"What's better: A great 2D movie or the worst 3D movie?" Stephen Colbert, host of "The Colbert Report," put that question to DreamWorks Animation CEO Jeffrey Katzenberg earlier this year, and while it was obviously a joke, it was also an entirely apt question for a guy who has been beating the drum on 3D for years now.
In fact, you could say that Katzenberg is the foremost evangelist for 3D. Back in 2007, he was describing it as "the single most revolutionary change since color pictures." So for him, the recent deluge of 3D movies, which includes DreamWorks films like "How to Train Your Dragon" and "Shrek Forever After," is great validation.
That said, the future of 3D in Hollywood is anything but guaranteed. With respected critics lambasting it as a "waste of a perfectly good dimension" and the movie-going public becoming more attuned to the differences between good 3D ("Avatar") and bad ("Clash of the Titans"), Katzenberg's baby may once again end up being dismissed as a fad.
9:03 a.m.: Walt [Mossberg] kicks things off with a question about "Shrek." This is the last "Shrek" movie. How do you decided to sunset something like that?
When we made the first "Shrek," says Katzenberg, we actually had a road map for this character's journey and at the time it had four or five chapters...So it was really kind of designed that way 10 years ago. So we really feel we've told the complete story...This isn't like James Bond where you need a different villain every time...And we've got some strong new titles lined up. Ultimately, says Katzenberg, we just felt this was the right time.
9:06 a.m.: Katzenberg notes that the company is very excited about the forthcoming "Megamind" as well as its other franchises. "We really felt it was time to retire the big green ogre."
9:08 a.m.: Walt mentions the Jobs session last night and notes that people increasingly want to be able to watch the video that they want to watch, when and where they want to watch it.
Katzenberg: We're at a point in time where the rate of change is faster than anything we've ever imagined...New devices are just pouring into our lives...Many times people talk about the movie and music businesses in analogous ways. But they're not. Every time there's been an opportunity to put our product in the customer's hand in an easy way, we've done it...The music business has done the opposite of that.
But there are barriers to this, says Katzenberg, presumably referring to theater owners, cable companies, etc.
9:12 a.m.: The conversation moves on to new video platforms like the iPad. Katzenberg: "In my opinion Steve Jobs' greatest accomplishment is this tablet...We're going to see this device in the hands of 3- and 4-year-olds...The intuitive nature of it is just so spectacular. Our children will be educated on it, they'll play on it.They're going to consume more media on it than anything else."
9:14 a.m.: Walt circles back, asking if the iPad's screen is really the best way to view video.
Katzenberg notes that nothing will ever top the movie theater experience, but he wants to be able to watch video wherever he wants to.
What about the laptop, asks Walt.
"The laptop is yesterday's news," says Katzenberg.
9:16 a.m.: Katzenberg is obviously a huge iPad fan. "This is a magical device," he says, noting that he uses it for video, e-mail, and script reading.
9:17 a.m.: Conversation moves on to Gold Glass Cinemas, which Katzenberg says is the "Tiffany" of the movie-going experience. Evidently, it's a restaurant-movie theater combination.
Walt: Haven't these things been around for a long time already?
Katzenberg says this new vision of the theater is far superior. "They've done a fantastic job on these things," he says. "You've really got to see them...The movie-going experience is going to migrate to a higher-end experience not unlike what's gone on with sports recently."
9:19 a.m.: Katzenberg: Exhibition theater owners are going to have to understand that they're not serving their own business well by creating these windows for movies.
9:22 a.m.: Is there such a thing as 3D fatigue, asks Walt.
"Again, we're at the beginning of a very new and great opportunity for storytelling. 3D is probably the most powerful tool to be put in the hands of filmmakers since color...Movies are about connecting with people emotionally; that's what filmmakers are trying to do. 3D amplifies the feelings that storytellers are trying to create...But we're still at the beginning of this...And not all 3D is equal and consumers are beginning to realize this...There have been lesser 3D movies released and there's already been backlash against it."
9:26 a.m.: What about 3D in the home. Are you really telling us that after much of the country has replaced their TVs that now we're supposed to do it all over again with 3D?
Well, there's a cycle to this, says Katzenberg-about seven years, evidently. He notes that some of the new 3D TVs are impressive. Sports and video games will drive adoption, he adds. "Our movies aren't going to drive this...it will be sports in 3D.What is the rate of adoption going to be?...Well, there's a constant turnover. I don't think this is a thing where suddenly everyone is going to go junk the TV that they just paid two grand for."
9:29 a.m.: Walt: What's going on these days in animation production?
We're about to go through a transformation in the workstation that's going to be as revolutionary as anything we've seen, says Katzenberg...We've been working in partnership with Intel on the next-generation chips they'll be delivering in a few months and it's going to completely revolutionize our business...Today when our artists create a frame in "Shrek," they essentially paint it and mostly they do it out of intuition and experience, and then they take that frame and send it to a render farm and eight hours later they get it back and it's about 80 percent right...These new processors will actually allow these artists to work in real time. What this does is change the entire process of how we create our product, and this is going to affect many industries that rely on high-power computing."
9:33 a.m.: The product's called Larrabee, says Katzenberg.
Do your competitors have this as well, asks Walt. Katzenberg suspects they will. "But we're going to be a lighthouse for this."
9:34 a.m.: Today, technology is the tool of our artistry says Katzenberg. It's how we create...and every movie we raise the bar and deliver to our customers a "wow." We went through it with "How to Train Your Dragon." We're going through it with "Shrek" and I'm certain we'll see it with "Toy Story 3."
Q: You've talked about the increase in 3D TVs. What's the cost of producing 3D content?
Katzenberg: I don't want to answer for the TV people. I can only talk about film. For us it's about 10 percent incremental cost. The live action business, they're just developing their equipment so it's a little more expensive.
Didn't Intel kill Larrabee?
Katzenberg: There are two version of the chip. I think Intel let go of the GPU side of it and are now concentrating on the high-end side of it.
What's your view on content libraries? Will they be more valuable in the future?
Katzenberg: If you look historically, you'd say libraries have phenomenal value...and there's tremendous opportunity for growth. At the same time, we are seeing here in a fully mature market declining values in those libraries...Consumer habits in the past few years have gone through radical changes...Spending $20 on a DVD a few years ago wasn't such a big deal; today it is. Today you can get those DVDs from Netflix, iTunes...So there are so many ways you can consume movies on a demand basis and conveniently. And I think this is a systemic change.
A note about our coverage: This live blog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one.