When Jeffrey Katzenberg touched down in Sun Valley, Idaho, last week, it extended a streak of appearances at the annual conference going back more than 30 years, nearly to the time Allen & Co. first launched its event in 1983.
But for Katzenberg this year wasn’t just another elite gathering for captains of industry; it represented a critical juncture in a journey he quietly embarked on last August after leaving DreamWorks Animation, the studio he sold to Comcast’s NBCUniversal for $3.8 billion.
His ambitious goal at this year’s conference: getting one of the myriad tech and telco giants he’d been talking to in the intervening months to leverage its infrastructure and reach for his latest venture. The entry fee for the interested company: $2 billion to help bring his vision to fruition. While he declines to specify which executives he spoke to in Idaho, Katzenberg was spotted meeting with a wide range of power brokers from Apple’s Tim Cook and Eddy Cue to YouTube’s Susan Wojcicki to Verizon’s Lowell McAdam, Marni Walden and Tim Armstrong.
“Is this a gigantic undertaking? The answer is yes,” says Katzenberg in an exclusive interview with Variety in which he lays out the full scope of his plans. “Is it bigger than DreamWorks? I hope so.”
Katzenberg’s plan involves nothing less than the creation of a whole new species of entertainment targeting 18- to 34-year-olds: short-form video series produced with budgets and production values you might expect from primetime TV, along with top-shelf creatives on both sides of the camera. For example, imagine a drama akin to “Empire” or “Scandal” but shrunk to 10-minute episodes made for mobile consumption. Or a five-minute talk show, or a two-minute newscast — all with high-profile talent attached.
If that weren’t enough to make this venture a ballsy gamble, Katzenberg has also been busy on his home court in Hollywood, where he’s pitching many of the most powerful names in the entertainment industry on supplying content for this venture.
Disney CEO Bob Iger, whose company is considering producing for what Katzenberg has tentatively dubbed New TV, sees the merits in the idea. “The explosion of short-form video is obvious to all of us, but a lot of what we’ve seen is the production of amateurs — user-generated content,” Iger says. “Taking a professional approach to this kind of content, we haven’t seen that yet in a concerted way, and I think that’s a smart thing to try.”
Also mulling a role as a producer on the venture is CBS Corp., though no deals are in place yet. “It’s an interesting new company and it’s something we’re clearly keeping a close eye on,” says CBS Corp. chairman-CEO Leslie Moonves. “I think it has a great chance for success.”
If New TV seems audacious considering Katzenberg’s ambition to reshape the media ecosystem as we know it, well, maybe you haven’t been paying close enough attention to him in recent decades. As he’s proved everywhere from traditional film animation to 3D, Katzenberg can sell innovation to the masses.
“Remember, I’m someone who got fired from Disney and eight days later started the first studio in 65 years with two of the most brilliant, successful people in the history of the entertainment business, doing something everyone said was somewhere between improbable and impossible,” he says, referring to the 1994 founding of DreamWorks SKG with Steven Spielberg and David Geffen. “I’m afraid that’s exactly what I love doing.”
Jeffrey Katzenberg’s New TV proposal could yield interest from any number of distribution giants. Here are some of the likeliest suspects and what makes them each a good fit.
Between movies and series, Prime seems to be all in on long-form video. But CEO Jeff Bezos is never shy about exploring new businesses, and the company could probably find a way to leverage a mobile-first programming strategy.
For all of the company’s innovative ways, video has lacked a truly differentiated strategy ever since movies and TV shows first hit iTunes. The question is whether content czar Eddy Cue wants his new programming hires from Sony Pictures TV to play in the short-form sandbox.
Entertainment group chief John Stankey is all about configuring content to pop on his own mobile platform now that Time Warner is coming into the fold. Yet even though it has an interest in short-form video, the company may opt to go its own way.
The timing for a deal with Katzenberg may not work because Facebook is moving along with both short-form and long-form original video content plans under COO Sheryl Sandberg. And New TV’s 18-34 demographic is not Facebook’s sweet spot.
The social giant has the demo Katzenberg wants, and founder Evan Spiegel is also pushing an innovative short-form strategy via Snapchat Shows, albeit at smaller budgets. It’s not like Snapchat lacks the capital; the question is, does it have the will amid a rocky post-IPO existence?
The streaming-music giant has made some small bets on short-form video series but nothing game changing. With a public offering on the horizon, CEO Daniel Ek may want to show Wall Street he can diversify — or he may prefer not to rock the boat right now.
CEO John Legere loves bold ideas and entertainment content, and he knows how to market to the 18-34 demographic. The Unlimited initiative is indication enough of this scrappy wireless company’s interest in pushing video.
