Leeds Business Insights Season 1 Episode #8
S1E8: Jim Packer - Roar of the Lionsgate: Lessons from the Movie Business
[00:00:00] Amanda: Welcome to the Leeds Business Insights podcast, featuring expert analysis to help you stand out from the herd. My name is Amanda Kramer.
We are thrilled to be discussing a seismic shift in the movie business and flipping from fear to opportunity with CU alumnus Jim Packer, President of Worldwide Television and Digital Distribution at Lionsgate. As President of Worldwide Television Distribution, Jim Packer directs Lionsgate’s strategies for capitalizing on evolving distribution and licensing opportunities in a fast-changing global marketplace.
Under his leadership, Lionsgate has built a billion-dollar-a-year global distribution business driven by its evolving portfolio of content and serving a robust network of digital and linear relationships around the world. A graduate of the University of Colorado, Packer has served on the board of trustees of the University of Colorado Foundation and the Leeds School of Business. He was the recipient of broadcasting and cables’ digital leader award and was inducted into variety's home entertainment and digital hall of fame, recognizing his achievements in content and technology.
If you spent the pandemic watching movies, both new releases and classics, you're in good company with plenty of film buffs around the world, but it's unlikely you saw most of them in theaters, which provided a unique challenge to an industry that's long been measured by performance at the box office. When the pandemic closed theaters, it accelerated a consumer shift to streaming that was already gaining steam. And Jim is going to tell us how he navigated this massive shift and what professionals and other industries can learn from his story.
Welcome, Jim, and thank you so much for being here today.
[00:01:45] Jim: Thank you so much. I'm thrilled.
[00:01:47] Amanda: Let's dive right in. And let's start with your industry. You have mentioned that we want to make sure the theatrical market is healthy but that you don't think the days of experimentation are over. If we stop going back to the movies, how does that change what success looks like?
[00:02:03] Jim: Well, I think, first of all, I don't believe people will stop going back to the movies. I think people will be selective and change, and they'll change their habits as they go along. And I think we've seen that in the pandemic—the amount of people. If you look at somewhat comfortable going back to the movies when the pandemic started, that was down to 14%, and then it bounced around. And over the last year, it's gotten as high as 80 and then went back down to 62 with Omicron. So it's starting to become the beginning of what the new norm will be because people are going back and experimenting. I went to my first movie with my family to go see the Spider-Man movie. I had not been to a movie theater in two years. So, I will say that I loved it. That experience is great, that companionship, and that, exciting moment when that movie starts, and you start that journey is why I got into the business and why I think people will go back to the movie theaters when they're comfortable.
So really, the question is, when we get back to a little bit more of normalcy, will the two years of habits change. And my answer is, yeah, I think they will change. But I don't know exactly how I think if I was to guess, I would say that it may be a little bit more difficult for those middle movies that aren't blockbuster tent-poles; they aren't art-house movies that people want to see in a theater. They're a $25 million action movie with Liam Neeson. That type of a movie has been made now by streamers. And the streamers have made consumers comfortable that, “Oh, I can get that at home.” So that's really the question mark, is in my mind, those kind of those middle-range films, when do they get back to pre-pandemic or do they never get back to pre-pandemic places? And do they live more in the streaming ecosystem? So that’s, I think, the big question that we've not answered yet.
[00:04:05] Amanda: So Jim, you know, we're talking about this new norm and some changes in consumer habits. And some of these have been accelerated by the pandemic. You've talked about shift to online new content. Can you tell us more about some of the permanent changes in consumer habits that you think we're going to see moving forward?
[00:04:23] Jim: Well, I think, first of all, pre-pandemic, I forget what the number was, but I think it was like people had an average of one or two SVoD services— VoD (Video on Demand). Okay, so they subscribed to one or two. They probably had a Netflix subscription, maybe an Amazon Prime. Now the average is around six. So, talk about a complete change in what people are doing. Subscriptions to SVoD services has completely utterly transformed. It means that you can be your own programmer. And you have to get comfortable being your own programmer. Really the ecosystem for entertainment for many, many years was the cable ecosystem.
Comcast direct TV, all of those companies would funnel in movies, TV shows, services, et cetera, and you would pay 125 to $150 a month, and you'd get this bundle, and it was served up to you, and you didn't have to make any decision except what to watch. Cut to today, people have been home; they've cut the cord a bunch. They've had to save money. So they've had to become their own programmer. In my mind, it's an exciting challenge. So we have to think about when we're licensing content, to which streamer, you know, you have to think about their audience and what audience goes to their platform and where does content fit? Is it a customer acquisition tool, or is it a piece of content that helps churn? Meaning people don't want to, you know, turn out of a subscription. The way I licensed content has changed because of all these services. So five to seven years ago, when I took out a show like Weeds, which was a classic show on Showtime, most of the competition was about exclusive.
