Megabrands

October 2008

Megabrand. Franchise. Tentpole. These words describe the media phenomenon of the runaway properties that capture the public’s imagination and take on a life of their own in the popular culture. Such brands are the holy grail for any content company because they provide revenue on a scale that dwarfs ordinary programs.

They have existed for decades, of course. Warner Bros. had Superman, Disney had Mickey Mouse, and from the earliest days media companies have exploited such characters across film, television, comic books, newspaper funnies, T-shirts, lunch boxes and any other means they could think of—although in those days no one used the word “platform.”

Today, with electronic platforms multiplying, and with new technologies spreading messages at lightning speed around the globe, the environment for nurturing media exploitation has become much more fertile. So now, rather than exploiting single characters, content creators and distributors are harnessing entire shows as megabrands—think American Idol or High School Musical.

In fact, so important have such brands become for the growth of any large entertainment company that BBC Worldwide has coined its own term for them and precisely fixed their parameters. “We call them superbrands,” says Marcus Arthur, the managing director of global brands at the company, “and we define them in two ways, from the business point of view and from the consumer point of view.”

In Arthur’s detailed—albeit BBC-centric—analysis, “from the business point of view, we say that a superbrand has got to be capable of achieving annual gross sales revenues in excess of £50 million and must be able to contribute a net profit margin of at least 15 to 20 percent. In addition, it must have scale in tier-one territories, which are the U.S., Australia, India, Canada and the U.K.”

But that’s not enough. “It must also be active in these territories in more than one format, perhaps in as many as three or four major formats, like magazines, television, digital, books, and so on,” he adds.

Then there’s the consumer point of view. “We say we want a superbrand to have a 10-million-plus consumer reach and a 30-percent familiarity in brand tracking—again in the same core territories. And we have territory strategies within each one of those territories,” he continues.

By BBC Worldwide’s reckoning, two of its shows presently meet the superbrand definition, according to Arthur: Top Gear and Lonely Planet. “We operate them very distinctly from how we run the rest of the business,” he says, stressing the special treatment those shows receive. “The majority of our business is run by format, such as TV sales, channels or magazines,” Arthur explains, “but for these two brands, what takes precedence in our decision-making is not format, or territory, but the brand itself.”

MAGIC FORMULA

Is there a formula that turns a show into a superbrand? “It comes down to content, to how smart and layered the stories are,” says Steve Grieder, the senior VP of Nickelodeon International, which has an improbable global hit on its hands with a show based on a sponge. “But there’s definitely an X factor involved because, when I look at our slate, there are other shows that definitely had all the things you need on a checklist for a megabrand in terms of fundamental appeal for the audience,” but which never attained that level of popularity.

Nickelodeon considers SpongeBob SquarePants and Dora the Explorer its two megabrands, and “there’s something about those shows that I can’t explain other than that they have characters that different types of people and kids take ownership of,” says Grieder. “SpongeBob has a fundamental sunny optimism that matches the way people like to look at themselves, and appeals to kids and their families—a bright yellow sponge that plows through life cheerily.”

Grieder acknowledges that Nickelodeon had to learn about megabrands and how to take advantage of them. “We’ve done a lot of growing up over the last 15 years,” he says. “Initially we took pride in and focused on being pure TV-content producers. But we learned that if you have a megabrand, a real hit that’s emerging from your portfolio and catching fire, then you have to immediately go to all the touchpoints, like DVD, picture books, and so on, because what your audience wants is more ways of engaging with that content on all the platforms.”

Then there’s Idol, from FremantleMedia and 19 Entertainment. No one would disagree that it’s one of the world’s most popular franchises, with indigenous versions created in more than 40 countries. It began seven years ago as the U.K. show Pop Idol. What made it such a success?

Even though talent-search shows have been around since the beginnings of television, “there was something fresh and new about the execution of Idol,” says David Ellender, the CEO of FremantleMedia Enterprises. “The essence of the show is its simplicity. It was not an immediate hit, but it grew quickly. Because of its success in the U.K. and with the licensed program in the U.S., there was a quick take-up in other countries, and we did a gradual rollout, with shows in India, Australia, Germany, France, Brazil, Latin America in general, South Africa, the Middle East. There’s even an Idol in Kazakhstan.”

Idol certainly fits the bill of the gift that keeps on giving. Not only is the format licensed worldwide, but the U.S. version of the show is sold as well. “Once you have a success with the indigenous version, you can also license the American show,” says Ellender. “American Idol is now sold to more than 100 markets, and played 48 hours after it airs in the U.S.” The indigenous versions also yield plenty of revenue. “The worst and best of the auditions are particularly popular,” he says.