Company president Martin Lau has a massive arsenal of entertainment holdings underneath the umbrella of this Chinese uber-brand. But the content distribution capabilities of its WeChat platform make it a global player as well.
COO Anthony Noto has Twitter squarely focused on live video, which could leave Katzenberg out in the cold. But if ever there was a pivot opportunity in case Twitter loses faith in its current strategy ...
Verizon could find that New TV represents just the kind of big swing it needs to connect with the mobile millennial audience it wants. Go90 could certainly use new energy, and exec VP Marni Walden knows Katzenberg from his AwesomenessTV days.
Katzenberg has been in business before with YouTubeCEO Susan Wojcicki and chief business officer Robert Kyncl. YouTube has so many different video strategies in place that there would seem to be room for another deal.
Now 66, Katzenberg says he burns with the same fierce drive that has fueled him since he began working in New York City politics as a teenager. He pitches his venture passionately over a three-hour breakfast earlier in July at the Soho House in Malibu, not far from a beach house he’s kept for decades.
Katzenberg’s next act is all the more improbable considering this wasn’t what he envisioned doing when he sold DreamWorks Animation. It was Comcast’s request that he step aside as a condition of the acquisition, in order to integrate the company into NBCUniversal. Though he wanted to continue, he knew after seeking a buyer for several years that a better deal was unlikely to come along.
“I thought I was going to stay on the path I was on for another 10 to 15 years,” says Katzenberg, who got a nice consolation prize in the form of the $400 million he pocketed from the transaction. “I thought my third act, which I am in right now, was going to be DreamWorks. Then Comcast showed up, and I thought they would be the best steward for what we created and what would be best for the company.”
Another, much less pleasant surprise for Katzenberg came later that year with the victory of Donald Trump over Hillary Clinton, for whom he has long been a major fundraiser. He declines to speak about politics for this article in order to demonstrate his focus on his new venture, but those close to him expect he’ll get involved again when the 2020 presidential race draws nearer.
His attention is now entirely devoted to WndrCo, a holding company he announced in January with nearly $600 million in investment from a mix of 12 private investors. He leads a team of seven partners including longtime lieutenant Ann Daly and former Dropbox CFO Sujay Jaswa. They expect to begin acquiring a handful of companies this year in addition to pursuing ventures they incubate themselves, with New TV the first such enterprise. They split their time between offices in Los Angeles and Northern California.
"It's an interesting new company and it’s something we’re clearly keeping a close eye on...I think it has a great chance for success."
WndrCo is modeled after IAC, the holding company founded by his former mentor, Barry Diller, who launched Katzenberg’s career in Hollywood at Paramount Pictures by making him his assistant in 1974. Like IAC, WndrCo is looking beyond the media sector for opportunities in other businesses disrupted by the internet. It’s a broad mandate, but few underestimate his abilities.
“I’ve known Jeffrey a long time,” says Iger, who has spent more than 20 years at Disney, where Katzenberg had a tumultuous but successful decade following his stint at Paramount. “Jeffrey gets things done. He doesn’t just talk about things — he does them. If anyone is going to pull it off, he will.”
Short-form video may not jibe with one’s idea of Katzenberg, who has produced well over 400 films, including the mega-franchises “Shrek” and “Kung Fu Panda.” But there’s been ample evidence of what he calls an “obsession” going back to 1999, when he and his fellow principals at DreamWorks joined up with Imagine Entertainment and Microsoft co-founder Paul Allen to launch Pop.com, a website that aimed to bring short-form content to the internet. Started long before broadband connectivity was equipped to deliver video to desktops, the venture shuttered less than a year later, a rare failure in the larger scheme of his career.
But as mobile devices proliferated and broadband speeds accelerated, Katzenberg never lost his fascination with digital entertainment. In a 2013 Mipcom keynote address, he went so far as to publicly offer TV producer Vince Gilligan $75 million to create three more episodes of “Breaking Bad,” envisioning it as “the greatest pay-per-view in scripted television ever.”
Gilligan didn’t bite, but Katzenberg found other ways to pursue his vision. He teamed with YouTube in 2014 to produce a short-lived daily series, “YouTube Nation.” The prior year, DreamWorks acquired digital-content outfit AwesomenessTV, to which it sold stakes to Hearst and Verizon in subsequent years.
U.S. Reach of Mobile Video vs. Other Media
More than 168 million users accessed video on their smartphone in the first quarter of the year. While traditional TV has far greater reach (292 million), a medium that barely existed 10 years ago now gets more video viewing than desktop or DVD viewing. That said, other smartphone apps take up more viewing time than video.
