Name: Watch the Chairman of Universal Pictures Speak at Fortune’s MPW Summit
Uploaded: 2016-10-19
Duration: 12 min 44 s
Description: Donna Langley sits down with Fortune’s Michal Lev-Ram

[ MUSIC ] [ APPLAUSE ] Well I feel unaccomplished. [ LAUGH ] That you have your nail done. Yeah so okay, so you had a killer 2015 you've some hits this year as well of course. Where does this come from? Is it luck? I mean, it's such a fickle business to an outsider, at least. So, how did you do it? Well, 2015 was definitely a banner year for Universal, but it was sort of made on the back of a couple of years, actually. Where we were rebuilding the studio, regaining some momentum. We'd actually gone though a fairly dark period of about five years where the business model changed quite dramatically. Home video is still a multi- billion dollar business. But it had been supporting the film slate for so long. And then consumer habits changed almost overnight. And so the business model changed pretty rapidly. So. Budgets, the number of movies things like that, had to be reevaluated and reconsidered. And for a long time we faulted, for a number of different reasons. We had to take a big step back. Most of the major studios have IP, intellectual property that they use to base their franchises upon, and Universal traditionally does not have that IP. And so, we really had to take a look at what was our core competency. What did we do well as a production company? As a marketing company and as a world wide global, Distribution organization. And you know a lot of that came down to the people. It comes down to case a lot of the time. You know and how do we case it for our audience. And so we redefined what a franchise means to universal. It could mean anything from Jurassic World or Fast and Furious all the way down to Starting a micro- budget horror business with a producer called Jason Blum. And we've had the third installment of the [ UNKNOWN ] out this year, and it's actually one of the only sequels that has done better than its predecessor. And horror movies are actually incredibly profitable, right? They are, and we make our horror movies at $ 5 million. And then they go out and they can gross anything up to 100. Just as a comparison a budget for a Fast and Furious? That's about $ 250 million .>> So .>> It's the craft services for one day. One of Fast and Furious movie. So we're able to make these movies We got into the animation business as well with illumination our company and produced films like the Minions film and this year Secret Life of Pets. Also a business model where we make our films for quite less than some of our competitors so the margin on those film was really good, so In answer to your question, we sort of looked at our product line, looked at our core competency, looked at the business rationale for each one of our films. Made sure it was a lot more rational than what we had. We were really looking at the reality of the business. And I think that and a little bit of luck. We had some good headwinds, and yeah, we ended up in 2015. Another big shift in trend in the entertainment business is a huge focus and influx of money from China. Do you see the market there? I mean obviously it's a huge market. It's overtaking us in terms of the theater market at least. Do you see it as an opportunity? I know you've got some co- financing deals also. Were a threat or both because they're obviously, Chinese production companies and other companies are pouring a lot of money in to hire you. But they're also building their own Hollywood locally. Absolutely. No, China is very important to the movie industry today. I think any emerging market is important where as you say the number of movie theaters and film goers that That has increased in China year over year. The numbers are extraordinary, and so we're seeing that reflected in the box office. So you know five years ago we didn't have any boots on the ground in China. We were distributing our films there, the ones that were distributed there through a third party. And we now have our own distribution marketing organization, consumer products. And so on. And so the name of the game there really is primarily is to get big temple films released in China. Fast and Furious, number seven, is actually to date it's still the highest grossing US movie in China with over $ 300 million in China. Time you're alone. Why do you think it did so well there by the way? You know, it's actually an interesting question, and it's one that we've asked a couple of different ways. I think it's sort of agnostic. It's action. It's really entertaining. I think it appeals- it sort of multi, The cultural and multi gender. And so, I just think it just appeals to the broadest range of people. Uh- huh. Yeah, yeah. But, so anyway, China's very important to us. We are also looking at opportunities to potentially Co- produce, which I know they have an amazing production infrastructure there of their own, and looking to see if there's ways we can collaborate on local products and things like that. We don't seem them as a threat, I think it's all great to add to our ecosystem that we'd be making, yeah. Do you have to make a lot of changes to films in order to Show them in China. Not really. And I think one of the biggest shifts actually, where China is concerned, over the last few years. Is the conversations actually start at the greenlight. So at the point at which we're ready to move forward on a film, particularly a big budgeted, sort of spectacle action film. You know, the kind that we are hoping will get into China. And we took a lot at the Green Light table. And we actually confer a lot with our partners in China, certainly, first and foremost, to make sure that we are avoiding anything that could be considered offensive to that market but, looking to see if there are costing opportunities or location opportunities and things like that, that could make it potentially more