DEW Keynote: Jeremy Zimmer, CEO & Co-Founding Partner, UTA

Ladies and gentlemen, please welcome Jeremy Zimmer, CEO of United Talent Agency, and a warm welcome for Michael Metzger of COVID and Company.

Whoops.

This is cool.

Comfy?

Yeah, so I'm Michael Metzger with Covet& Co. It's an investment bank providing M&A advisory and financing advisory services to media and tech companies. And I'm, I'm very honored to have Jeremy Zimmer with me here, CEO for the United Talent Agency. Just some background, he was one of the co-founders of UTA back many years ago and built it up to the top agency and has an amazing set of clients, award-winning clients from actors, directors, producers ranging from Johnny Depp, Angelina Jolie, Harrison Ford, Uma Thurman, Owen Wilson, Frank Marshall, and Andrew Adamson. UTA is also considered the leader in the digital space, a digital agency, and really pioneered also the online video space with starting UTA Online almost a decade ago, and also formed the Garage Startup Accelerator in Los Angeles together with USC and the venture fund Kleiner Perkins that's focused on helping accelerating startups. So with that focus on the digital space, I think all of you know the role, the traditional role of an agency for traditional film and TV. But maybe to start off, maybe you can explain what's the role of a digital agency? What does a digital agency do?

Well, I mean, our role as we see it, and, you know, as the world becomes digital, to talk about the digital agency as opposed to the agency is sort of like talking about the wet part of the water. I mean, it's all blending into, you know, our agency is not so much about having, oh, the digital guys. It's we have a digital culture. We think in terms of how the best way that our content will— that our clients' content will get distributed and the best platforms for that distribution. We have a digital department, and their focus is really to be sort of— is to live in the world that exists between content creators and technology, between digital platforms and traditional media, and to sort of help get every— help people work together and utilize each other's best practices to create value for people on both sides of the coin. So that's sort of the mission of that digital group. We started it a long time ago. With a much simpler mission, which was just, okay, you know, I said, I just hired, like, you know, I just wanted to grab a bunch of guys from the mailroom who were young and eager and knew how to, you know, operate a laptop. And I said, okay, here's what I want you to do. I want you to spend all your time on YouTube looking for talented people. And as people start, as you could see views starting to really trend, I want you to go figure out who's talented, who's interesting, and let's just grab them and see if we can represent them. And that was sort of the very simple early mission. And of that group. We also started a company called 60 Frames, which I can't remember— we started, I think, in 2006. And that was, you know, once again, a very sort of naive notion, which is, let's just raise some money and allow our clients to make some stuff, and we will just put it out there. It was that simple. There is, you know, if we allow our talented clients to give them some freedom and create what they want to create in sort of a—

A sandbox.

you know, a digital snackable form, and then we'll just distribute it. And that was a simple idea. There was no revenue model at all. And we kept saying, oh, we'll figure it out. And we were about to figure it out, but then the end of 2007 came and no one could figure anything out. And so that company went down. And that was fine. It was a great— I mean, it was not so fine for the investors, but it was a great learning experience for us and got us a very sort of early head start in, in the, the next iteration of the digital business.

Great. Um, looking what's happened in the digital space, kind of the time, uh, consumers spent 10 years ago versus now. So, so the linear TV and, and traditional feature film, there's a lot of new competition. I mean, people spending $1.8 billion on one or two games as as King.com just announced yesterday. There's a lot of time spent on cell phones, smartphones in general. Then there's Netflix, other media. So there's a lot of competition. And we titled this discussion, If Originality and Innovation Can Save Hollywood. And maybe starting on the movie film side, on the originality there. So we've seen a lot of— the major studios seem to be focused mainly on sequels.

Right.

reuse of existing IP. So question to you, what's your assessment of the situation on the movie side of the business, and what would need to change to really ignite that, to get away from the sequels?

Well, I think that, you know, the sequels have been a very— let's not call it the sequels, the franchise business, the studios focus on building large franchise movies. I think, you know, a lot of it's been great because it's driven, you know, a lot of profits and huge success worldwide. But I think there's become a bit of an overdependence on it, and there's so much focus on getting the sequels up and running and finding franchise tentpole movies that there's been less focus and less resources available for developing original ideas. Maybe movies that are a good standalone product but aren't necessarily a franchisable product. And I think that that has led the studios astray to the point where they are so dependent on a few franchise movies every year that they don't really have the— they have lost sort of the capability to discover originality, nurture originality, and nurture creativity. And they have also lost the will to spend money on fostering and creating and allowing originality and fostering new talent. I think that's, you know, I think that's critical to the mission of every company that's involved in the entertainment business is, you know, a part of your budget, a part of your time, a part of your energy has to go towards creating and, you know, towards fostering and— searching for, discovering, and fostering new talent.

