What do the following movies have in common?
American Beauty, The Green Mile, The Matrix, The Sixth Sense, Being John Malkovich, Boys Don’t Cry, The Blair Witch Project, Fight Club, Toy Story 2, American Pie, and Star Wars Episode I.
They were released in the same year. It was so good they wrote a book: Best. Movie. Year. Ever.
Was it talent? Maybe. Good economics? Perhaps. Instead, let’s look at this using the Placement, Promotion, and Product Bullseye. If a business ‘hits the bullseye’ it succeeds.
In 2000, Thomas Tull founded Legendary Entertainment. It was one of the first companies to combine private equity investments with Hollywood movie-making.
It was good timing. The late 90s saw the highest number of movie screens in America. In 2004, Blockbuster’s store count peaked. A year later DVD sales did too.
The placement for movies was primo. There had never been more screens on which to place movies. Make enough of something and some of them will be very good.
Tull also nailed the promotion for movies. Prior to Legendary, Hollywood used mass-market advertising – because it worked! Jaws pioneered and Star Wars exploded the model that with national advertising and distribution, movies could be huge.
But Tull saw national consumers as three segments. There were huge fans, who would pay regardless of promotion. There was also the free tickets and twenty bucks crowd. These people wouldn’t go for free tickets and twenty bucks. Then there was the middle group. It was them Tull wanted to reach with the advertising. Persuade the persuadable and he did just that
The final piece of the picture puzzle was a great product. Hire great directors – Nolan, Snyder, del Toro – and get out of their way. Legendary’s product was helped too by characters like Batman, stories like We Are Marshall, and laugh-fests like The Hangover.
The product was also profitable. Movie studios controlled the pricing and theaters earned their keep on soda, sweets, and treats. Ditto for DVD, a product with a high upfront cost but zero marginal cost .
Now flip it. Books are also media. Lee Child is a 3x NYT Best Seller and when Killing Floor was released in 1997 it had a limited audience, was hard to find, and was promoted in a review of books section of the newspaper. Not ideal.
Books became a better business model. They’re better placed: physical or digital. Promotion is more focused, specifically with the rise of podcasts. But Child still has ‘his biggest fan’ come up on the street to ask when his next book is out. It’s out now, he tells them, go buy it!. The product, for the right authors too, has never been better. But best sellers are not blockbusters.
Businesses ask: Where to direct resources? Through contrast, the bullseye model highlights the trade-offs.
Keep following along. 👇
Part one of Batman was looking at the movie industry from 1975-Marvel in the Batman BATNA post.