appealing. Okay, and then we had, Susan, [ UNKNOWN ] up here, just a little while ago, obviously. How are you thinking about the changing habits, in terms of how younger people, especially are consuming content at Universal? Well, there's a couple of different ways that we look at the new platforms that are available and the way that we see that consumers are looking at their content. One of the tricky areas for us, as Susan was saying, quite rightly, is that young people in particular are really moving away from linear television. We were talking earlier about our children, I have a 5 and 7 year old sons. They have no idea, I try to explain to them one sunday that Curious George was not on that 5 o'clock and they couldn't understand what that meant. What'd you mean it's always on Netflix. I told my girls to watch Saturday morning cartoons just a few weekends ago and they were like what are Saturday morning cartoons? They just don't get it. But what means to us is when it comes to marketing our films we don't have the traditional, we're not capturing the eyeballs obviously with one of our biggest sources of marketing is on linear television. And so that's something we're looking at and we are actually Turning your attention much more towards digital platforms for marketing. We actually released a film called Unfriended, which is one of our little micro- budget horror films. And 60 % of our marketing dollars were spent on the digital platforms, and it's usually about 12 %. But that percentage is actually getting higher every year. Wow. And then the other way, the other thing that we're looking at is just in the digital distribution, EST windowing and things like that. And just making sure that we're actually pushing those platforms. Again, I think we look at it, we obviously look I will say I make, you know, we make content, I'm a content maker and that's what I love to do, and I am a firm believer in the theatrical experience. I mean I know there's nothing I love to do more than go and see a movie in a dark theater and you know go and laugh along with 350 people or go and be wowed by great spectacle and great sound. But the reality is and the consumer is ultimately gonna tell us that, you know, it is, you know, content is available, you know, anywhere, anyhow or we have to be very mindful about that. So, another question for you. You are a woman Yes and you are in Hollywood, you've been in Hollywood for a while, there's been a lot of scrutiny and discussion and I think healthy debate for the most part, lately about diversity and inclusion in Hollywood, just like there has been in Silicon valley and other industries. [ COUGH ] Have things changed? Are they changing? What are you doing Personally within your organization to change them. I'm thrilled that this conversation, as you said, across many different sectors is reaching the heights and levels that it is. I found myself having many more conversations with many more different kinds of people. About inclusion and diversity that I have ever before in my career. And I'm really encourage by that. The reality of it is though is that by speaking for the film business is the statistics have not really change. The needle hasn't been moved at all in the last 20 30 years and It's really, it is time now, I think, that we're going through a cycle, cuz I think that it is cyclical, but we are going through a cycle where we have captured people's attention to really take advantage of that. Mm- hm. Specifically, for me, being a woman I know what I like to go and see in a movie theater. So for me, greenlighting a film like Fifty Shades of Grey which you may like it or not like it, but it's a film that appeals primarily to women. Or Trainwreck last year with Amy Schumer and taking a bet on somebody who hadn't had a film career to date But recognizing that there's a real space in the marketplace for that. So definitely taking advantage of that. We work with the AFI, with their women's director program, and we work with the Sundance Institute. And a great program, that I love, which is, it's supporting Direct us in this second outing. So the idea behind it being. Raising a couple of hundred thousand dollars to make your first movie. Not easy, but you can get it done. And then after that, after you've done that. What then? The second movie, out of the gate, is sometimes much harder than the first one. And we were seeing. The Sundance Institute collaborates with Adam Bergen and a number of other great research organizations. And, they were finding that women were dropping off. Particularly female directors, were kind of dropping of in they're second movie windows. Supporting them and being able to bring this resources of the studio financial and also expertise resources to take a group of people and support them in the endeavor of making the second movie. Let me as you real, real quick. The Hollywood Reporter they did away with their ranking on their Women in Entertainment List. I don't know if you all saw that? Do you think that was a right move? Should we do that with our most powerful women list? Should we do away with ranking? Is it negative? Positive? Neutral? I think that we paraphrase Janice Min at the breakfast last year. I think that she had been running it that was for a number of years and she had got A little bit fed up with the politics behind it. I can't speak to that. I don't know. I didn't really participate. But, I think she just thought, well you know what? I'd rather bring a group of really talented women together and not put anyone under the burden of having to be ranked. I don't know. I think I think people being recognized and acknowledged for the things that they've done is a good thing. Alright. Well we're all looking forward to the Fast and the Furious number eight. Yeah, me too. Thank you so much for joining, us Donna. Thank you so much, thank you. [ MUSIC ] [ BLANK_AUDIO ]

Donna Langley sits down with Fortune’s Michal Lev-Ram