Other FremantleMedia shows that could be described as megabrands include reality series The X Factor and The Apprentice, games like The Price Is Right and Family Feud, the scripted Baywatch and the Got Talent franchise.

STANDOUT HITS

Over at Endemol, the high-profile megahits are Deal or No Deal and Big Brother, says Richard Osman, the creative director at Endemol U.K. “They’re very different. Brother is a huge global brand, but Deal is probably easier to exploit across any number of different platforms because it’s a game, and it’s got a mechanism, so it lends itself to many other things.”

Osman adds that “without giving away trade secrets, Deal is our biggest, most important, most exploited show.”

But Deal proves that a megahit does not necessarily equate to a standardized show for all markets. “We make it differently in every territory,” he notes. “For example, the one you see in the States is different from the one you see in the U.K. The game mechanism is the same but the execution is entirely different, as are the sets and the time slots. There are different sensibilities in different territories, and we allow every territory to make its own interpretation of the show.

“That’s why it became a hit,” Osman continues. “The Italians first did a daily version of it, then the U.K. did its own version, and then suddenly, bang, it’s everywhere in the world. But we’re not strict about how you have to make it and what it’s got to look like, or what sort of hosts you’ve got to get. It’s up to the individual territories, and that has really worked for us.”

Do producers of megahits conceive of those properties with such multiterritory, multiplatform success in mind? In the case of Deal, the answer is “No. Absolutely 100 percent no,” says Osman. “Originally it was just an endgame to a Dutch lottery show. You wouldn’t even recognize it. Multinational success was probably the last thing on anybody’s mind. But further along, once you had seen the Italian version, you would think, ‘Oh, hold on. There’s something here.’”

However, Osman continues, with the hindsight of Deal, while Endemol may not be conceiving of shows only with global hits in mind, “once we’ve created an idea, we’re thinking not only whether we can sell this to the U.K., but how can we roll this out to everybody else. For game shows we ask ourselves, ‘What are the gaming and gambling applications of this? Where else can this show go?’ It’s becoming more important to develop a show with international and cross-platform potential.”

But again, there’s no magic formula. Mega-brands “can develop by design, by organic growth, or perhaps good instinct, or past learnings,” says Ben Pyne, the president of global distribution at Disney Media Networks, where the breakout programs with the most ancillary opportunities are Lost and Desperate Housewives. “It’s a combination. If we had the exact formula, we would bottle it.”

PLAN OF ACTION

That said, once the property does take off, hard work, “smart planning and coordination on the part of the Disney lines of businesses extend it into a multiplatform megabrand. This certainly does not happen overnight or by accident.”

The dynamics at the BBC are somewhat different from those of a private-sector media company. BBC Worldwide, the public-service broadcaster’s commercial arm, is charged with exploiting and monetizing the programs created on the nonprofit side.

“The BBC commissions programs with no desire or plans to commercially exploit them,” says Adam Waddell, the managing director of the Top Gear brand. “Our job then is to take those shows and develop them commercially, to get them to the scale where they can become superbrands.”

Waddell attributes the worldwide success of the motoring program Top Gear to the fact that it’s “the only car show in the U.K., possibly in the world, that doesn’t rely on advertisers. This has given it freedom when it comes to auto reviews. It has huge editorial integrity. That’s what made the brand explode in the U.K.”

Top Gear started in 1977 as a regional BBC TV show, then it went national. “We started commercially developing it in 1993 when we launched the Top Gear magazine,” says Waddell. The publication quickly became the biggest-selling car magazine in the U.K. and is now published in more than 20 editions around the world.

Other brand extensions include the Top Gear website, the sale of the U.K. show to other territories and the development of a Top Gear format. Versions of the show are set to launch in Australia and in the U.S., with NBC, and Waddell is in talks with other broadcasters. In addition, BBC Worldwide has launched a 24/7 channel on YouTube for the franchise.

Then there are the ancillary rights. “Top Gear has a wide business across books, toys and DVDs,” Waddell adds. “Plus, we have Top Gear Live, a live theatrical motoring show featuring presenters of the program. The live show has been playing in U.K. venues for a few years, and Waddell says it will soon be taken to South Africa, New Zealand, Australia and Hong Kong, among other markets.

