t a marriage that made sense for us. That was the point at which we said, OK, if we are not going to do it inside of a larger enterprise then we have to do it ourselves. So that is when we made the decision to go from two movies a year to three movies a year, to make sure that at least one movie every year has a very big consumer-products opportunity around it so that it has very strong ancillary rights inherent in the property itself, not just something that you think about after the fact, which we had never [done] before. We went out to build a consumer-product business. We recruited Michael Francis. He’s a global branding expert, maybe one of the best in the world. We realized that we were going to have to build our library out in order to be able to expand into these other areas and we were going to need more than just the IP of our movies. That’s how the acquisition of Classic Media came about. That has sent us out into the theme-park business, the DreamWorks Experiences and the cruise-ship business. All of these things, of which there are more coming, have come out of that decision made a number of years ago that we really should get greater value out of the brands that we created, and we should diversify the number of platforms that we are in.

TV KIDS: So Classic Media gives DWA brands and characters that can be exploited in different ways.
KATZENBERG: Here is the analogy I’ll make: it’s probably an ambitious analogy, but OK, guilty. I think Classic Media will be as meaningful and valuable to DreamWorks Animation as the Marvel library was to Ike Perlmutter when he bought it 15 years ago. There are things that are analogous about it because when he bought that library everybody thought, well, those properties have been exploited, they’re dated, they’re well recognized but is anybody going to care about Iron Man or Thor or The Avengers? And the fact is that they have done a brilliant job of reinventing those classic characters for the 21^st century. I think we have the same opportunity to take these incredible characters that exist inside the Classic Media library—Lassie has been around since the 1950s—and there is a way to reinvent and bring these classics into the 21^st century. Lassie is a classic and I can say that about everything from George of the Jungle to Casper the Friendly Ghost, to Where’s Waldo—it’s an endless list.

TV KIDS: Tell us about the Netflix deal.
KATZENBERG: We had been out looking at a number of linear opportunities for the last 12 or 18 months. There were, and continue to be, some opportunities for us, but they all have very high hurdle rates to achieving what we were setting out to do, everything from having to re-brand, to distribution agreements, to leverage in the MSO marketplace. With each of the partners that we had talked to, and we talked with both the large cable content companies as well as some indie linear channels, it just felt as though our timing for this was not quite right.

At the same time we had acquired the Classic Media library, which clearly was a very big separator for us in terms of both the library itself, 6,100 episodes, but more importantly the IP—450 really well known and well-recognized brands. It’s actually incredible how much IP resides in Classic Media. These things came together at the same point when we had actually made a deal with Netflix for a TV series based on the film Turbo. We had already started working with one another in a very collaborative way. They were amazing to work with, very unique and I think they were likewise impressed with the leadership and the creative talent here. The thing that ultimately was the most compelling was just how passionate everybody here was to do something great. The ambition showed was very, very, high and I think that impressed the Netflix people. All these things started coming together and led to a great moment in time when they made the decision to re-evaluate the content deals that they were making. They saw how powerful kids’ content was and they wanted original content and they wanted a brand. The answer to all those questions was us.

TV KIDS: Children are watching a whole lot more on demand these days.
KATZENBERG: When you talk to the leadership at Netflix they will tell you that kids’ content has become one of the single most important drivers of subscriptions for them. Parents love it. It’s safe content and it’s a tremendous value proposition. It’s, “I can do this for my kids and on top of everything else, for only $8 a month I also get to watch the movies I want to watch.” Kids’ programming became a very big driver for them, so I think for Netflix this was also an offensive play. They should go deep into what is clearly starting to show more and more value for them in their business.

TV KIDS: As DWA increases its production of television series, what challenges on one side and opportunities on the other do you see in the children’s and family television space?
KATZENBERG: It’s a time of great opportunity because there are more and more ways to reach our audience globally. There are new value propositions being offered that are in many ways becoming more compelling. Many of the traditional platforms that exist for kids today, some of the more dominant factors in that marketplace, are unlikely to be so tomorrow. That is what is fantastic about what is going on and that is where AwesomenessTV comes in because that is an incredibly amazing new platform and new type of opportunity that is unlike any of the things that anyone is doing right now, including Netflix. I’ve never been more bullish, to be honest with you, I think there are more ways for us to connect with our audience and the thing that always has been, and continues to be, the most valued thing is great characters and great content. That is the bulls’ eye right now and that is what we know how to do, which is create great characters and build great stories around them. The fact that stories today can be in all different forms is great. It’s disruptive to the existing stakeholders. Really that is what we are talking about. Three years ago I felt we had to join them to succeed. Today I actually feel the opposite of that. I feel that today there is greater opportunity to succeed and to disrupt and to create value out of that disruption by being independent, by being unattached.