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Nested in a back lot at Universal Studios, Amblin Entertainment is producer/director Steven Spielberg’s movie production company. Soon to be folded into Spielberg’s new DreamWorks SKG Studio, a joint venture with partners David Geffen and Jeffrey Katzenberg, Amblin also produces television shows. Amblin’s staff is responsible for promotions, merchandising, licensing, and product placement, in addition to producing Steven Spielberg’s movie projects. Unlike in-house promotion departments at major studios, Amblin acts in partnership with distributors including Paramount, Warner Bros., Universal, and Disney, who work with Spielberg on individual projects. Known for its blockbuster films, Amblin is also a leader in the field of marketing and promotions. The company’s merchandising and licensing team, headed by Brad Globe and Mark Levy, are known for their industry firsts and partnerships with promotional tie-ins.
Beginnings at Universal
Named after Steven Spielberg’s student film Amblin’, the production company was founded in 1984. Its headquarters was built at Universal Studios, which cost the studio more than $3 million in addition to employee salaries (which are all carried by Universal). The company’s name represents a major launching point in Spielberg’s career. Amblin’ was a 23-minute documentary Spielberg made in film school. Spielberg had bad grades and was not able to attend the top film schools, but managed acceptance at California State University, Long Beach, where he made Amblin ’. After seeing the film, Sidney Sheinberg, Universal’s television director and later president of Universal’s parent company MCA, offered the 20-year-old Spielberg a seven-year contract to make Universal television shows at $275 a week. When he directed Jaws for Universal a few years later, Spielberg received five percent of the profits, putting an end to his days of working for a salary, with about $5 million in income.
Surrounding himself with people who were first creative and then businesslike, Spielberg still left much of the business to his employees, leaving his time free for movie making. Not to say that Spielberg’s involvement with Amblin projects was hands-off; on the contrary, he was involved with every aspect of film promotions, editing trailers and overseeing marketing tie-in schemes. During the ten months when Amblin’s offices were under construction, Spielberg spent three days a week overseeing the process. Amblin’s Southwestern architectural design was lavish, with art departments illuminated by skylights, a video arcade, and a courtyard with fruit and vegetable gardens and a swimming pool. Spielberg’s personal touches pervaded the headquarters, with a tiny “Jaws”-like shark in the wishing well and a candy counter in the screening room.
Amblin is notorious for its atmosphere of secrecy. According to the Los Angeles Times, Amblin workers are required to sign lifelong confidentiality agreements. The company’s security staff quickly turns away those who linger too close to the building. Such ironclad security is ironic in light of Steven Spielberg’s own start in the movie business. In the 1960s, when Spielberg was a teenager, he took a tour of Universal Studios. The next day he returned in a business suit and made himself at home in a vacant office, which he happily occupied until he was discovered and asked to leave. Only a few years later, Sidney Sheinberg saw his film, Amblin’, and shortly after that Spielberg directed five films for Universal.
The movie business declined by approximately ten percent in 1985, perhaps because of the boom in video rentals and neighborhood rental shops. In 1985, Steven Spielberg stepped out of the director’s chair to manage the administrative development of his young company. It was a year of great successes and massive failures, as Amblin tried its hand at varied film and television projects. High-grossing films released by Amblin featured directors hired by Spielberg, such as Richard Donner (The Goonies) and Robert Zemeckis (Back to the Future). Less successful was Spielberg’s television venture, “Amazing Stories.” In 1985, NBC ordered 44 episodes (two years’ worth) of this new series without ever seeing a script, in a deal valued at $750,000. With “Amazing Stories,” NBC hoped to race ahead of the show “Murder She Wrote” in the ratings. Spielberg hired Hollywood’s best-known filmmakers to develop the series, which involved tales of horror, humor, and weirdness. “Amazing Stories” would not fulfill NBC’s hopes, however. The show slid quickly in the ratings, with its premiere episode drawing one-third of the night’s viewing audience, and its succeeding episodes dropping to one-fifth of the viewing audience only one month later. NBC canceled the program in its second season. Other unsuccessful Amblin projects in 1985 included the films Explorers and Young Sherlock Holmes for Paramount and Fandango for Warner Bros. The Money Pit, made for Universal and directed by Richard Benjamin, was sent back to the director for reediting and additional shooting.
