Katzenberg Offers Hollywood a Challenge

In his morning keynote at the 3D Entertainment Summit, Jeffrey Katzenberg expressed bafflement that Hollywood hasn't made more live-action 3D movies and challenged exhibitors to be more aggressive with their 3D ticket prices.

"I find it curious how slow the live-action business has been in jumping on this opportunity," said the DreamWorks Animation topper, a longtime evangelist for the stereoscopic 3D (S3D) format. "In a business where margins are sinking like a stone in water, suddenly something comes along that for a small incremental investment you create huge incremental income possibilities for you. Why every studio isn't out making three, four, five 3D movies is inexplicable."

Katzenberg predicted that James Cameron's Avatar will be the "dam-buster" that does for live-action S3D filmmaking what The Wizard of Oz did for color, showing the artistic, creative and commercial potential of the format.

Saying S3D represented the greatest opportunity for growth and expansion of the entertainment business he's seen in years, he jabbed at exhibitors for being "timid" about charging a premium for the format.

"The consumer has shown now, time and time again, not just a willingness but an aggressive ambition to trade up for a premium experience," he declared. He said theatrical margins on Monsters vs. Aliens, DreamWorks Animation's first S3D release, were up 30%. "Now that's a staggering number," he said, "but we think that's going to go up significantly in 2010."

Offstage, Katzenberg expanded on his onstage remarks and said exhibitors have an opportunity to reinvent their business by moving to digital projectors .

"To the degree to which they are innovative and entrepreneurial and think about their customer, they end up with a phenomenal new business. To the degree they don't, and stay entrenched in old models, they will lose, the enterprise will slip right out of their fingers. "

Katzenberg was reacting in part to remarks from Variety VP and editorial director Peter Bart, who warned that the movie industry must embrace S3D and other big ideas if it is to emerge from its biggest crisis in decades.

"The one thing that's clearly agreed to around the world is that the existing economics of the movie industry simply don't equate anymore," Bart said. "There needs to be another big idea. There need to be new revenue streams to save what at this point is a somewhat shaky economic structure."

He compared the current crisis to his days as a Paramount executive in the early 1970s, when audiences were turning away from the old-fashioned musicals that had been studio staples.

"We looked at each other and said what the hell is going on," he recalled. Worse, he said, the movie that did open and capture the public imagination was a porno, Deep Throat, a property the studios couldn't emulate.

"What soon happened was the big idea did come around," Bart said. There was The Godfather, Jaws, a series of blockbusters, homevideo and international opened up. But it was a moment of deep tension and apprehension.

"I'm not proposing the onset of 3D porn. But I think we're reaching a moment where 3D and other concepts are going to be hugely embraced not only by the business community but by the creative community."

Katzenberg is known for his opinion that all movies will eventually be made in S3D. He told the gathering of around 300 at the Universal Hilton Ballroom that he's learned not to say that. "I think I lose some credibility," he said. However, he did not say he's changed his mind.

Still, he said, he is torn about whether he'd like to see the entire industry embrace 3D as his company has.

"I feel like John Belushi in Animal House. I've got the angel on one shoulder and the devil on the other. And the angel says, 'Yes, if I put my industry hat on, I'd love to see the industry support this platform because I think it's transformative for the business and in many respects could save an industry I think is at a perilous place.' The devil side of me says, 'Let me just worry about me.'"

By David S. Cohen, variety