The former DreamWorks executive is pitching a big idea, but hasn’t lined up his backers yet.
Hollywood veteran Jeffrey Katzenberg has hired a big name to run his ambitious, amorphous video startup: Silicon Valley veteran Meg Whitman, most recently the CEO of Hewlett Packard Enterprise, will run the company, which is supposed to deliver high-quality short videos to paying subscribers.
Katzenberg and Whitman’s company doesn’t have a name yet, but that’s not the only thing on its to-do list. It will also need lots of money, and content.
Katzenberg has been looking for both for at least half a year. Last summer he announced his plans to raise $2 billion for his newco, and made a point of making the rounds at Sun Valley, the annual media mogulfest.
Since then, he has told industry executives that he has re-thought his plans and now only needs around $1 billion to get his company off the ground. He hopes to get that via a Hulu-style structure, where he gets big media companies to contribute both capital and content for the venture in exchange for equity.
Katzenberg’s ambitions have generated lots of interest in tech and media circles, along with lots of skepticism.
On the plus side, he’s an executive with a very long Hollywood track record — Paramount, Disney, DreamWorks, then DreamWorks Animation — and a network to match. And he’s a relentless, persuasive pitchman.
On the negative side:
- Joint ventures are hard, and media joint ventures are very hard: Both Hulu (video) and Vevo (music video) have been beset by conflict between their media company owners since inception.
- That said, Hulu does have a significant advantage over Katzenberg’s company-to-be: Hulu is fueled by content that already exists. Its owners use it as a place to re-sell their very best product: TV shows they put on their own networks or other outlets first. In Katzenberg’s case, he wants media companies to make a thing they don’t currently make — high-end, short-form videos — and give them to him first.
- The most consistent argument I’ve heard: There’s a reason people don’t make high-end, short-form videos — there’s no market for them. To tease that out: People will happily consume cheaply made content for free on YouTube, Facebook and everywhere else. They will also pay real money for expensive stuff, via subscription outlets like HBO and Netflix. But that middle ground is a bad place to be.
Katzenberg’s response, to people who have heard him out, boils down to this: Just because something doesn’t exist doesn’t mean that it won’t exist one day. A longer part of the pitch: Look at all the people with phones! They will want to watch stuff on there that’s both short and good, and I want to be the one selling it.
That doesn’t not make sense. And until Katzenberg and Whitman actually test the thesis out, you can’t rule them out. But they have a long way to go.
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