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Today, and tomorrow, any ambitious entertainment outfit must be an all-purpose, universal-joint conglomerate--for two big reasons. First, the media are converging, one on top of the other, even as the computer, phone line and TV screen are converging into the brave new integrated system of tomorrow. Second, the globalization of the U.S. entertainment industry is roaring forward unabated, making Hollywood an exhilarating, sky's-the-limit export factory.
If you want to control your creative product, you have to also control all its downstream commerce--as Disney does, building The Lion King into a $300 million North American box-office hit, then topping that with $450 million in only two weeks of Lion King video sales. And the hit album and toys and theme-park tie-ins. S, K and G don't have their own theme park in mind just now (for which Disney and Universal must be grateful), but they have big entrepreneurial eyes, and peripheral vision for all those ancillary markets.
To seize these opportunities, DreamWorks and its competitors will need both the vision thing and the chutzpah thing. "Because the costs of manufacture and marketing continue to rise," says Peter Rawley, executive vice president of the International Creative Management agency, "the audience has to be expanded very rapidly. So we have to squeeze the Chinese, get them to sign on. Add India, Southeast Asia, Latin America. And if you are going to spend the money to develop those markets, you'd better go with a full caravan. You can't be like Marco Polo and say, 'Oh, you like silk, do you? Well, we left that behind. We'll go back and get some and see you in a couple years.' No, you've got to be an all-encompassing media company. And, for that, you need management and creative talent, in about that order."
Spielberg alone among his media musketeers expresses some apprehension about the DreamWorks plan to do it all right now: "We could have built this up over a 15-year period. Instead, we're trying to do it in a couple of years. After our first planning sessions, I thought about how much easier it would be to start with a single film, make it, see how it does, and if it does well, do a second picture. That's the conservative, play-it-safe side that haunts me before I fall asleep at night.''
In the real world, every silver lining has a cloud, and DreamWorks faces a few. The world entertainment market could go limp, from a recession or from software exhaustion. Or the company could make flop movies and records. The HBO deal, which was touted as a billion-dollar windfall for DreamWorks, is tied to box-office performance; if the films are dogs, HBO will pay considerably less. And what if all goes poorly? The team's investors could demand that their money be returned before S, K and G get paid for their two-thirds equity stake.