Intellectual Property

How 20-Year-Old Katzenberg Memo Changed Disney


Under copyright until 2023! has something that shouldn't be fascinating but is: A nearly 21-year-old memo from then chairman of The Walt Disney Company's film division Jeffrey Katzenberg, urging an attic-to-basement* retrofitting of the house of mouse: 

Since 1984, we have slowly drifted away from our original vision of how to run our movie business. Once we had a fairly strict and pretty successful strategy, which we referred to as our "Singles and Doubles Philosophy." At some point, we seemed to have replaced it with a strategy that might best be called the "Yes, But Philosophy"… as in, "Yes, he's expensive, but it's a great opportunity for us" or "Yes, that's a lot to spend on marketing, but we have too much at stake not to" or "Yes, the sequel will require a big budget, but it's a potential franchise." There should always be room for exceptions to rules, but of late the exceptions seem to be the rule. Not surprisingly, our control of our own destiny has been eroded.

We are far from unique in this state of affairs… something I take little comfort from.

The current condition of our business is typical enough of American businesses that an entire management theory has been developed to describe it. This theory is formally called the Product Life Cycle. It holds that businesses go through a natural development process that is comprised of four stages: Introduction. Growth. Maturity and Decline.

In 1984, The Walt Disney Studios had already been through the full cycle. We arrived here fresh, energetic and ready to create an entire movie studio from the ground up. We succeeded spectacularly in growing a new business and re-starting the cycle. Now, there are ominous signs of the stagnation of Maturity which leads inexorably to the disaster of Decline.

The January 1991 memo's popular draw is that it served as the model for the parodic mission statement in Cameron Crowe's Jerry McGuire. I have no big opinions about Katzenberg, who seems to feel the producer's natural love for the sound of his own voice. But his ideas retain a lot of power, some because they are timeless ("emphasis on creative story development," we meet again!); and some because they describe show business reality: 

When there is fear and uncertainty, the people have craved bargain entertainment…

So, when times get tough I have no doubt that people will still want to escape to the movies, but they'll want it for the historic cost of a loaf of bread.

More intriguing than those is how Jeffrey the K's advice does and does not foretell the next two decades of Disney history. Katzenberg departed Disney three years later amid a fight with Disney CEO Michael Eisner. In the memo, he gives a list of proposed solutions: 

  • The Idea is King
  • "[H]igh concept" is a useful, complex, thoughtful encapsulation of what we should all be working toward. It makes a link between movie making and movie marketing. It embellishes the concept that "the idea is king" by asserting that the idea that forms the basis of a film should not only be one that is compelling but also one that can be communicated.
  • There simply is no such thing as a revenue floor. 
  • [W]e should now look long and hard at the blockbuster business… and get out of it.
  • It is a performer's talent that can make a film a success. Celebrity can be an important bonus, but celebrity is really all about timing. 
  • [T]here should be a sympathetic protagonist who goes through some transforming experience with which the audience can relate. 
  • Getting Writers Who Can Tell the Stories
  • Kids Movies Aren't Just for Kids
  • Testing has the aura of science about it. And there is nothing scientific about the movie business. 
  • In almost every instance, the performance of a film in the ancillaries echoes its performance in domestic theatrical. 
  • One of the ways to combat the high cost of movie making is to create a haven for talent here at Disney. 
  • The decision-making pyramid should remain short and squat, with a minimal distance between the place where the ideas come in and the verdicts get delivered.
  • The more significant distinction between the big screen and the little screen isn't the screen at all. It's the audience. 
  • I firmly believe that the recent marriages between Japanese hardware makers and American movie makers may not be ones made in entertainment heaven.
  • [G]o for singles and doubles, hold down costs, keep hands on, watch your appetite, be wary of the Big Stars, pay ancillaries no mind
  • Movies only result when there is a collective passion that moves it forward past one hurdle after another.

Just a few years after this, Disney released Toy Story, and went on to build a lucrative, cost-effective relationship with Pixar that ended in 2006 when Disney bought the animation studio and placed John Lassseter in a top creative spot. While Tom Hanks and Tim Allen were at their peaks when Toy Story was made, Pixar has an excellent track record for producing hits with non-A-list vocal talent. I get the impression that Katzenberg's Dreamworks, which hired career-peaking Mike Meyers, Eddie Murphy and Cameron Diaz to voice Shrek, isn't quite as sharp on that front. In fact, Katzenberg's animated products tend to follow the "Kids movies aren't just for kids" recipe a little too closely for my taste. I wish the smart-alecky Shrek franchise would spend more time entertaining my kids and less time trying to entertain me. 

Also during that period, with the assistance of a box office bomb that Katzenberg had warned about, Disney downsized its traditional animation studios. (Though the company still puts out a lot of animated material that doesn't look very expensive and keeps my four-year-old watching the Disney Channel.) 

I also get the sense that post-Katzenberg Disney stays closer to the talent-development model than the megastar model Katzenberg decried. Disney's TV channel is powered by a vast army of adolescent apprentices, all of whom seem able to sing a little, dance a little, act a little and do a little comedy. Many of these kids have gone on to make real careers, and every year there's a new crop. I don't know how much the studio is responsible for the apprenticeship (nor whether it even makes sense to look for consistency in a company that owns Marvel, ABC, a bunch of vacation resorts and so on), but to my eye Disney seems like the closest thing to a classic contract/grooming system Hollywood still has. Again, the result seems to be a lot of material people want to see. Like all content, it's getting harder to monetize, but it doesn't seem to be extravagantly expensive to produce. 

None of which refutes Katzenberg's memo. Maybe his warnings actually worked.