The Katzenberg Memo [Part 4]
In January 1991, Jeffrey Katzenberg, then the head of Disney’s motion picture divisions, wrote a memo that ended up being circulated throughout Hollywood. Even though it is 21 years old, it is remarkably relevant to the current movie business. For example, the United States was in a recession as we are today. The movie industry was confronted by numerous financial challenges tied to technological advances and cultural shifts, also as we are today.
Over the next few weeks, I will be posting the entire memo. If you have any interest in screenwriting or working in the film business, you should read it. Why? Because it gives you a wide-open view of how studio executives think. After all, any script you write and circulate in Hollywood doesn’t exist in a vacuum, rather it funnels through a system, one that operates based upon the business principles and practices of studio heads like Katzenberg.
Today: The Fallacy of the Floor
The Fallacy of the Floor
It seems that the root cause of the blockbuster mentality is the notion that one can construct a film project in such a way that it has a “floor” for its anticipated revenues. The theory goes that the way to ensure a successful movie is to release a high profile, highly promoted film, featuring at least one major star. It is felt that this kind of film not only has a built-in audience, but that it also ensures a big opening weekend.
This approach to filmmaking was seen to get its ultimate vindication with the success of “Batman,” which combined action and hardware with an established fictional hero and an established real-life star, Jack Nicholson. The movie that ensued became one of the all-time box office champs and landed its producers at the helm of a major studio.
So, it was particularly interesting to see what happened when the blockbuster mentality got its true test last year. “Back To The Future Part III,” “Gremlins 2: The New Batch,” “Another 48 HRS,” “Days of Thunder,” “Rocky V,” “Havana” and “Bonfire of the Vanities” are just some of the major releases that, as “Variety” reported, were “headed for miniscule profits at best.”
Of course, there are those who will say that these days the ancillary markets can rescue films that do poorly at the domestic box office. To be sure, international box office, cable and, especially, home video have increased the profit potential of many films and have helped some marginal films creep into the black. But these markets have never rescued a box office bomb.
There simply is no such thing as a revenue floor. Those who think a major sequel is a sure financial bet, consider the fate of “The Two Jakes” or “Robocop II.” Those who think an epic, romantic movie is a sure bet, consider “Havana.” Those who think a star-driven package is a sure bet, consider “Family Business” or “Bonfire of the Vanities.”
Any film can fail at the box office. And that’s o.k. It’s part of our business. No one can know for certain what the public will want to see. So the basic problem with the above movies wasn’t that they were ill conceived or misguided or even bad entertainments. The problem was that they were just too expensive.
Oh, there’s a lot to chew on here. Notice the sea change:
* Back then stars were the big draws. Now it’s special effects and narrative conceits (e.g., contained thriller, found footage).
* Back then ancillary revenues were driven “especially” by home video. Now DVDs are dying and it appears it’s the international market, not 3-D that Hollywood is banking on [I have an article on that to post later].
* Back then there were a lot of sequels. Now… well, there are still a lot of sequels.
What other comparisons can you make?
One really interesting thing out of this entire line of reasoning is to end up with the conclusion that the movies were “too expensive.” This from a studio that is poised now to launch the $250M John Carter. So evidently the echoes of Katzenberg’s memo have faded away in Burbank.
To read Part 1 of the Katzenberg memo, go here.
For Part 2, go here.
Part 3, go here.
To read the entire memo, go here.
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