With its laser focus on young demos and production values that approached television’s, AwesomenessTV was really what convinced Katzenberg he was onto something. He nearly put in motion a different idea involving premium short-form video with Verizon when the telco invested last year in AwesomenessTV, but the partnership was dissolved after he left, as Variety exclusively reported.
To fully grasp Katzenberg’s vision for New TV, one has to reach back into entertainment history and think of the awkward transition from radio to television; those first TV programs were essentially radio broadcasts set to pictures. It took many years before TV found itself and began creating programs that weren’t really repurposed formats from another medium.
He also drew inspiration from yet another medium: publishing, where the works of best-selling authors Dan Brown and James Patterson featured a small but important tweak: Chapters were much shorter than what fiction readers typically expected. Katzenberg sees New TV in the same way: great storytelling but adjusted to smaller increments.
To wit, Katzenberg doesn’t just want New TV to take established genres and cut them down to size; he wants it to give birth to entirely new and different kinds of programming that are native to mobile. He sees mobile video as in a state of arrested development, subsisting on ersatz substitutes, largely in the form of viral videos that are barely monetizable yet eminently digestible.
“It’s unbelievable how many hours we all spend watching great TV content today and, separately, how much time we are consuming short-form content,” observes Katzenberg. “So why can’t those two worlds come together in what is a new creative and business alignment?”
The short answer is that while there have been tons of experimentation going back at least a decade with programming short-form content, the advertising dollars have long fallen short of the levels necessary to fund content at anywhere near levels comparable to traditional TV. Made-for-mobile content rarely exceeds a cost of $5,000-$10,000 per minute; Katzenberg wants to spend as much as $125,000 per minute.
To incentivize the creative community to participate, Katzenberg would take much of the $2 billion he’s looking to secure from a distribution partner and finance New TV productions. Producers or studios would earn fees consistent with what they make in traditional TV. Last but not least: Creators could retain the rights to their intellectual property.
“We need dozens and dozens of suppliers to be incentivized to see this as a financial boon to jump on the bandwagon,” says Katzenberg. “They’re not going to do it without a cut of the action.”
Veteran TV-lit agent Ari Greenburg at WME applauded the move, citing increasing interest among producers in gaining ownership of their properties. It’s an interest kindled by disruptions in the U.S. and U.K. TV industry — chiefly by Netflix — that have made ownership a less risky proposition. Producers from Mark Gordon to Jason Blum have been financing content that in an earlier era would have been left for the major studios to bankroll.
“Is there a world where someone like Chuck Lorre will want to own the next show he makes? Yes,” Greenburg says.
New TV is very much a work in progress, but Katzenberg already has a few guideposts in place. No episode will last longer than 10 minutes, a nod to the dwindling attention spans of young audiences. There will be no ad breaks in those episodes; title sponsorships and brand integrations will be in place instead of commercial interruptions. And New TV can’t launch until Katzenberg can deliver a significant volume of content; there needs to be a wide variety of genres to suit different tastes. He could have opted to help that along by padding his library with chopped-up versions of existing long-form content, but he’s nixed that because he believes it’s creatively lacking.
"Jeffrey gets things done. He doesn’t just talk about things — he does them. If anyone is going to pull it off, he will."
Ultimately what shape the platform takes is up to whichever distribution partner comes aboard. New TV could be an individually branded subscription service offered by an existing video provider for a modest monthly fee. Or maybe it will be entirely free and embedded in an existing brand. Given the highly differentiated consumer viewing habits for short-form content, one scenario that is possible, although less likely, is the notion of a brand like Netflix or Hulu that specializes in long-form content ending up with New TV.
There are a number of configurations a deal with a distributor could take, but it’s also possible Katzenberg will end up pushing ahead solo. He concedes that he’d rather not because of how arduous that would be without the ad- vantage of a platform with an enormous global footprint.
“I’m of the mind to take the path of least resistance,” Katzenberg says. “This idea is hard to do, and recognizing what a huge undertaking it is, I’m not intimidated by doing this alone. But it would be for sure a harder, longer road to travel.”
Timing is in Katzenberg’s favor. He happens to be knocking on the doors of digital distributors that are all in varying early stages of pursuing original video strategies and possibly in the market for a great idea to separate themselves from the pack. Tech titans like Facebook and Apple want to give users something extra that keeps them in their respective ecosystems longer; telcos want to find new revenue streams as the wireless market matures. In May, AT&T CEO Randall Stephenson mused aloud that the company could distribute 20-minute versions of “Game of Thrones” for mobile when HBO becomes a part of the telco giant after its acquisition of Time Warner.
