Go Big or Go Home: An Interview with Anita Elberse, Author of "Blockbusters"
In Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment, Anita Elberse explores all the elements behind making the biggest hits in movies, TV, music, books, and sports. The entertainment industry has seen a rapid shift around the way it consumes pop culture. And perhaps counterintuitive to the democratizing influence of the internet, entertainment businesses are successfully making bigger bets on even bigger titles. As Blockbusters reveals, pursuing projects with high risk and high reward is actually the best long-term business model.
I spoke to Elberse about the book, the effect of the internet, and how the entertainment industry may change in the future.
In the book, you introduce the "tent-pole strategy," which is basically the opposite of the age-old advice of diversifying one's portfolio. Why does the tent-pole strategy work?
A “tent-pole strategy” or, as I call it, “blockbuster strategy” is one in which a content producer makes huge investments to acquire, develop, and market concepts with strong hit potential, and then banks on the sales of those titles to make up for the middling performance of their other content. It’s a popular strategy: many of today’s leading film studios, television networks, book publishers, music labels, and video game publishers live by this approach.
Why does it work? For one, strong brands and high production values matter. Higher production budgets allow studios and other producers to afford the best creative talent, the most sought-after properties, and make the highest-quality products. Scale also brings marketing advantages: it is relatively cost-efficient to advertise those tent-pole bets. And trying to create blockbusters fits the way in which consumers make choices: we like to talk about the latest films we’ve seen, or the latest books we’ve read, which makes us converge on the same choices.
That doesn’t mean that producers should bet only on blockbusters, though. In my book, I also explain why smaller bets are important, even if they might have lower odds of success. It’s about having the right balance in one’s portfolio.
Blockbusters is focused on media from mostly the past decade. What has changed in the past ten years that makes the tent-pole strategy so effective? Is it a new strategy or is it a response to a changing environment/audience?
My book indeed is based on a decade’s worth of research on the entertainment industry, so it discusses many of the biggest successes in recent years. I would not say that the audience has fundamentally changed in recent years—in fact, the laws of consumer behavior I describe are surprisingly constant. But the changing environment certainly plays a key role in the popularity of the blockbuster strategy.
One key factor is the globalization of markets. You see that in the movie industry, where domestic box-office revenues have been stable but international box-office revenues are growing fast. Now, if you consider that international markets have their own local products and often don’t have as many screens as we do here in the U.S., and that markets like China impose other constraints on the amount of movies that can be shown, it becomes clear that only a small group of films benefit from the international growth. As a studio executive, you want to make sure your movies travel well, and that often means you have to make blockbuster bets.
Another factor is the growth of digital channels. As I explain in Blockbusters, contrary to what long-tail-theory enthusiasts think, digital markets don’t democratize markets—in fact, they create even bigger stars and even bigger blockbusters. Giving people access to whatever product they want whenever they want it benefits products that are already popular much more than it benefits niche products.
"Bundling" is a strategy of selling people extras that they don't want, and you cite cable packages and music albums as examples. As consumers become more accustomed to spending their money a la carte, is unbundling inevitable? Will we ever be able to get HBO without cable?
I’m sure we will at some point in the future be able to consume HBO without paying the cable companies, but for now, it makes little economic sense for parent company Time Warner to switch to such a model. In my book, I quote HBO president Richard Plepler who used just one word—“math”—to explain why HBO has so far refused to stray from its current model. However you slice and dice the current numbers, the reality is that unbundling provides no clear economic benefit.
Bundling has a bit of a negative connotation in the popular press but it is not necessarily “selling people extras that they don’t want”—instead, it’s all about giving people access to products that they want but perhaps not enough to pay full price for it. I think most people underestimate what they would lose if they would have to pay for, say, each television channel separately, and how much fees for the channels they love would increase.
In the book, you talk very briefly about the effect of critical praise, but definitely less than I expected. Almost all of the highest-grossing films of all time, for example, were well-reviewed among critics. Couldn't you say that to succeed, a blockbuster movie has to be good?
Yes, I agree with that. Quality is a necessary requirement, especially in today’s world where everyone can instantly share their thoughts on entertainment products via social media, and you can’t “fool” people into seeing a movie that is of poor quality. But quality is not a sufficient requirement. Many critically acclaimed entertainment products never reach mass audiences. When you thoroughly analyze these markets and speak with executives and others who are active in it, you quickly discover that it’s just as much about having the right distribution and marketing strategy. (And no matter how good your book is, you have to get Amazon’s book blog to pay attention to it in order to find true success!)
How do you see the strategies behind blockbusters changing in the next ten years? In particular, will we see more advertising/commercial partnerships like Jay Z's Samsung deal?
That’s very much what I conclude in Blockbusters, yes. I think brand partnerships are among the most fascinating strategies that will shape the future of entertainment. We’ve seen quite a few such partnerships between the world’s biggest stars and the biggest companies lately, and many pop up in my book. In music, Lady Gaga’s Born This Way and Taylor Swift’s Red were launched with a plethora of partners, while Beyoncé has teamed up with Pepsi. Before his deal with Samsung, Jay Z even partnered with Microsoft for the unique scavenger-hunt-style launch for his book—an award-winning campaign developed by advertising agency Droga5 that I describe in considerable detail from the perspective of all major stakeholders. I think such partnerships solve important challenges that plague entertainment businesses, so I’m confident they are here to stay.
Do you think the lessons from Blockbusters are specific to media/sports companies or can they be applied to other businesses outside of the entertainment space?
I am biased, of course, but I think the lessons apply very broadly. That’s a big reason why I’m so excited to share what I’ve learned about the entertainment business. If you look closely, you’ll see the relevance of blockbuster strategies and the growing power of superstars in a wide range of different domains. That is only going to increase the more we see partnerships like the one between Jay Z and Samsung. In the book, I describe how the lessons carry over to the worlds of hospitality, consumer electronics, beverages, fashion, and other sectors. Some of the strongest brands, from Apple and Red Bull to Victoria’s Secret and Burberry, have strategies that borrow from those of leading entertainment businesses. And I’m sure more companies will jump on the bandwagon once they realize how powerful blockbuster strategies can be.