Do you think the studios are recognizing that? Is that what's going to happen? Will somebody else take a big chunk of that and the studio is going to continue to focus on the franchises with revenue maybe declining, or what's your projection?

I think everybody's going to— I think people are starting to— I think on the studio side, they're starting to go, huh, we need to sort of pay attention to these We need to pay attention to what's going on out there. We don't— you know, they're all terrified of becoming like the record business, yet they're not really certain of how to do— you know, what to do today to change that. They, you know, they tend to be very wedded to how long it takes to change anything, and I think that's an unfortunate aspect of the way those businesses are being run right now. On the other hand, you know, every year, several— you know, every year a studio or 2 studios or 3 studios are taking risky bets that are paying off. So, you know, Warner Brothers took what was perceived to be a very risky bet on Gravity. That was a movie that Universal developed and let go and Warner Brothers said yes to. Very risky bet, paid off in a very significant way. And you are— so you are seeing every year there is people taking the bets on creativity, taking bets And allowing for, you know, new ideas and new creativity to come in and stimulate the system. I just think there needs to be more of it. And I think there needs to be— you know, the executive culture spends so much time— I mean, there are so many executives spending so much time on Spider-Man 5. Somebody could be spending their time trying to do something a little more original. That's just my thinking.

What about the TV side? What about the TV side of the business?

Well, on the other side of the coin is the TV side, because there's, there's less sort of— there's less opportunity for remakes and sequels in television, although there are certainly some of them. There's less opportunities for that in, in television, and, and the culture of television is very much writer-centered, and particularly, you know, cable television, which is so much driven by drama, is very writer-centric. So you're finding television to become a place where if you want to be If you want to write a great character, if you want to write an original character, if you want, as an actor, want to do something original and compelling, television becomes a much better medium for you. And so you're seeing, you know, what we're all, you know, people are calling it the golden age of television because the economic model is very supportive of it. I mean, the cable system that, you know, everybody's so dying to unplug and cord cut, but that system where we all get, you know, where we're all sort of stuck paying these monthly subscription rates allow for a very healthy development process where there's money to spend on writers and money to spend on ideas, and people are given the opportunity to really work through stuff and come up with some great compelling characters.

So within another piece of the TV or kind of shorter form series, I mean, Netflix has been very successful with House of Cards.

Yes.

And do you think they will— and they announced, I mean, have now a very healthy market cap, I think $26 billion, and they announced they're going to invest $3 billion in the production of both kind of TV content as well as movie content to be distributed on Netflix. Do you think more amazing original content will develop from that, and will a company like Netflix even Take over a big part of the current established Hollywood business?

I mean, I think out of their $3 billion, they will create some more original and compelling content. And they will also create some stuff that's not very good, because that's just— that's the nature of the beast. It's hard to do— you know, nobody bats .500, you know? So I think Netflix, people want to say, oh my God, these guys, the first show they do is a smash hit, and it's fantastic. and wins all, you know, nominated for all these Emmys, and everyone forgets about Lilyhammer, which was the first show they did, which they stopped calling their first original production because they wanted to call House of Cards their first original production. And, you know, that's all fine. That's show business. But it's not easy to do great stuff all the time, as we see over and over again. So I'm sure Netflix is going to have— has many more hits in their future.

And—

will be a great place for people to work. And by the way, as will HBO, and as will Showtime, and as will AMC, and, you know, all these guys who are investing in original content.

So for the talent you represent, how do the economics change if somebody works for somebody like a Netflix versus the traditional TV network? How is it different?

Well, I'm less— I don't think anyone is as certain of exactly how the Netflix economic model is going to work on a go-forward basis. It's— the question is, is what is the aftermarket on Netflix? So even on HBO, there's an aftermarket. So, you know, for instance, the backends of shows like True Blood or Sopranos ends up being very valuable because they have, you know, a lot of international sales. They have, you know, very successful DVD business. And even in the case of Sopranos, an off-network business. I'm not sure what's going to happen with the off-network business on Netflix programming. I know House of Cards is available on— House of Cards is available in DVD. I'm not sure whether there'll be an off-network sale, whether some— I mean, is someone going to buy it when they can just watch it on Netflix anytime they want? Is someone going to, you know— If you're Turner, are you going to buy a show that's on Netflix when it's right there? I don't know. I assume so, but I'm not sure what Netflix's policy is going to be regarding that. So in terms of how the backend— what backends will be available for those creators, I'm just not certain.