Serious Entertainment: The Color Purple
Perhaps the most controversial of Spielberg’s efforts in the 1980s was his serious dramatic film debut: The Color Purple. The filmed adaptation of Alice Walker’s novel received mixed reviews but generated good box office results and 11 1986 Oscar nominations. Spielberg was shunned with no nomination in the Best Director category—an oversight that was considered a personal snub by industry insiders, according to the Los Angeles Times. Spielberg had been overlooked previously for the Best Director nomination when his 1975 film Jaws was nominated for Best Picture.
In 1987, the Academy made it up to Spielberg, gracing him with a special award in a year in which he did not direct a single film. At 39 years of age, Spielberg became the third youngest recipient of the Irving G. Thalberg Memorial Award, a prize for “creative producers whose bodies of work reflect a consistently high quality of motion picture production.” Dairy 1 Zanuck was the first recipient of the award in 1937 at the age of 35, and David O. Selznick was the second youngest recipient in 1939 at the age of 38. Spielberg was the 28th recipient of the special award, based on his lifetime achievements. Under the auspices of Amblin, Spielberg had turned out some of the most successful films in movie history, including E.T., Raiders of the Lost Ark, Indiana Jones and the Temple of Doom, Gremlins, and Back to the Future.
In 1988, Amblin President Kathleen Kennedy attended the premiere screening of E.T. the Extra-Terrestrial in Moscow. The film had set the world record for box office grosses in 1982, and by 1988 it had earned $720 million ($395 million in the United States and $325 million abroad, which translated to 240 million admissions). The 1988 release of E.T. on videocassette brought in an additional $360 million. Augmenting its international audience, the film was being presented in the Soviet Union as part of a film exchange with the United States.
Once again, Steven Spielberg was shunned by the Academy in 1989. Who Framed Roger Rabbit?, a co-production of Amblin Entertainment and Walt Disney Studios, received six Oscar nominations for technical achievements but none in the more prestigious categories of Best Picture, Director, or Actor. The lack of nominations was surprising given the widespread critical acclaim for the film: it had appeared on a list of the year’s Top 10 Critical Favorites, it received a Golden Globe nomination for Best Comedy or Musical, and director Robert Zemeckis was among five Director’s Guild nominees for its annual award. From a financial standpoint, the movie was the top-seller of 1988, reaping U.S. revenues of $153 million.
Taking advantage of already-broken ground, Spielberg and Amblin concentrated on sequel-making in 1989. That year, Amblin released Indiana Jones and the Last Crusade (the third installment in a Spielberg-directed adventure series beginning with Raiders of the Lost Ark) with Paramount and put the finishing touches on a sequel to Gremlins with Warner Bros, and two sequels to Back to the Future with Universal. Releasing sequels was a safe and easy moneymaker for Amblin and also left Spielberg with time to work on other projects, including his multimillion dollar contract to design projects for Universal’s theme parks in California and Florida as well as his television production projects. Spielberg hired Carole Kirschner, formerly with CBS, to run Amblin’s television division, which was producing a new cartoon program with Warner Bros. By December 1989, Amblin made an agreement with Turner Network Television to produce six original television movies of original works by top playwrights. Also in 1989, Spielberg began directing Always, his first directorial partnership with Universal Studios since 1982 (two years before Universal built the Amblin offices on its back lot).
Between 1984 and 1990, Amblin had produced 15 films in partnership with major Hollywood studios. Three of the most successful films produced by Amblin between 1984 and 1990 were Back to the Future (which generated $104 million in theater rentals), Who Framed Roger Rabbit? ($81 million), and Gremlins ($80 million). Back to the Future, which was made with Universal and received rave reviews, made $11.3 million in its opening weekend alone. Some of the most successful films involved intensive merchandising and licensing tie-in campaigns. Back to the Future, for example, is said to have earned approximately $3 million from promotions alone, and Who Framed Roger Rabbit? is estimated to have generated $18 million in worldwide marketing revenues. Such films placed Amblin in the forefront of the promotions arena, generating the aggressive campaigns that have since become industry standards. In relationships with promotional partners, Amblin maintained significant control, laying the ground rules for the timing and nature of advertising. For example, when Amblin joined J.C. Penney and Pizza Hut in a several million dollar cross-promotional campaign linked with the 1988 release of The Land Before Time, Amblin established specified dates before which ad agencies were forbidden to place promotions. In this way, the campaigns avoided overkill and consumer confusion endemic to many cross-promotional partnerships.
