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I Am American Business

Jeffrey Katzenberg

Producer Notes

Jeffrey Katzenberg is CEO and Director of DreamWorks Animation SKG. Katzenberg has been with DreamWorks Studios SKG since co-founding the multi-faceted entertainment company with his partners, Steven Spielberg and David Geffen, in 1994. He is the producer of such computer-animated films as the Academy Award-winning "Shrek," "Shrek 2," "Shark Tale," "Madagascar" and "Over The Hedge." Prior to co-founding DreamWorks, Katzenberg served as chairman of the board of Walt Disney Studios from 1984-1994 where he was responsible for the worldwide production, marketing and distribution of all Disney-filmed entertainment, including motion pictures, television, cable, syndication, home entertainment and interactive entertainment. Before Disney, Katzenberg was president of Paramount Studios.

Video Interview

The "I Am" Q&A

What kind of car do you drive?
Prius

What's your favorite place to go?
Hogly Wogly's Tyler Texas Barbecue in Reseda.

What website do you like to visit?
Huffingtonpost.com.

What was your worst moment in business?
Oh my, there's so many of them.

What is your favorite drink?
Diet Coke.

What's your favorite food?
McDonald's.

What is your idea of fun?
Love to ski.

What's the most fun for you at work?
Every day.

What personal weaknesses do you forgive in someone?
Jealousy.

What business weaknesses do you forgive?
Taking Risks.

Who's a business hero of yours?
Warren Buffet.

What personal qualities do you admire in business?
Integrity.

Are you doing anything for the environment?
A lot, I hope, turning the studio carbon neutral.

Transcript

CNBC:
What is the state of the movie industry today?

JEFFREY KATZENBERG:
Well, I think the movie business today is both at a place of great opportunity and also at a moment of great challenge. People love movies and they want to see them in every size, shape, form on every device you can imagine. I think the challenge to the movie business today is that the movie theatre experience really hasn't innovated now in many, many decades, while the home experience continues to get better and better. And 3-D is this amazing new opportunity to create an extraordinary new experience for moviegoers.

CNBC:
Why is the movie theatre experience important?

JEFFREY KATZENBERG:
I think that from the beginning, there has always been something unique and special about seeing movies in movie theatres. It's a communal experience. It's actually how we make our movies to be best experienced and enjoyed. And whether you're doing a comedy- laughter is contagious-or scaring people and having them jump out of their seats, there's something great about that. And whether it's kids on a Friday night that want to have a date and get out of the house, or parents that want a special treat, to go do something great with their kids, movies are still one of the great bargain experiences that we have for entertainment.

CNBC:
But let's talk about… the bottom line. Why are the theaters still so important when you have DVDs and downloads?

JEFFREY KATZENBERG:
The movie theatre is the locomotive. And that is what really creates the value for movies in all of these ancillary markets. They become primary, but their value is actually established in movie theatres. There's virtually no such thing as a movie that is a complete miss in movie theatres that then goes on to be a blockbuster in DVD or in home or digital download or any version you can think up.

CNBC:
You need the movie theatre experience to drive everything else?

JEFFREY KATZENBERG:
The value for films is actually created in a movie theatre and a blockbuster success in a movie theatre is what creates blockbuster success for DVDs, for digital downloads, for any version of these films in their second life-for cable, for broadcast. It all happens in the movie theatre and during that original release window.

CNBC:
Is movie theatre attendance down?

JEFFREY KATZENBERG:
No, last year was near a record setting year, both in gross revenue, as well as in admissions-and I think this year has the promise of being yet another tremendous, tremendous year. And so, the business is actually healthy. People want to see movies. There may be too many movies right now, and so there's a little bit of cannibalizing of one another, but the big experience, the unique experience of seeing these kind of great, fun blockbuster films, around the world has never been more valuable.

CNBC:
Let's talk about 3-D. What is it and why is it important?

JEFFREY KATZENBERG:
I guess for me, 3-D is simply the greatest innovation that has occurred for the movie experience in seventy years. The last time that there was something that was as impactful to films as this is going to be-at least in my opinion-is when movies went from black and white to color. And it, this is a convergence now of several things that are happening. First of all, it's not a gimmick anymore. It's not what I always refer to as "my father's 3-D." It's not these blue and red kind of cheesy glasses that create an experience that gives you a headache. This is the digital age and it's all changed. And you're seeing these through quality polarized glasses in a digitally projected, beautiful image in new move theatres and for filmmakers, for the authors of these films, there are a set of tools today-cameras and equipment-that allow a storyteller to just bring an audience into storytelling and immerse them in an experience in a way that is completely unique. And, I have to say, I have not been this excited about the opportunity of making movies and the opportunity for moviegoers in my entire career in the movie business.

