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Innovation

What business leaders can learn from Hollywood’s response to the pandemic

Published 19 March 2021 in Innovation

The film industry is remaining relevant during the turbulence of the pandemic: how can other industries be equally adept at applying similar lessons? Hollywood film producer Michael Dounaev speaks to Amit Joshi, Professor of AI, Analytics and Marketing Strategy at IMD.

What effects has the pandemic had on Hollywood?

First it has accelerated the “digital makeover” of Hollywood, which was there for the doing before, but people were complacent.

Take Disney – it should have been the first to make the switch a long time ago, and it suffered a USD 7.4 billion loss and 32,000 layoffs by not having done so sooner. In the end, Disney Plus provided the growth that Disney need. They were fortunate to have been able to switch and move forward because they had the means. Others didn’t.

Secondly, the pandemic has created a situation in which the industry is asking how to compensate for the change in revenues from USD 1 billion box-office revenues to 20 dollar-a-month subscriptions serving whole families. Essentially this comes down to drastically saving costs.

It’s not just film now though: it’s content. Podcasts and social media have become extremely close to all industries.

What do you think the streaming folks – the likes of Netflix, HBO Max and Amazon Prime –  got right, besides being in the right place at right time?

When the pandemic hit, there were 460 movies ready, on tap for viewers. Had that not been the case, the psychological impact on people all over the world would have been immense. It fed inspiration and ideas, and that is why the pandemic has made content king.

In a way, the pandemic has done to the film industry what IMD did to me 20 years ago – it tested my comfort zone. Doing so puts you on edge; makes you realize how different we all are. At the same time, we’ve learnt that if there is one thing we all share, it’s emotions.

Streamers know that teenagers, kids and all humans want their comfort zone. And they responded to that.

But don’t forget how news triumphed too, because people wanted that also. CNN, with 138% growth, was the biggest winner last year – just ahead of Netflix.

Do you envision cinema-going ever returning to pre-pandemic levels?

It depends on the experience offered. Americans, for instance, loved going to the movies, as an experience in itself. Combining experiences across business models will become increasingly important; in our industry that might mean dining and watching a film, say.

I think most of those in the industry realize there won’t be a comeback. Already, movies can now be made available in homes between 0 and 17 days (as a maximum) after being released in the cinema. The previous industry norm was 90. Warner have just announced they will be releasing Batman in theatres at same time as streaming.

But, let’s remember the pandemic is not over! And going to the movies is a way of getting out, and losing yourself for 90 minutes. One change we are definitely going to see is two extremes playing in the same theaters: arthouse and mainstream.

And the effects on the small screen?

From ‘The Queen’s Gambit ‘to Shona Rhimes’ ‘Bridgerton’, producers are no longer afraid to produce something that was unimaginable before, and are having amazing success.

People want content they can relate to, from global warming to sports. And watching their role models giving an example that life goes on is very helpful for people in the pandemic. Hollywood understands there is a moral obligation in any content they are providing.

Let’s not forget, creativity is the future of leadership – and you teach that at IMD.

What would 2020’s takeaways from Hollywood be, in a nutshell?

The subscription business strategy is absolutely important. People want it. Then there’s the distribution system; the tentpole marketing system was invented by Hollywood. We are not selling products, we are selling experiences! Think of the Teslas of the world with their ups and downs, and yet people still want to watch.

Actors have to go through constant coaching – what are the current emotions and how can they deliver them? Other industries can do the same.

Netflix today is a no-star system. They will take a good actress, unknown. Why? Because the content will sell. Films with the Leos and Scarletts of the industry might sell too, but you have to have the other products also available to cover your target audience.

“I love Julia Roberts” is no longer ok for our industry, just like “I love the idea” is no longer ok for yours. It’s replacement is a question: “Where’s the data?” The major players use the AI data to find out what the audience wants. But if there are any guarantees still present they are the importance of content and of emotion.

This all means that, for our industry and others’ too, the ball is now on the side of the writers; those writers who have the zest and the nerve. And given content’s importance, the ecosystem around the story you tell is fundamental.

Michael Dounaev did his MBA at IMD before going on to co-produce films including Woody Allen’s Oscar-nominated ‘Match Point’ and the prison-guard biopic on Nelson Mandela ‘Goodbye Bafana’, winner at the Berlin Film festival. In total, nine of his productions have been selected for the most prestigious film festivals and/or nominated for Golden Globes and Oscars.

Immediately after graduating from IMD in 2000, Dounaev joined Bertelsmann where he worked in the international magazine division. He also taught the Business Storytelling course for the IMD MBA in 2018 and 2019.

Authors

Amit Joshiv - IMD Professor

Amit Joshi

Professor of AI, Analytics and Marketing Strategy at IMD

Amit Joshi is Professor of AI, Analytics and Marketing Strategy at IMD and program director of the Digital Analytics program. This research builds on his 2020 paper (co authored by Allègre L. Hadida, Joseph Lampel, W. David Walls),  ‘Hollywood studio filmmaking in the age of Netflix: a tale of two institutional logics’, published in Journal of Cultural Economics. Hadida, A.L., Lampel, J., Walls, W.D. et al. Hollywood studio filmmaking in the age of Netflix: a tale of two institutional logics. J Cult Econ (2020).

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