OK. Another piece of also the local ecosystem here that— where there's a lot of originality happen is Around the MCNs, the YouTube channels. What role do you play as an agency within the MCNs? And there's also, what role do they play in talent discovery? What kind of talents— when do you get engaged?

I mean, we've been sort of all over that ecosystem in a number of different ways. We work closely with Brian Robbins, who is a television and feature client of ours. built Awesomeness, which we were very involved in the building of and the subsequent sale to DreamWorks, and have had an ongoing role in the day-to-day business of that company. On the other side of the coin, we were representing Lucas Cruikshank, who was known on YouTube as Fred. We introduced Lucas to Brian Robbins, and they created the Fred movie and sold that as a series. Now we are working with Bethany Mota, and we just made a deal for Bethany with Aeropostale to develop her own line of clothing. I mean, we're deeply sort of engaged in that whole ecosystem. We're also working with some of the stars off of Vine and, you know, really believing that these people are talented and fresh and original and have real audiences and that those audiences will follow them to other platforms and will allow them to, you know, sell them products or build advertising-supported programming around them or whatever it is. We believe those audiences will travel with these people. Yeah. As long as they're creating content that's fresh and compelling, it doesn't really matter what platform it'll be on. You know, the MCNs have come under— you know, right now it's very— you know, there's fashionable and unfashionable in every industry, and I know the MCNs appear to be less fashionable today in terms of, you know, are they going to make any money? Are they going to survive? Who cares? You know, what good is a massive audience if you're not delivering If there's no— if the advertisers won't support it, the conversation du jour. At the end of the day, there is— these guys have massive audiences, and they're developing talent brands that have real value. And I think the role an agency can play, ours or our competitors, is to help those talent brands develop what they're doing so that it can translate to other platforms where there's more monetization available, or where we can bring advertisers and brands into the MCN to support these people and support what they're trying to do and help sort of underwrite some of that process.

Clearly, monetization on the MCN is an issue. Have you— what are kind of the best success stories from people who did get successful with their YouTube or MCN channel, but then got other opportunities, whether that's on the TV side or anything else? Do you have any examples?

Well, I mean, I think Fred, you know, the Lucas Cruikshank model is a great one. I think obviously the Awesomeness, the entire Awesomeness Experience is a great example. Bethany Mota is doing well. We've just, you know, we've been able to get Jimmy Tatro, who's a a young YouTube star, and we're helping him develop as an actor. I think we just got him a great role in the sequel to 21 Jump Street. We're working with Andrew Bachelor and helping him develop as a touring artist. So he's taking a— you know, going out and doing a comedy tour. We worked with Spoken Reasons, who's a YouTube star, and Vine star, and we've helped him develop his touring act as well as helping him develop as an actor. We put him into— I can't remember the name of the movie— with Sandy Bullock and Melissa McCarthy last year. We got him a great role in that. We're helping him develop some television properties. So it's, you know, it's really what we do. It's artist development. And instead of discovering these people at Sundance or discovering them Uh, you know, wherever we would, you know, in a showcase or off-Broadway, we're discovering them on, on YouTube.

So how does that typically work? Do you discover the people? You, you kind of watch who's getting what audience and what segment and you then reach out to them?

Yeah, I spend about 8 hours a day on YouTube myself.

Awesome.

Just, you know, combing, combing through. And if I see somebody who's funny, I just call them up. Say, what are you doing? No, we, you know, we're in the flow, and when we get excited about somebody, we, you know, we contact them. And most of these people, by the time we reach out to them, have some form of management.

Okay.

Or they're being represented somewhere, or someone's already there, and then we sort of move in and try to make a compelling argument how we could do a better job. It's rare that we're calling somebody and they're just sitting in their barn in Oklahoma going, really? Me? Golly. I mean, by the time we get to them, they've got managers and deals and lawyers and all kinds of stuff.

Okay. Awesome. You mentioned Awesomeness. I think you were involved from the very beginning and obviously within a fairly short timeframe got an amazing exit. And looking at the whole ecosystem, there have not been a lot of sales.

No.

So what was different with AwesomenessTV? Was it kind of the right content, the right audience at the right time, or I think it was all of those.