CNBC:
But from a bottom line point of view, what is 3-D going to do to business?

JEFFREY KATZENBERG:
When you look at the economics of 3-D, for us it adds about ten percent to the cost of making our movies. Our films cost between a hundred and thirty and a hundred and fifty million dollars apiece to make; they're very, very expensive. This puts fifteen million dollars of additional, incremental costs, on top of that. We believe that there will be a very good return on that investment, that this is a premium experience people will pay a premium price for-you've already seen that now, whether it's with IMAX or with the Miley Cyrus concert film. When you give consumers a better experience, they will pay a premium price for it. And that's where I think the opportunity comes for exhibitors and for the business as a whole.

CNBC:
Can we talk about why 3-D is important for the movie theatre experience? It's not something you can do at home, right?

JEFFREY KATZENBERG:
Well I think that there are many benefits and many beneficiaries of 3-D. For sure, one of the primary ones will be the movie theatres themselves because, if you think about it, in the last decade, the home experience has gone through this extraordinary innovation-flat screen TVs, digital, great stereo sound. And the theatre experience really has not changed. With 3-D, this is a chance for innovation in the movie theatre that the home experience is not going to be able to compete with for many years to come. And so, to be able to offer people something that is of a significant quality, much better than they can experience in their home, is something I'm very excited about.

CNBC:
And from a revenue point of view?

JEFFREY KATZENBERG:
Well, I look at 3-D having many different opportunities and many different beneficiaries. To me, I always start with first and foremost the movie goers. And in this day and age, to give people a reason to come out of their home, especially when we're in challenged financial times, people are going to stay closer to home, and are not going to travel as much as they had. And so, to be able to go your local movie theater and to see an exceptional experience, and something that's completely new and exciting, to me, it's a big opportunity for movie goers. For the theaters, the exhibitors in this, I think it's a chance to have not just people paying higher admissions, but actually having more admissions, having people come to the movies that had stopped going, 'cause it hasn't been special enough. It's easier to see a film in their home. They haven't had a reason to get out of the house, and I think that's what 3-D is going to be.

CNBC:
So I heard you were kicked out of summer camp for playing poker? Is it true?

JEFFREY KATZENBERG:
I went to Camp Kennebec in Maine, and yes, I did have a challenged experience there where I was playing cards for M&Ms, and they asked me to leave.

CNBC:
And I also heard rumors that some casinos in Las Vegas asked you to leave?

JEFFREY KATZENBERG:
Well, I don't know about that. The myth is always better than the reality.

CNBC:
What have you learned from gambling?

JEFFREY KATZENBERG:
I don't think of business in the context of gambling. I think that gambling, by definition is a game of chance.

CNBC:
What if you always win?

JEFFREY KATZENBERG:
Well, that's fine, but most people don't always win at gambling, and I'm no exception to that. To me, business is something that is done with a great deal of thought, and it's not something that's left for chance and accident. I think that there is a bit of luck involved in everything that we do, and one needs luck at those right, opportune moments in time. But I think, to a very large degree, we create our luck.

CNBC:
All your movies after Madagascar 2 are going to be 3-D?

JEFFREY KATZENBERG:
Right.

CNBC:
Is that a gamble?

JEFFREY KATZENBERG:
Starting in 2009 with Monsters Versus Aliens, all of Dreamworks Animations' movies are being authored and will be distributed in 3-D. And is that a gamble? I don't think so. I think myself and my colleagues here at, at Dreamworks Animation, we've actually seen over the horizon. We've seen what it is that we're going to be able to offer movie goers as an experience. And I don't think there's any question about it, it is absolutely breathtaking. And a couple of weeks ago, I showed all the major exhibitors, two thousand exhibitors in Las Vegas, a couple of minutes from Monsters Versus Aliens in 3-D, and they were blown away. I think to see it is to believe in it, and to understand that this is just something unique. And unfortunately, there's that old, wonderful expression that a picture is worth a thousand words. Well, a 3-D picture is worth three thousand words. And so, to explain to people what it is never going to do it justice. You actually have to see it.

CNBC:
But other people have also said that the industry needs someone like you to make it happen, because you have to talk all the theater owners into buying the new equipment, and you have to explain it, and you have to be able to launch enough movies, and be in a competitive position to get them into the theaters at the right time… that it takes someone like Jeffrey Katzenberg, who doesn't take no for an answer to make this transition happen.

