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They Were Right about Dancing but the Jury is Out on YouTube

February 2007

STANFORD GRADUATE SCHOOL OF BUSINESS

Andrea Wong. MBA '93"Dancing With the Stars," the hit program based on a British reality TV show, wouldn't have aired on ABC if it weren't for Andrea Wong, MBA '93, and she was once a naysayer herself. Meanwhile, Kevin Tsujihara, MBA '92, worries what YouTube and similar file-sharing services mean to the business side of entertainment.

The two were keynote speakers at the annual student-sponsored Future of Entertainment conference held Feb. 28. Wong, a network executive vice president, said originally she believed that ballroom dancing with B-list celebrities wouldn't rouse an American audience. She turned it down twice before a BBC colleague told her the UK show had inspired him to take up ballroom dancing. She finally watched "Dancing With the Stars," liked what she saw, and took it to her bosses, who hated the idea.

"People thought I was truly out of my mind" for getting behind the show, she said. Skeptical executives expected it not only to flop, but perhaps to take down ABC's strong brand of "feel-good" reality hits such as "The Bachelor," "Supernanny," and "Wife Swap" with it. Wong insisted the show had a chance, and her boss let her go ahead with it even though he didn't think it would work, she recalled.

"It's an incredibly sexy show without saying that it's sexy," she said. "We found ourselves mesmerized by so many things about it."

So did American audiences, who have tuned in for three seasons to watch the likes of Evander Holyfield, Jerry Springer, and Emmitt Smith work the dance floor with professional partners.

That kind of network leap of faith is rare, Wong said. Even though 95 percent of what's aired on network television fails, executives seldom green light a project they're betting against.

But Wong has a track record of defying expectations. She graduated from MIT with an engineering degree. After working in investment banking and starting her MBA at Stanford, Wong got an internship in the business side of NBC. She talked her way into a production assistantship on the "Today" show and fell in love with the creative side of television. She joined ABC after graduation. When network chiefs were looking for someone in-house with an MBA and production experience to help lead its new alternative programming division, she got the job. Since then Wong has helped launch "Extreme Makeover: Home Edition," "The Bachelor," and "The Bachelorette," among others.

Wong said an MBA can be viewed with skepticism in the entertainment business, especially on the creative side.

"You sort of have to shove it under the rug and pay your dues," she said.

Dues-paying in news and television often means begging for jobs that pay almost nothing. It means making 50 calls to someone before he or she decides to answer. But once you've established yourself as a serious player in entertainment, an MBA comes in handy, Wong said. It helped her get the high-powered job she has now, and the skills she learned in business school help her lead effectively.

Wong traces her knack for hit shows to her interest in people, she said. She's also not afraid to take risks on shows like the "Nick and Jessica Variety Hour."

"The best (unscripted series) tap into some emotion," Wong said.

"The Bachelor" is a cultural phenomenon because most viewers relate to the agony and elation of courtship. "Wife Swap" deals with judging other peoples' lives. "Supernanny" strikes the all-too-universal chord of how to unspoil bratty children.

When reality television hit big in the late 1990s, ABC tried to follow the harsh gotcha-style shows being aired on other networks with little success. ABC experimented with the reality model and eventually hit on an "aspirational" niche that works well with women and families, Wong said.

Interactivity and the rise of copyright-threatening portals such as YouTube weigh heavily on the minds of executives in the business side of entertainment. Kevin Tsujihara, MBA '92, is no exception. As president of Warner Bros. Home Entertainment Group, the conference's closing keynoter joked that he's "not sure" who has a harder job—himself or Tom Cruise's publicist.

Tsujihara sees ways to better serve customers and make money online, but copyright protection and digital rights management are essential if online delivery systems are going to work. For example, if Warner Bros. is willing to sell movie downloads for a fraction of a DVD's retail price, it needs to be able to limit the use of the movie to what the customer paid for. If the movie can be put online for others to download, Warner Bros.' variable pricing model is ruined.

Warner Bros. is looking for ways in which both the upstarts, with their staggering audiences, and the established companies, with their content, can create new business opportunities. This kind of fence mending is taking place between Warner Bros. and BitTorrent Inc., a company that originally specialized in disseminating pirated movies on the web. They teamed up to sell Warner Bros. content to paying users in May 2006.

"As soon as you sued one guy, another one would pop up," Tsujihara said. Warner Bros. is willing to fight for its copyright when it must, "but we have to try and create legitimate business models as well."

Tsujihara isn't convinced that downloading will replace the DVD, or even the trip to Blockbuster, anytime soon."The internet isn't really set up for these fat files to be flying around," he said.

As an example, Tsujihara cited Microsoft's Xbox Live, an online downloading service for video games. Its 2 to 3 million subscribers blew out the company's servers with their downloading demands, he said.

While internet models struggle to catch on, Warner Bros. is happy to sell content on demand through cable companies, a business that's far more efficient than manufacturing DVDs to sell through middlemen such as Blockbuster. It will also continue to release films in theaters, air content on television, and license shows to cable networks. "I'm agnostic" when it comes to format, he said.

Tsujihara also weighed in on the Blu-ray versus HD DVD debate. It really doesn't matter which one wins out because both have the same picture quality, he said. But until one dominates over the other and Chinese manufacturers begin making $199 players, most consumers will stick with plain old DVDs, he said.

—Sarah Ruby