I think it was, first of all, the right founder. Here was a guy who really understood— he's a very special guy who could be— he understands both sides of the business. He understands all sides of the business in a really unique way. So I think that was really important. I think it also matched— it was also the right time where people were very— it was sort of peaking at the right moment in a weird way. There was also a really compelling, you know, who Awesomeness is. They know exactly who their audience is. They are creating content for that audience. The audience is excited to be receiving it. They are becoming a brand, so more like Vice than, say, you know, than a more agnostic platform. So they have got a real brand in terms of their content, who their audience is, what they are delivering on a consistent basis. It also fit in really nicely with DreamWorks and their needs to sort of broaden out their audience so that it was, you know, a little— not just kids, but kids and teens and tweens. It also helped Jeffrey tell a more compelling and complete story that was not so hinged on animated movies. It just made sense for both parties at the right time.

Do you see any other companies similar to them where you see, wow, they're also really doing amazingly well?

I mean, I think there's a number of them, but I think— I certainly think Vice is is one of those companies. I think also, on another side of the coin, I think Maker is. I mean, where Maker may not have dialed in specifically in terms of audience and content, the scale of what they're building, the scale of eyeballs cannot be ignored. And as they become better at focusing those eyeballs, they become a very, very powerful platform and really significant for advertisers, in my opinion.

That's great. And that's where the innovation part also comes in and, um, just building this platform on massive scale for, for great and new diversity of content. What other, what other forms of innovation do you see or anticipate seeing helping Hollywood?

Well, I think that, that, you know, Hollywood really needs right now to become much, much more efficient in the way they speak to their, their consumer. I was with, uh, I was with a very high-level executive at Universal yesterday, and we were talking about the fact that they have no idea who their audience is. They have no relationship with their audience. So Universal puts Ride Along out, and however many, you know, tens of millions of people are going to buy tickets to that movie, and they don't know any of them, and they have no ability to speak to them. They can't talk to them at all. The theater owners gather what information they do, and the theater owners do it very poorly. Then the movie will get sold to them on iTunes, but iTunes keeps all that information, or they'll sell a disc on Walmart and Walmart keeps all that information. They have no— you know, Amazon keeps all the information. So the guy making the movie, putting the movie out in the theater, has no connection to the guy buying the product. And that is, to me, a massive inefficiency.

Why aren't they distributing the media? Why aren't they distributing the media directly instead of going through iTunes? That's what Steve Jobs laughed at, at Hollywood and the music industry.

Well, you could— I mean, that's a valid question. You know, why was Netflix built on the back of all this studio product? I mean, you know, the fact that they allowed a company from, you know, up north to sort of create this unbelievably powerful platform on their back. It's a valid question, but the truth is they have not yet developed any relationship with this audience, and they need to, and they need to work efficiently and well with the studios to collect that data. They need to be able to start marketing to the consumer in a much more direct and much more efficient way. I mean, the fact of the matter is, is, you know, we represent talent for the most part, and our talent prices have been under assault for— and look, I'm not, you know, no one's throwing a charity for the clients. They're doing fine. But the pricing has been really, really— has been significantly reduced over the last several years in the interest of more profitability on the studio side. While at the same time, the marketing costs have stayed— have either stayed flat or gone up. So even though the cost of a movie may have gone down from $50 to $25, the cost of marketing has stayed at $50 or grown to $60. So increasing profit— you know, they haven't gone as far as they need to go in terms of increasing profitability because they are too scared and too inefficient in the way they look at marketing a movie. So at the end of the day, you have got your movie out there and, you know, it is Monday morning and your movie is opening on Friday and you look at your Monday tracking and it doesn't look as good as you want it to, or it does look as good as you want it to, but you want it to look better, you are still going to plop down another $10 or $15 million on network television, even though you absolutely know that no one is watching, right? We all know one thing, one thing that is happening, one thing that is not happening in the summer is people are not watching television. Yet the studios are spending hundreds of millions of dollars marketing on television. It's insane. And I think that the opportunity for innovation is there and is a huge opportunity, and there's a lot of money to be made.

Another very interesting part is for moviemakers looking at what happened with Veronica Mars kind of involving the audience. She— I think you were intimately involved doing a Kickstarter, raising close to $6 million and engaging more than, or close to 100,000 people. So for once, you get the engagement, people are involved before actually the movie comes out.

Right.

Do you see that model becoming more—

I mean, I hope so. I mean, what the hope of this Kickstarter thing is, If I'm someone who actually invested $5 in the production of Veronica Mars, I would say there's a much better chance that I'm going to want to go see that movie because I've already sort of— I've already bought in. So marketing to me is going to be simple. Now, obviously, that's a very— most movies aren't going to be funded on Kickstarter, and most of the time it's not going to be like that, but this idea of getting people to opt in in some way or another, I think, is really powerful. And the Kickstarter thing is a— I mean, the Veronica Mars example on Kickstarter is a great one. You know, we represent Rob Thomas, the creator and writer-director, and he was dying to do a movie based on this wonderful character on what was essentially a failed series. And Warner Brothers had no interest. And we kept going and going and going. And we finally begged them. We said, look, if we can raise all the money— Will you guys agree to allow us to— will you agree to at least distribute it in a non-theatrical? We raise all the money. You don't have to spend any money. Will you at least put the product out on DVD or something? They said, oh, okay, go ahead. We'll give you a one-picture license. And then we raised all the money on Kickstarter. And, you know, Warner's has been a great partner. They just weren't excited about it in the beginning.