I want Weeds exclusively on my platform, right? Because everybody was trying to differentiate their plan, now it's changed a little bit. And because people have five and six different services, they want to make sure that when you go into their service as a subscriber, that you're getting a full compliment of things that keep you around that make you happy about your subscription, that make you want to continue. So we licensed Weeds to four different platforms because all of them wanted to share because they cared more about lowering churn, which I think is really an interesting change in the marketplace and really spurred on because of the pandemic and the fact that people have about six of these.
The other thing that's I think changed pretty dramatically is the growth of AVoD– Advertiser Video on Demand, the AVoD platforms. Many many people have churned off of basic cable out of Comcast direct TV. Have, you know those subscriber numbers have continued to go down? They aren't stopping getting entertainment. They just need to find out where they want to get that entertainment. And when you have five or six of these SVoDs, that cost you money, at some point, you might want something free. So that has helped really grow companies like Roku, Tubi TV is one that we actually, here at Lionsgate. I was one of the things I pushed early on.
We made an investment in Tubi and then it sold to the Fox company and Fox is promoting it all the time. And I think it's a really great growth story. We've seen numbers on Tubi as far as utilization that have just been truly exponentially, growing versus what I saw four or five years ago. And it's just because it's a free entertainment option. Yeah. Now promoted by Fox. So, I think that's the other trend that we're seeing is that as people become their own programmers, they're going to have their own financial situation in mind. And they may not want eight subscription services. They may want three or four, and then they want two or three AVoD services that are free. And they're okay watching ads in those two or three AVoD services because the overall bundle costs them less than doing it the old way. So that's kind of the game that's going on. And I do think that the AVoD ads have gotten a huge benefit out of it and their growth has really, I think, accelerated because of the pandemic.
[00:08:45] Amanda: That's really, really interesting. We're talking about kind of being able to read the tea leaves of consumer behavior. And in retrospect, it's easy to say that cord-cutting was going from concept to trend, but in the moment, it's not easy to commit your business to such a drastic shift. You know, you've been called a first mover in home entertainment, Jim, I think by variety. How do you read those tea leaves? You've given us this example about Tubi. How do you know when to adopt a new strategy? How do you stay committed to it, and how do you avoid making that jump too early?
[00:09:18] Jim: If you were to say, would you rather be too early or would you rather be late? I'd rather be early. And I have been early in a number of the ventures that I pushed through the company and ways that we license. And I think that it’s not a hundred percent success rate, sometimes you are too early, but if you wait and you're late, you can sometimes miss a trend, and then it's a little bit harder to get deals done or product out in the marketplace. With AVoD, I saw the Tubi platform is a really interesting company. I saw some of the data coming through on our rev share early on when these AVoD platforms were growing they didn't license content they did revenue share. So you'd get 60% of all the advertising that they sold. And so you got a lot of data from that. And I saw some, really interesting numbers enough to the point where we invested in Tubi. And one of the reasons we invested was just to learn about the AVoD space and understand what was working, what wasn't working, what content would be smart. And then, I basically would use that data with my team, and that would inform how we could be a first mover with Roku. How can we be a first mover with Samsung? How could we be a first mover with IMDb TV? Do you do new content? Do you do series? Do you do older films? You know, what do you do and what content is working. And maybe you get a year jump year and a half jump over everybody else versus waiting until the end, but that can be meaningful in a revenue standpoint for a company like ours. But there's no magic on when you go earlier when you don't. I think part of it is for me. I still love the aspect of it's your gut a little bit as your gut. I was one of the first studio executives to put a movie on YouTube, a professional movie because at the time YouTube was being scrutinized, and people were very upset, including Viacom had a lawsuit because the piracy, and I made a legitimate deal put legitimate content. It wasn't the best content. It was Bs and Cs. But I made a decision that I wanted to be on YouTube with movies. And I remember it was something hilarious. It was like 75 articles were written, that MGM at the time, put movies on YouTube, even though there's piracy. And it was like, “No, they had geo-filtering. They paid us, it was a good deal. So it's no different than any other platform we just were first.” So it's just kind of an interesting situation and you have to pick your process if you will. And when I do something early, sometimes I'll wait to go to the end if it's something really risky for the company. Like as an example, I don't think Lionsgate would have been the first studio to take the risk of putting movies on HBO Max at the same time they're in theaters. That was a big risk and at, for a studio our size, we needed to wait to see how that went, but other things you can do early and, you just always have to make sure the deals are short so that if you're wrong, you don't get into a long-term problem.