In a world where Madison Avenue is rapidly losing faith in the 30-second spot, marketers are also looking for alternative solutions, according to MediaLink CEO Michael Kassan, who Katzenberg tapped as a consultant for New TV. In June, Kassan set up meetings at Cannes Lions for Katzenberg with many top marketers and agencies who he believes won’t look to digital-native influencers as their only short-form content play. “Marketers are nervous about approaching the entertainment business,” Kassan says. “They want to deal with people who are not out to make a quick buck and just be work for hire.”
Global Mobile Viewing Rises
The average TV viewing time has dropped 2.5 hours per week over the past four years. But mobile viewing has more than made up for that.
It’s worth noting that Katzenberg isn’t the only one on the planet seizing the opportunity. Late last year, Vivendi launched a similar venture, Studio+, in more than 20 countries. Another French company, digital studio Blackpills, has greenlit more than 50 short scripted series aimed at millennials on its ad-free app and via a production deal with Vice Media. Boasting projects from Luc Besson and Sharon Horgan, Blackpills arguably qualifies as premium programming, though perhaps not quite at the level Katzenberg can deliver.
Studio+, Blackpills and New TV are a reflection of the most undeniable trend in media: The growth of mobile video is exploding. The question is, how much market share of that video can Hollywood command with its existing product relative to amateur-filmed cats on skateboards or digital-native specialists like BuzzFeed?
Maybe expecting viewers to consume long-form content like movies and TV in fits and starts on mobile devices more conducive to shorter formats will make less sense over time; perhaps, thanks to Katzenberg, these miniaturized episodes will one day be as common as the 30-minute sitcom, maximizing viewer retention.
But before declaring a new era in media, consider all that Katzenberg has to accomplish to usher this era in: If he can get a few billion dollars from a distributor, then he needs to prevail upon creatives to produce a kind of content that doesn’t currently exist and persuade Madison Avenue to work on customized sponsorships in lieu of traditional spots. Then the creatives have to be good enough to attract an audience unaccustomed to this kind of content. Having lots of different constituents adopt unprecedented behaviors is far from easy.
Mark Burnett, one of the most successful producers in reality-TV history, knows how difficult — but also how rewarding — it can be to introduce new formats to the uninitiated audience and industry. He remembers that when “Survivor” became the first unscripted series in primetime on CBS in 2000, many didn’t know what to make of it and deemed it too different to succeed. Thirty-four seasons later, guess who was right? “Just because ‘Survivor’ had never been done before on network TV didn’t matter,” says Burnett, who considers Katzenberg his mentor. “The audience likes what the audience likes.”
In the short term, New TV may find itself on a path not altogether different from where the industry is with another untested storytelling format with potential still to be realized: virtual reality. Modest but significant investments are being made at studios and other quarters of the entertainment industry to see if VR is a real market. As with VR, getting top-tier producers, actors and writers interested in exploring short-form is key.
"We come across ideas every day that don’t hold up to the scrutiny of something that is a half hour or an hour, so [short-form] is a great place to put that kind of content."
Jerry Bruckheimer, who goes back 30 years with Katzenberg to their days producing movies at Paramount, says even film and TV veterans like himself see the possibilities.
“We come across ideas every day that don’t hold up to the scrutiny of something that is a half hour or an hour, so [short-form] is a great place to put that kind of content,” he says.
There wasn’t a single person contacted for this story who didn’t profess an interest in doing business with Katzenberg’s venture, though no actual commitments are in place so far.
“The idea that Jeffrey’s going to focus on content of a shorter form, which is more conducive to consumption on mobile devices, and pair that with a very significant investment in the programming is very exciting,” says Peter Rice, CEO of Fox Networks Group.
But the more people you speak with about the prospect of creating short-form content for Katzenberg, the more you realize it’s just as much the man himself who inspires confidence as the idea he’s pushing.
“The last time he proselytized something, it was film animation,” notes Greenburg. “Tell me, where would Disney be today, or Fox, Warner Bros. or Universal, without ‘The Lego Movie’ and ‘Minions’ and Pixar and all the Fox animation on their books? Tell me how they’re doing? And none of that existed until Jeffrey brought that business back at Disney, then proved he could do it somewhere else.”
That “it” is DreamWorks, which looms large enough above all Katzenberg’s accomplishments to have influenced the name of his new company, WndrCo. Asked where he came up with the name, he replies, “Well, I feel like I spent 25 years dreaming, and now I’m full of wonder.”
But what happened to the vowels?
“We can’t afford vowels yet,” he jokes. “We have to make successful investments, and then we can buy our vowels.”