Part #1: The Blockbuster Strategy

When we think about Blockbusters, there is one company that comes to mind: Disney. The interesting thing is, Disney was really struggling 10 years ago. They were not as successful as they could be. So they decided to make a change: 

• They started making fewer films even though they have the capacity. Every year, they do less movies with bigger budgets.
• They started making big bets on the few ones they made. Really big bets. They were not afraid to spend a lot of money on one movie.

If you want to understand the Blockbuster Strategy, you need to compare the stories of Jeff Zucker and Alan Horn. They made fundamentally different decisions in a pivotal time in the history of media:

• Jeff Zucker (now CNN, then NBC) decided to cut down on the production of new series. And let profitability go over popularity. Managing for Margins. 
• Alan Horn (Warner Brothers) decided to go the opposite way. He claimed: we have to make bigger bets. 3-5 big bets in a year, and go all in. Tentacle Strategy.

The winner was … Alan Horn. On all aspects. Even profitability. 

Leading content producers pursue a Blockbuster Strategy. They are not afraid to spend a disproportionate amount on only a few titles. 

Blockbusters lessons:

#1 Don’t be afraid to make big bets
#2 The notion of smaller bets being safer is … a myth
#3 Choose to boost your already big products

Why are blockbusters better investments?

1. Strong brands and high production values matter
2. Scale creates marketing advantages
3. International markets gain in importance
4. Big bets become “self-fulfilling prophecies”
5. The blockbuster strategy fits how consumers choose

Disney has taken this strategy and perfected it over and over again. Now they make fewer films and make more money with those films. Disney now have created a habit of making films that generate over a Billion dollars. 

And NBC chose to adapt this strategy … in the end. They give Gold Priority to a selected number of initiatives. The Gold Priorities need to become a success. Everybody has to contribute. And these Gold Priority projects are … the already very successful ones. They want to make the big successes even bigger.

It doesn’t mean that smaller players (Blumhouse, Octone) or small ideas can’t win. Disney refers to small bets as ‘Brand Deposits’. 

• they are tests for future big bets
• they fill the pipeline for exhibitors
• they aid in the attraction young talents
• they help building a reputation among critics

What can you learn from the successful smaller players:

• Partner with bigger brands for their resources
• Live ‘off the scraps that Hollywood leaves’. Be creative and find a niche. 
• Analyse the market to see opportunity
• Understand how the lager players work 

Livenation has 35.000 events featuring 4.000 artists, and they use that to find the Pharells and go all in there. Just like Netflix: make a wide portfolio and amplify the winners. 

This theory isn’t rocket science, and the evidence is compelling. Yet a lot of companies don't use it. Why? It requires the right culture in which making mistakes is OK. So if you took a risk and it turned out to be a mistake, you can react in two ways:

1. Jeff Zucker way: Let’s not do that again and take less risk in the future.
2. The Blockbuster way: This was not fun, but this is exactly what we should be doing. Let’s learn what went wrong but keep taking these risks.

Questions to think about as a leader: 

• How do you manage people to produce creative inputs?
• How do you foster the courage to experiment and go big?
• How do you respond to failure?