[00:12:24] Amanda: In the past, you've talked about Netflix, and the original business model was delivering DVDs by mail, and they came to you when you were a distribution executive. And they said, we want you to sell us everything you cannot sell, which you said was music to your ears. And you gave them the bottom of your catalog. And you took what you called the short money. And you said there were a lot of lessons that came from that. Can you tell us more about what you learned from that experience?
[00:12:51] Jim: I think the first perspective is, I think all the studios took the short money we all looked at that and said, wait, wait, you know, rarely do you get a buyer that comes in and says, you know, what can't you sell? Why don't I just buy all of that? You don't get those calls very often, right? And it's obviously very easy when you get them. But what I realized, maybe in hindsight, is they knew something we didn't. They knew that when people came into a Netflix queue, they didn't just always buy the most popular movies. They had all the data and they realized that deep catalog got rented as much as the new movies. Because it was by mail, you could get anything you wanted. It was a subscription. So when people don't have to pay, for that particular movie, they get it as part of all you can eat, they can go I remember that old action movie that I watched with my brother and let let's rent that next week. That just happened to be that person's unique situation where they remember a particular older movie, but Netflix knows, oh wow. They like those older, deeper catalog films. I think now, when somebody comes in and says to me, “Hey, I want to license something that you don't want to license or you can't license very well.” I'm going to give it a little bit more thought and not look at it just as, “Hey, this is a quick land grab of cash.” You got to look at it as well. What are they doing with this content? And what are they really planning to do? And what could they build on the back of my content? I think that moral of the story when somebody says, I want a license stuff that's cheap and nobody else wants, ask a few question.
[00:14:31] Amanda: That is great. And thank you Jim, for taking us through that journey of a decision that helped you glean a lot of learnings that you applied moving forward and makes you say, “Hey, I'm going to look at something and ask a few questions and think about it differently and think where might the value be in that.”
Okay, Jim, I'm going to name a hit from this year that a lot of listeners watched on Netflix. And I want your reaction to it. Squid Game.
[00:14:58] Jim: First of all, have you seen it?
[00:15:00] Amanda: I personally have not seen it. I'm sorry to say.
[00:15:04] Jim: It's crazy. It's crazy. And that is an example of the change of our world. So, who knew that a Korean drama could be put on Netflix, on a global platform and become the number one show in the US, could that have happened ten years ago? No, the answer is no, but what's happening with these global platforms is you never know where the hits are going to come from.
You just don't know. I think I even saw somebody with Ted Sarandos like they had no idea. And I even knew it a little bit because some of the dubbing that was done for Squid Game was terrible. Yet it still was compelling, you know, and I still loved it. And I would tell people, you got to watch this. So, I think what's happening now is the world has changed, and we're comfortable watching Squid Game at home, right? We're comfortable watching Narcos even though there's maybe no English and that, and I think that's one of the things that's changed is we're more of a global world down. I got my first experience with that phenomenon with a TV show that was done for spike called Blue Mountain State.
It was a bunch of fraternity football people, you know, R-rated, and American football is crazy American football as you could ever get. We sold it to Netflix, and ultimately, it ran in multiple countries all over the world. Nobody thought that American football would take off at all because the real football happens over there, not American football. And then we did a sequel movie, a two-hour movie that we distributed internationally. And all of a sudden, I remember looking at the Apple chart, and this Blue Mountain State movie was number one in like Sweden and Norway and all these countries. It was the number-one movie on Apple. And I'm like, I don't understand this. This is an American football movie. This is not list. It's like a smaller show on a smaller cable network. But what it showed is that in Norway, in Sweden, they had watched Blue Mountain State on Netflix because they didn't have to pay for it as part of their subscription. It had dubbing, or it had subtitles, and they got into it, and they said, “Oh, this is kind of interesting. I kind of liked the show.” And then when a new movie comes out, they said, “I'm going to go by that because I watched the other one, and I think it's kind of fun.” People get the ability to get serviced-up content that they might not normally see. And because they don't have to make a buying decision on every piece of content, because it's an all-you-can-eat scenario with asphalt services, you can sample something. And if you like it, you can stick with it. And if you don’t, you can just go to something else. And I think that's one of the real benefits, and I think that's ultimately why Squid Game caught on because it started to trend. People started talking about it with the old word of mouth, and then next thing you know, it was number one around the globe.
[00:18:16] Amanda: An incredible example of globalization and word of mouth - things picking up very quickly online. We're just seeing different trends than we may have seen in the past.