Do you see that happening with even on a larger scale, larger movies, more money?

You know, I am sure everything is going to happen. I mean, you know, within— I don't think I am going to fly, but, you know, or be president. But I think, you know, I think there is going to be lots and lots of things that happen in different ways. Things are going to get funded and all kinds of— I don't think we can imagine all the different ways that we are going to see content coming together. So I have no— you know, something exciting will happen, yeah. Could Jim Cameron raise $100 million to make a movie off Kickstarter? Absolutely.

I mean, I can envision a case specifically if some more well-known actors also got together that the amount could be very substantial.

Yeah, absolutely. You know, a lot of our clients are reluctant to do that because they don't think it's right. They don't think it's right to take money from their audience when their audience has no expectation of a return. You know, they don't feel it's the right— they feel it's somehow not fair in the relationship they have with their audience, that for them to go and do something that's, you know, fundamentally an economic enterprise and to do it on the back of their audience doesn't feel fair. If their audience wants to go buy a ticket subsequently, then that's fine. They're not afraid about selling a ticket, but the idea of having people sort of invest in their enterprise feels wrong to them. So, you know, not everyone's up for that.

Okay, great. With that, I want to open it up to the audience.

Yes, ma'am.

Are only able to come in when they want to. When you have a client, like I work with a client for social media, they're trying to pitch their new show, which I would love to get to a part talking about their new show to pitch to you. Which way would you take that client? Because you could say, okay, let's do television, or let's do Hulu or Netflix. I mean, which way are you going to take that client?

You know, it's very specific to the client, to the show. to, you know, what the needs are, to the budget, and to who says yes. You know, I'm frequently likely to go to the person who says yes. You know, yes reduces a lot of friction.

I guess I could pitch one of my shows to my clients.

Could you pitch your show to me? Unlikely. No, just kidding, but not really.

But you said you wanted something new and complex, because if I think about YouTube, a lot of people are overexposed. So here you are getting a client. Do you want that client if they are not fresh and new, if they are overexposed online through YouTube or any form of video or any form of expression?

Once again, it is all, you know, we are open to new talent and discovering new talent. That is what we do. Most people, are not up to our standards. And that's just a sad fact. You know, what I always say about YouTube— and this is going to sound horrible— is the great thing about YouTube is it proves that most people are not talented. And that's really good for me.

Great. Any other questions?

A YouTube question.

Yes, sir.

I remember about 20 years ago, I put myself on QuickTime. Way before YouTube, but YouTube, how do they get away with putting some of my favorite artists, musicians on there without having to distribute money back to the TV?

Because the artists need promotion. No, no, no.

Neil Young and Paul McCartney.

All right.

But what about the TV programs? I mean, isn't it copyright infringement? They say that it's for educational purposes. That's what I want to understand. I have my own I have my own YouTube channel. I never put anybody else's stuff on there. I put my own stuff on there. But how do they get— because it's this new technology that's out there.

I don't really know. I mean, look, obviously copyright infringement's a big problem. And to the degree that YouTube participates in that, they try to be very respectful of copyrights. But I'm sure they have trouble taking things down as fast as they get put up. So I can't really comment on that. Yeah.

Okay, one more question.

Yeah.

Yes, sir.

So Netflix claims that they knew House of Cards prior to the first season, and they claim that through their data mining and research that they knew that David Fincher, political thrillers, and Kevin Spacey would be— those 3 elements would be a huge hit. Do you think that's possible, and is that something Netflix is going to continue to do?

Is that information I mean, I think what they claimed is they believed that the combination of those things would have— people would be interested in tuning in based on those factors. I don't think they would claim that they knew that would be a hit. I think they knew that those factors would lead to people having a high interest to sample, and if the show was good, it would continue. And I think that's what they based their decision on. I think that's what their math shows them. I think that's a good point. But I don't think anybody claims that, oh, I know if I have Kevin Spacey in this one and that one, it's going to be a hit, because anyone who says that is wrong.

All right, great. Thank you, Jeremy. It was very insightful.

Thank you, everybody. Thank you to Jeremy and Michael.