Anita Elberse’s new book Blockbusters (Melbourne: Scribe Publications, 2014) opens with a revealing contrast of different project ‘greenlight’ strategies at two entertainment conglomerates. Warner Brothers president and chief operating officer Alan Horne pursued a high-profile marketing campaign for a fifth of the studio’s production slate. The blockbuster strategy paid off. In contrast NBC’s Jeff Zucker cut corners with a risk mitigation strategy. Zucker’s caution may have contributed to NBC Universal’s decline in television ratings in the United States.
The project ‘greenlight’ decision is like a financial option. Horne took call options on potential blockbusters: having an edge or positive expectancy. Warner Brothers would benefit if the call options were successful. Horne attracted A-list actors, producers and directors. Zucker’s risk averse strategy was financially prudent yet was more like a put option. It cut costs and would have moderate benefits. Yet unlike Horne’s strategy it had no large upside. Zucker failed to keep pace with his competitors and left NBC in 2010.
I sometimes wonder if the contrast between Horne and Zucker can be applied to project ‘greenlight’ decisions in other contexts.