JEFFREY KATZENBERG:
Listen, 3-D has been evolving now over the last four or five years, and there are a lot of people that have really been there, and in many ways are more pioneer at this than I am, specifically Bob Zemeckis, as a filmmaker, Dick Cook at the Walt Disney Studio has believed in this, and has been pushing it for a long time. I've simply come along at a moment in time when all of the forces seem to be at a place where it can take off. And it is a great opportunity for our company. And so, my drive to make this happen is about an opportunity for Dreamworks Animation. I think it's a fantastic opportunity for the industry. Jim Cameron is making a 3-D film. Steven Spielberg, Peter Jackson…they're the alphas of our herd, you know? When these guys move, the rest of us follow.

CNBC:
How would you describe your style of doing business?

JEFFREY KATZENBERG:
I don't think I've actually worked a day in my life. I love doing what I'm doing. I drive through the gates of Dreamworks every day to come in here, to me, it's like coming into paradise. I can't imagine a better job, I can't imagine a more beautiful place, I can't imagine a more talented group of people to be able to work with every day. I really love doing what I'm doing, and so I do it the fullest I know how. I put every moment of every hour to work in the best possible way that I, I can, and to me, it has been nothing but reward and challenge and excitement, and failures and successes, and disappointments and celebrations. And that's all part of it. It's a roller coaster ride. It's not all a one way street, unfortunately.

CNBC:
You also have a reputation for being equally dedicated in charity fundraising and political fundraising among other things?

JEFFREY KATZENBERG:
Well, again, I was brought up to believe that if you do something, you should do it right, and you should give a hundred percent of yourself. And so, whatever it is, whether it's making movies or trying to make 3-D happen or charitable work or political work, I really like to put a hundred percent of myself into it. There's an expression in poker when you put all your chips in the table, it's called all in. I like being all in.

CNBC:
I want to just talk a little bit about branding…Shrek being one of the great movie brands. How do you create a movie brand?

JEFFREY KATZENBERG:
I think people talk about brand all the time, they talk about the value of brand, they talk about creating a brand. In our business, in the movie business, if you make successful films, you make successful products, that is actually what creates brand. You can't set out to create a brand. There's no path to doing that. Shrek has become recognized for its quality and its success around the world. We had no idea that that was going to happen at the time. I mean, it's a movie that took five years to make, and at the time, half the world thought we were crazy making a anti-fairy tale fairy tale. And it's again one of those very fortuitous things, and you might call it a gamble, but the brand came through making something great and maintaining quality through it. For Dreamworks Animation, we don't get there by putting our name on a movie. It's putting our movie on our name. And if we can make successful movies and be consistently successful at it, then Dreamworks Animation will mean something to people.

CNBC:
Let's talk about the evolution of Shrek a little bit. Shrek now is going to Broadway.

JEFFREY KATZENBERG:
I would say Shrek is really the gift that keeps on giving to us. The first Shrek came in 2001, won the Academy Award, first Academy Award for an animated movie. Shrek two came in 2004, and is the most successful animated movie of all time, and literally I think the third most successful movie of all time. And so, it has been gifting us in a way that's hard to imagine, and certainly Shrek 3 continued on this last year. It has created opportunities for us in many ways beyond the movies. The next opportunity will come for us this holiday, when we will launch Shrek onto Broadway, as a musical. And I think we have an opportunity to once again really surprise people and do something that is a little different and a little irreverent, a little subversive, and very much keeping with Shrek. We had Shrek The Halls on television this past Christmas, and it was I think the biggest, Christmas special on ABC in thirteen years. So, when the quality is maintained, there's just an enormous appetite for him. We're working on a Puss In Boots movie. So, there's a lot more to be mined, a lot more gifting that Shrek is going to do for us.

CNBC:
When you started thinking about Kung Fu Panda, how did you plan for all the different platforms?

JEFFREY KATZENBERG:
Well, Kung Fu Panda started five years ago. One of our development executives here, walked into a Monday morning meeting and literally just said the words “kung fu panda,” and all of us cracked up. And people often ask, “How do you know when you have a great idea?” And it's the hardest thing in the world and the easiest thing in the world. Hardest in there're very few of them, the easiest in, if you say the idea, and people laugh, and it doesn't matter whether you say it in St. Louis or you say it in Paris or you say it in Moscow, I can tell you, when you say the words “kung fu panda,” people want to know more. Puts a smile on their face. So we worked very hard over now five years to make a great story of a cute idea. And I'm cautiously optimistic. And the movie business has many moving parts to it, and there're no guarantees. And there are no free passes. So, we'll see. But there's a lot of opportunity surrounding Kung Fu Panda. Activision has made what I think is one of the true great video games. If there were no movie, it's a great video game, 'cause it so beautifully lends itself to that. And I think it's a property that would seem to have a lot of merchandising opportunities associated with it. But, it all starts with the movie. If the movie is great, and people really enjoy it, then they are interested in other things associated with it. And we're prepared to pounce on if it works. But you've got to let it happen.