By 1989, Steven Spielberg had produced or directed five of Hollywood’s top hits, and his 25 films had sold more than $2 billion worldwide. Spielberg’s production fee was a minimum of $1 million in 1989, and he usually kept ten percent of the profits. Spielberg declined offers to take the company public, largely because he had the access to cash and clout that he needed to finance almost any project.
In 1990, Amblin joined Warner Bros, to produce 65 half-hours of animation for syndicated television: “Tiny Toon Adventures.” The company also was hard at work developing marketing strategies for new releases, including Back to the Future III. For this film, Amblin worked with Universal to create a Western Union sweepstakes, with a grand prize trip to Universal’s new theme park in Florida. The company also co-produced A Brief History of Time, based on the book by wheelchair-ridden theoretical physicist Stephen Hawking. In its third animation collaboration with Universal, Amblin joined Andrew Lloyd Webber to create an animated feature film of Cats.
Continuing to try its hand at television production, Amblin TV developed “seaQuest” in 1992 with Universal. “sea-Quest,” a one-hour science fiction series set in the 21st century, failed to reach a large viewing audience.
Dinosaurs Score Big, the 1990s
In 1993, Amblin released the megahit Jurassic Park with MCA. The film was accompanied by an unprecedented marketing campaign that was set in motion as early as 1991. By its release date, Jurassic Park had been supported with $60 million in promotional exposure in the United States alone. Amblin was now known for its lucrative partnerships in cross-promotions related to major film releases, and the company was approached by Pizza Hut, Burger King, and several other suitors. Amblin chose to link Jurassic Park with McDonald’s, its previous partner for the films An American Tail, Back to the Future, Who Framed Roger Rabbit?, Hook, and the rerelease of E.T. According to Advertising Age, which named Amblin “Promotional Marketer of the Year” for its efforts in regard to Jurassic Park, the movie evolved beyond the highest grossing film of all time to become a “global brand.” Jurassic Park grossed a record $50 million in its opening weekend, more than $900 million worldwide, and involved 1,100 pieces of ancillary marketing. Three Oscars were earned for technical brilliance.
Also that year, Amblin announced a major project with New York Playwrights Horizons, whereby the company would commission ten plays over the next two years, at $100,000 a year. Although the hope was that Amblin films would develop from the play scripts, the production company did not have automatic rights under the agreement, but was allowed a first look at the works. Amblin sponsored other writing programs, including the Writers Workshop Ethnic Minority Screenwriters Development and Promotional Program.
1994: A Hallmark Year
Two major movie events made Amblin one of the most prestigious businesses in Hollywood in 1994: Jurassic Park had made box office history, grossing almost $900 million worldwide, and Schindler’s List, an epic drama about the Holocaust, had revealed a new side of Steven Spielberg. Unlike the glossy marketing campaigns Amblin had dreamed up for its entertainment movies, Schindler’s List involved a straightforward no-frills strategy, positioning the movie as an important experience. To accompany a nationwide Holocaust education project in conjunction with the film, Amblin sent 30,000 guides about the film to high schools. The highly-acclaimed film received the Best Picture Award and numerous other Academy Awards.
An executive change occurred at Amblin in 1994, when Walter Parkes and Laurie MacDonald became the new president and executive vice-president of Amblin, overseeing what was now a staff of 60. Parkes and MacDonald replaced another husband-and-wife team, Kathleen Kennedy and Frank Marshall, who left Amblin to form a production company at Paramount. Spielberg had always hired based on creative talent rather than business skills, cultivating a “creative hothouse” environment that made Amblin more nimble than its competitors. Known more for their creative work as producers than for their administrative skills, the couple would become part of the Amblin team that was beginning to move in new directions. Spielberg retained his titles of chief executive officer and owner of the company, and, for the first time, he began to look at ways to expand Amblin. A computer game lover known for his online matches with actor Robin Williams, Spielberg looked first at multimedia software linked to his films. In 1994, he made an equity investment in Knowledge Adventure and made plans to co-develop software.