[00:19:12] Jim: That's exactly right.
[00:18:28] Amanda: You talk, Jim about your gut, and I think one piece of the gut– the risk tolerance - you have mentioned before that across your career, you have intentionally expanded your risk tolerance. Can you tell us a little bit more about that and how you leverage that to flip from potential fear to opportunity?
[00:18:49] Jim: Well, I think in my career, I think I would always try to learn the next aspect of the entertainment distribution business. So when I started, I worked at the Walt Disney Company, and I was doing local television syndication, and I was there for 15 years. And that was at a time when you used to sell sitcoms to local TV stations in each city of the country. And so we would sell things like home improvement and stuff like that, that we would go out and come up with a plan, and we'd license it. But I noticed as I was in the middle of my career that the cable business USA Network, TBS, TNT, those particular networks had started to really, really grow, and then I also noticed that some of these tech companies were really exploding like Apple and Amazon. And I had to make a decision. I think this is where, you know, on a personal basis, you have to make that decision, which is, do you stay with what's comfortable? And do you stay at a company you've been at for 15 years where you're really comfortable in your job, or do you put yourself in a learning curve? And that's what I did when I left to go to MGM, I had a lot of people call me and question me, why would you go from the Walt Disney Company to MGM at a time with MGM that was rumored even for sale. And I said because I'm going to learn everything I can about transactional business, about the Subscription Video on Demand business, about the pay business, about, you know, basic cable.
I want to learn all of that, and I want to start to learn international. And I learned Canada at the time I took over Canada and started to learn how the how a different country would treat content, especially a country that was right on the border that protected the Canadian producers. So, I took that chance because I figured long-term. And I think every career you have to take that moment where you say, you know, what might not be as much money, but it's, it's going to teach me this. Or it might be a different kind of company, maybe a little bit risky, but I'm going to learn Y and Z that is important. And so, each one of those little risks along the way put me in a position where I could get a wider canvas to learn more. And then ultimately for the pandemic, it's paid off really tremendously because all the windowing strategies. When do you take a movie to market? When do you take a TV show to market? How do you sell it to one person you sell it to four, all those learnings where to put to use during this pandemic because people's utilization of content at home went up tremendously. I was looking at it. If you look at the impact of COVID on add home entertainment, the percentage who did each activity more during the pandemic listen to these percentages. Stream movies on SVoD 62% more than they were doing before the pandemic. Stream TV shows on SVoD platforms 59%. Watched videos on YouTube online up 52%, good for Google. Rented or purchased movies up about 40%. And then watch movies on demand up to 36. So there's not a category of content consumption. That didn't go up during the pandemic. And so that's when you're managing a company's library like we have with John Wick and Hunger Games and, Weeds and Madman and all these great pieces of iconic IP, where you put those, how you license them when you do that when everybody's home, and it can watch it is really the game. That's the fun of it. And that's what we've been able to put to use by, you know, just having a skill set that has expanded over the years.
[00:22:46] Amanda: Absolutely. It sounds like you've been adding skills to your skillset over the years, time and time again. One thing that I think would be interesting to understand is, did you have an end goal in mind, Jim, or did you just continue to gather this information, this experience, and then leverage it, as you saw opportunity to do so.
[00:23:07] Jim: I didn't really have an end game, but I, I had a fear. And the fear was if I'm not smart in a particular discipline when all the disciplines are colliding, it could be a bad thing for my career. So I, I really had a drive and a focus to make sure that as I saw certain patterns in distribution or content consumption, that I would try to learn about it, I would really try to learn about it, or I'd try to be a first-mover when I could. It really just helped me along the way because I think with the entertainment business, especially, I mean, it's just hard to predict what's going to happen. I mean, look, what's happened over the last few years with SVoD. I mean, the pace of change over the last two years versus the previous call it five to 10 has been exponential. So if you, you know, are in an industry that's not stale or stagnant, you have to be comfortable and smart enough and to take advantage of every way to learn, which is why I love Leeds, always learning, you know? And that's why I continually do things for him, because I think for all the young people that I talked to, you got to keep yourself smart.
And if you're in a dynamic industry, like I happen to be, um, always be looking around the corner, don't get comfortable. And I think that's the key, you know, you want to be looking around the corner.
[00:25:11] Amanda: Absolutely comfortable and always looking around that corner, I think are really important key takeaways there. And one question I want to ask more about, and I think it'd be a great point for our LBIdea or key takeaway, is, what do you watch for to know that you're about to become a dinosaur, and then how do you get others, particularly at a large corporation, to buy into those changes?
