A possible new competitor? Katzenberg’s Big Ask: $2 Billion for Short-Form Video Project
By ANDREW ROSS SORKINOCT. 2, 2017
When Mark Zuckerberg founded Facebook and went looking for investors, his so-called first round of financing was for $1 million. When Travis Kalanick sought financing for Uber, he persuaded investors to ante up $1.25 million. Reed Hastings of Netflix raised $2.2 million.
Jeffrey Katzenberg’s idea of fund-raising is on a very different scale.
Mr. Katzenberg, the longtime Hollywood executive and co-founder of DreamWorks Animation, is trying to raise $2 billion for his new television start-up. That is likely to be the largest first round of financing in history for a digital media company that, at least at the moment, is only a concept swirling around in his head.
The huge price tag has not stopped virtually every large media and technology company — Apple, CBS, Disney, Google, Spotify and Verizon among them — from taking meetings with Mr. Katzenberg. And several Wall Street private equity firms are circling. The Hollywood parlor game of who is going to invest first has already begun. He is looking for big checks.
Mr. Katzenberg, 66, is convinced that his new product, called New TV, can upend the format of television for mobile devices. He wants to create the next-generation version of HBO or Netflix, purpose-built for viewing on phones and tablets with short-form content of premium quality — think of “Game of Thrones” as if each episode had a narrative arc of 10 minutes.
He wants to create big, expensive productions at a cost of $100,000 a minute. (For the sake of comparison, a highly produced minute of programming on YouTube might cost $10,000.) And he wants to attract A-list talent both in front of and behind the camera. That’s one reason the financing ask is so high: Hollywood heavyweights cannot be convinced to do 10-minute video snippets unless they are paid what they are accustomed to being paid.
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Related Coverage
DreamWorks Animation Sale Leaves Jeffrey Katzenberg at a Crossroads APRIL 28, 2016
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Joydeep Nayak 5 minutes ago
Will it be another MySpace ?!
JeeWhiz 53 minutes ago
Premium content: Great! Few commercials? Fabulous! Ten minute videos? Uhh, no if that's all it is. People will end up watching it for...
Kirsten B 53 minutes ago
Content has never been king. Ask any of the writers working in entertainment.
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Mr. Katzenberg’s hunch about the way a huge swath of consumers will watch television in the future is, in all likelihood, right. The number of teenagers and young adults who have their nose pressed to their mobile devices watching video content is startling. Globally, 72 percent of all video is viewed on a mobile device, according to Ooyala, a video platform provider.
The question is whether his idea is ahead of its time. And whether he can find the right business model to support such expensive programing.
Mr. Katzenberg is a realist. “We need $2 billion. That’s a high bar,” he said. And he acknowledges that the financial details still need to be worked out. It’s daunting. He needs to build an instant library of content — and a big one.
Mr. Katzenberg’s gamble is being taken seriously because of his long history of success and his provocative thesis about the current television model. “The design and the architecture of the storytelling fit the business paradigm, not the other way around,” he explained, suggesting that shows were made in the format of a half-hour or an hour for business reasons and do not make sense in the world of mobile devices and streaming.
He also took a shot at all the advertising on network programs. “I would actually make the argument that one of the challenges for network TV has been that they’ve actually busted the form by asking people to watch 19 minutes of commercial time inside of 60 minutes,” he said. “Thirty-two percent of your watch time is watching commercials.”
Instead, Mr. Katzenberg is hoping to create a premium network that will probably rely on a combination of subscription fees and advertising — à la Spotify. He does not believe he will put television companies out of business; in fact, he needs them as partners and believes they can live side by side.
But Mr. Katzenberg does not want to simply create a studio that specializes in short-form storytelling; he wants to create a platform for it. He is hoping that many of the big television networks both invest and produce content for the service.
By ANDREW ROSS SORKINOCT. 2, 2017
When Mark Zuckerberg founded Facebook and went looking for investors, his so-called first round of financing was for $1 million. When Travis Kalanick sought financing for Uber, he persuaded investors to ante up $1.25 million. Reed Hastings of Netflix raised $2.2 million.
Jeffrey Katzenberg’s idea of fund-raising is on a very different scale.
Mr. Katzenberg, the longtime Hollywood executive and co-founder of DreamWorks Animation, is trying to raise $2 billion for his new television start-up. That is likely to be the largest first round of financing in history for a digital media company that, at least at the moment, is only a concept swirling around in his head.
The huge price tag has not stopped virtually every large media and technology company — Apple, CBS, Disney, Google, Spotify and Verizon among them — from taking meetings with Mr. Katzenberg. And several Wall Street private equity firms are circling. The Hollywood parlor game of who is going to invest first has already begun. He is looking for big checks.
Mr. Katzenberg, 66, is convinced that his new product, called New TV, can upend the format of television for mobile devices. He wants to create the next-generation version of HBO or Netflix, purpose-built for viewing on phones and tablets with short-form content of premium quality — think of “Game of Thrones” as if each episode had a narrative arc of 10 minutes.
He wants to create big, expensive productions at a cost of $100,000 a minute. (For the sake of comparison, a highly produced minute of programming on YouTube might cost $10,000.) And he wants to attract A-list talent both in front of and behind the camera. That’s one reason the financing ask is so high: Hollywood heavyweights cannot be convinced to do 10-minute video snippets unless they are paid what they are accustomed to being paid.
Continue reading the main story
Related Coverage
DreamWorks Animation Sale Leaves Jeffrey Katzenberg at a Crossroads APRIL 28, 2016
Recent Comments
Joydeep Nayak 5 minutes ago
Will it be another MySpace ?!
JeeWhiz 53 minutes ago
Premium content: Great! Few commercials? Fabulous! Ten minute videos? Uhh, no if that's all it is. People will end up watching it for...
Kirsten B 53 minutes ago
Content has never been king. Ask any of the writers working in entertainment.
See All Comments Write a comment
ADVERTISEMENT
Continue reading the main story
Mr. Katzenberg’s hunch about the way a huge swath of consumers will watch television in the future is, in all likelihood, right. The number of teenagers and young adults who have their nose pressed to their mobile devices watching video content is startling. Globally, 72 percent of all video is viewed on a mobile device, according to Ooyala, a video platform provider.
The question is whether his idea is ahead of its time. And whether he can find the right business model to support such expensive programing.
Mr. Katzenberg is a realist. “We need $2 billion. That’s a high bar,” he said. And he acknowledges that the financial details still need to be worked out. It’s daunting. He needs to build an instant library of content — and a big one.
Mr. Katzenberg’s gamble is being taken seriously because of his long history of success and his provocative thesis about the current television model. “The design and the architecture of the storytelling fit the business paradigm, not the other way around,” he explained, suggesting that shows were made in the format of a half-hour or an hour for business reasons and do not make sense in the world of mobile devices and streaming.
He also took a shot at all the advertising on network programs. “I would actually make the argument that one of the challenges for network TV has been that they’ve actually busted the form by asking people to watch 19 minutes of commercial time inside of 60 minutes,” he said. “Thirty-two percent of your watch time is watching commercials.”
Instead, Mr. Katzenberg is hoping to create a premium network that will probably rely on a combination of subscription fees and advertising — à la Spotify. He does not believe he will put television companies out of business; in fact, he needs them as partners and believes they can live side by side.
But Mr. Katzenberg does not want to simply create a studio that specializes in short-form storytelling; he wants to create a platform for it. He is hoping that many of the big television networks both invest and produce content for the service.
