Blog

Straight Outta Universal Studios: Strategic Leadership

by Eric Baker
on 2015-08-20

Universal Studios was all about the Benjamins last weekend with yet another #1 debut at the box office, as the R-rated biopic Straight Outta Compton, detailing the rise of influential gangsta-rap outfit N.W.A, far exceeded projections with a massive 60-million-dollar opening frame. That figure pushed the film studio over the 2-billion-dollar mark for the year. That’s $2B domestic.

In hip-hop parlance: Universal is out for dead presidents to represent them. Say what!

To put Universal’s 2015 haul in perspective, the studio earned 1.1 billion dollars all of last year. The last film studio to surpass $2B was Warner Brothers in 2009, and it took that company until December. And that’s only because their aunt gave them a card with money for Christmas (so they could buy what they really want).

Much like Indominus rex in Jurassic World, Universal has demonstrated serious bite force, chomping almost $650M from moviegoers’ wallets for the latest entry in their dinosaur franchise. Add $351M for Furious 7, $310M for Minions, and $166M for Fifty Shades of Grey, and you can start to see where the money is coming from.

Business websites are currently hard at work analyzing all the factors involved in this remarkable string of hits (and loading up on financial acronyms and stock-market abbreviations to lend gravitas to their opinions). But let’s not overlook good, old-fashioned leadership.

Good leadership calls for a mix of traits, and two essential ones are risk-taking tempered by strategic thinking ability. Given how much movies cost to make these days—about $150M for a major studio film on average—studio execs are taking a huge risk every time they greenlight a project. That dude in front of you at Macho Nacho who spends 20 minutes deciding between rice and beans? Not studio-exec material.

All studios take risks. It’s the business model. Where strategic thinking comes in is anticipating trends and capitalizing on them. People who grew up with Star Wars in the late `70s and early `80s proved immensely loyal to the franchise when it returned 16 year later, and they brought their kids with them. Since Jurassic Park was the game-changing film for the next generation, wouldn’t it follow that they too would do the same as the Star Wars fans? Universal obviously thought so, and they were wise. For older Millennials, many of whom have families now, Jurassic World pressed the magic button.

Universal, taking a cue from their own name, also cast a wide net. Are women an underserved audience? Here’s Fifty Shades of Grey. Kids movie? Minions. Older teens and young men? Furious 7. People who can’t get enough talking teddy bears? Ted 2. Oh wait. They can’t all be winners. If you can’t lose, it’s not a risk.

Disney/Buena Vista, currently sitting at $1.5B in revenue, still has Star Wars: The Force Awakens in the pipeline for 2015, but not even that may be enough to catch Universal. I bet Disney wishes they had said “yes” to that Wu-Tang Clan biopic right about now.