[00:25:38] Jim: I don't want to be a dinosaur. So first of all, just make sure you don't get trampled by one. So gotta be careful, you know, they're big. And even though they're lumbering, they're pretty big. So I think, look, I look at, my first company, which was the Walt Disney Company as a great example of a company that you could have looked at and said it was a little bit of a dinosaur, right? In the sense that there was a period of time where all the movies that the Walt Disney Company was making were being funneled to Netflix. Okay. And they did a big deal and they funneled a lot of their movies to Netflix. And all of a sudden, you know, Netflix at the time grew to about a hundred million subs. I give Bob Iger and the Walt Disney Company credit the mantra you're discussing of becoming a dinosaur, but using my content was happening. And it goes back to what I said a minute ago. You have to be comfortable with risk and change because they pivoted. And they said, you know, no, no, we, we don't necessarily want you having the relationship with these customers.
We, the Walt Disney Company, with our parks and our cruise ships and everything, not having the relationship with the consumers, we have an amazing brand. And so they basically cut off the licensing, which was a huge source of revenue for the company, and took a risk to start their own streaming service. So, you know, when you are among dinosaurs, you have to be quick, and you got to understand what you need to do to pivot. And I think the Walt Disney Company knew that I think the stats are just staggering. So at that point in 2017, Disney plus was announced. Netflix had a hundred million subs globally. Today, Netflix has 222 million subs globally. Okay, so Netflix has done quite well. Disney, though, has 118 million of their own. So that's an example of a quick pivot, big company, maybe not looked upon as nimble. And they were nimble and they rallied the troops, and they've been very successful because now I find myself with my family periodically watching the Mandalorian, and I'm watching all these new things, and I'm one of those 118 million paying subs, and I love the product. I think that's, I think that's a good, interesting lesson.
[00:28:29] Amanda: That's incredibly interesting. And to your point too, you know, Jim, you mentioned earlier how much you value data and leveraging data from both your failures and your successes. How do you utilize data and/or other things to gain buy-in when you think that a change needs to take place? Because I think that's something that could be quite a challenge.
[00:28:52] Jim: Yeah, I think I learned a lot working for TPG and Providence at the time. And what I learned was the art of the deck. And it's an art taking all the data and telling a story in a PowerPoint in a deck is one of the more critical skillsets that you need in order to get people to change. And there's a lot of, you know, I talk about it with my team all the time. Like I put them through, I give them the opportunity to get classes in it because, you know, doing the PowerPoints, you think, oh, that's pedestrian, I'm not going to just put together the PowerPoint. Oh my gosh. When I see one that's well done, it sings, and it tells the story. So I say to my team all the time, first of all, what's the story you're selling? What's the story you're telling? And then don't sell too much. One of the key things to me, when I see a deck where they're selling me, I don't like it. I start to get my like, is this real? Let the data or the presentation do the selling. Don’t overdo it. If you have the right convincing data, you have angles, you have competitive information, you don't have to sell, the decks will sell themselves. And I think that's a key key thing. The other thing I say to my team that's important is when you have a deck, always remember you may not be there to present it. So when somebody has to explain something to me on the page, I will always say, wait, wait, wait, wait, what if I send that to somebody that's never going to be with you at all? Will they understand the data or the point you're making on that deck? And they'd go, no. Great. Let's put that right there. So when corporate development gets it or lucky enough, it gets to our CEO and we aren't in the room, it explains why the data actually matters. So I think that you know, data to me is only as good as you can put it in a fashion that people can understand. They can walk away with a point of view, even if it's not your point of view, but they may make their own point of view, but they get the information they need.
And then, if done well, it makes it easy because they don't feel like you're selling. They can see the trend, and hopefully, you get buy-in. And so I think that's been also accelerated because of the pandemic because think about how many decks you have to use. Now I, you know, I don't have as much brainstorming or, or kind of community time with my team. And I really quite frankly missed that, but we've had to, as a group, get better decks because that's a lot of times the only way you're presenting new business ideas.
[00:31:47] Amanda: Right. That's really interesting Jim, especially as you think about utilizing the data to tell a story and a compelling story that can be told when you're not in the room, not necessarily something that many of us think about. That was fantastic.
Thank you, Jim, so much for your time today and for your generosity in sharing all of this information with us.
[00:32:11] Jim: I enjoyed it. Thank you so much.
[00:32:16] Amanda: Thank you again for listening to Leeds Business Insights, and a special thank you to my guest, Jim Packer. Don't miss a single episode. Subscribe to Leeds Business Insights wherever you get your podcasts. See you next time.
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