At the close of its first decade in operation, Amblin had performed enormously well in the film arena, but had been an underachiever in other ventures. The company was producing up to five movies a year, two syndicated cartoons (“Tiny Toons” and “Animaniacs”), and three prime-time TV series (“seaQuest DSV,” “ER,” and “Earth 2”). In animation, the company had initially threatened Walt Disney’s market leadership in the 1980s with An American Tail and Land Before Time, as well as the Disney production Who Framed Roger Rabbit?, produced by Amblin. Amblin was unsuccessful, however, in subsequent animation efforts, including We ’re Back, a dinosaur feature that received terrible reviews and earned only $9 million. More successful were the television animation projects: “Tiny Toons” and “Animaniacs” on the Fox network. But Amblin had yet to make the splash in prime time television that it had at the movies. “seaQuest DSV” ranked 78th out of 128 shows in the Nielsen ratings and was in fourth place in its Sunday time slot, and “Amazing Stories” had been a failure in terms of viewing audience. Forbes speculated that Amblin’s television unit, led by Tony Thomopoulos, formerly of ABC, suffered from a lack of attention from Spielberg, who could afford to produce flops since he never lost financially.
A lesson Spielberg had learned in Hollywood as a teenager came in an interview with director John Ford. Ford advised him never to spend his own money to make a movie. Spielberg took the lesson to heart, and as one of the wealthiest men in Hollywood, designed agreements for his films that gave him the benefits of ownership without the risk of personal investment. Using this strategy, Spielberg became a billionaire by the age of 46. Spielberg’s share of earnings from Jurassic Park was approximately $250 million, the most any individual ever made from a movie or unit of entertainment. In 1994, Forbes estimated that Spielberg’s personal assets exceeded $600 million, which, when added to the capitalization of his 100 percent ownership of Amblin, made the college dropout a billionaire.
Spielberg had amassed his wealth through movie deals in which the studio absorbed all costs (production, advertising, and distribution), while Spielberg received five percent of the initial revenues of films he produced and 15 percent of those he directed. Because Spielberg’s cut did not take expenses into account, he made money even if the film lost. Spielberg’s share then would escalate to 30 percent until the film broke even, at which point he and the studio would split the profits. This “gross points” strategy, whereby an individual receives a cut of revenues from the first dollar, had not been enjoyed by any director in the past generation. In fact, Forbes speculated that the most recent director to earn gross points had been Alfred Hitchcock. Because Spielberg had directed six of the 15 top-grossing movies of all time, this strategy resulted in a win-win proposition for all.
In late 1994, Spielberg joined partners Jeffrey Katzenberg (head of Walt Disney Studios) and David Geffen (head of Geffen Records) to form a new entertainment company. DreamWorks SKG would be the first major studio to be formed in 59 years, and Amblin Entertainment, as well as Geffen Films, would ultimately be folded into the new studio. Amblin would fulfill all of its existing commitments, however, before becoming part of DreamWorks SKG. The new studio would focus on five areas: movie and TV production, animation, music, and multimedia. According to Broadcasting & Cable, startup costs for DreamWorks SKG would be $2 billion, and the three partners had a net worth of more than $1.5 billion, exceeding the gross national product of Fiji. While negotiations over its new site in the Playa Vista development near Marina del Rey, California, were being completed, DreamWorks SKG took up temporary residence at the Amblin Entertainment offices on the MCA lot at Universal.
In 1995, Seagram purchased a controlling interest in MCA, taking President Sidney Sheinberg completely by surprise. At this point, Universal Pictures was largely dependent on Spielberg and Amblin, who had produced the studio’s only hits (including the megahit Jurassic Park). Prior to any announcements regarding executive restructuring, Spielberg threatened to leave the studio if his long-time friend and mentor Sidney Sheinberg were to be displaced.
Amblin is continuing its operations while DreamWorks SKG is in the planning and construction stages. In 1995, Amblin was involved creatively and financially in Fox Children’s Network’s airing of “Casper.” Later that year, Amblin co-produced The Lost World, a sequel to Jurassic Park, with Universal Pictures.
Largely linked to the charisma, vision, and deal-making of Steven Spielberg, Amblin will enter a new phase when it is folded into the operations of DreamWorks SKG at the turn of the 21st century. As part of a merger joining three of the most forceful talents in Hollywood, the company’s future is potentially three times as bright as its already stellar past.
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