Another major brand for BBC Worldwide is the preschool show In The Night Garden. “It is an enormous property for us internationally,” says Neil Ross Russell, the managing director of children’s at BBC Worldwide. “We’ve developed the licensing and merchandising campaign and it’s become the biggest license in the U.K. in its first year. It’s been very successful for us. It’s already in 22 countries with over 40 different licensees.”

Indeed, a major TV hit generates revenue not only via the usual video venues—broadcast television, cable and satellite, domestic syndication and international sales, format rights, DVD, and so on—it also enters the wider arena of ancillary rights, which includes licensing and merchandising.

Joy Tashjian, the president of the Joy Tashjian Marketing Group, a longtime developer of licensing and marketing programs, has seen the business evolve from the simple trademarking of children’s programs and characters to the widespread licensing of TV’s prime-time shows.

PRIME TIME POTENTIAL

“The big licensing opportunities used to be in animation for kids, Disney, the Cartoon Network, and so on,” says Tashjian. “Things have since moved toward prime-time product. Manufacturers look to it as a huge opportunity because it hits so many eyeballs at once.”

Part of Tashjian’s job is to maximize her clients’ revenue opportunities in the licensing sphere. She cites NBC’s American Gladiators as an example. “We could easily be in discussion with a retailer for one exclusive action figure, but that would not preclude us from taking the rest of the action-figure line to other retailers. At the same time, we could give exclusive action-figure rights to a company like Toys “R” Us and still develop a program with, say, Wal-Mart for exclusive trading cards. There are opportunities to cross over on many layers with retailers.”

Like NBC and other networks, CBS has several shows that have found homes beyond TV, including worldwide hits CSI and Survivor. “We’re rolling out a number of categories,” says Liz Kalodner, the executive VP and general manager of CBS Consumer Products. These include lottery games, video games, DVD games and live events. “We have a CSI touring museum exhibit,” notes Kalodner. “The exhibit has three crime scenes. You’re randomly assigned to one, you get a clipboard, you take notes, then you’re taken to a lab and you have to solve the crime. It’s been tremendously successful for kids aged 8 and over, and for school groups. And it teaches them about science.”

Kalodner adds that CBS also launched an “interactive experience” at the Six Flags Magic Mountain theme park near Los Angeles, “where the audience will get to solve a crime on stage.”

Some of Twentieth Century Fox’s properties have become huge international successes. The Simpsons is one such megabrand. “We have plush products for The Simpsons from the U.K. going into Argentina,” says Carl Lumbard, the senior VP and managing director of licensing and merchandising for Europe and Latin America.

“One of the core things that I work on at the strategic level is, How do we make product go from one place to another?” he explains. “If we’ve approved it and the brand is strong and we can get the pricing right, it means we are quicker to market and can fill gaps in product niches much quicker than having to develop product from scratch on the local [level]. There is a benefit of time for the retailers to get more product in, and the efficiency of not doing the same product three times for different locations.”

LOST IN NEW PLACES

At ABC, one of the biggest cross-platform successes is Lost. “Outside of TV and DVD, it has spinoff merchandise, books, a computer game, a board game and a magazine, among other things,” says Disney’s Pyne.

“Where Lost has particularly thrived is in the new-media space,” Pyne continues. “It has legions of fans keen to know more, and alternative-reality games such as find815.com, original new-media series such as Lost: Missing Pieces, and podcasts—all built around the show—have helped develop it into much more than what airs on TV. They’ve contributed to the series’ mythology and made the program ‘stickier’ for TV viewers.”

One of the latest platforms to emerge as a distributor and revenue-generator of megabrand content is mobile technology. “Whether for parents who want access to content in a car with little kids, or whether for tweens and teens, we’re making our content available on mobile,” says Nickelodeon’s Grieder. “But it depends on the market, because 2.5G is not the same experience as 3G. The mobile-video experience in Japan is different than it is in the U.S.”

In addition to video, games are another mobile platform. BBC Worldwide, for example, licenses a mobile game based on Top Gear, reports BBC’s Waddell. It generates revenue via consumers paying to download it to their phones.

Endemol’s Deal or No Deal has also taken the mobile-game route. In November, EA Mobile, a unit of game developer Electronic Arts, will release the first mobile game based on the franchise.

WHAT DOES IT TAKE?

Developing a megabrand requires deep pockets and resources. “It’s easier for a company like ours, with offices in many territories, because you don’t have to try to break into new markets one by one,” says Endemol’s Osman. “If we’ve got a show, we can be getting it out to all the other territories fairly quickly and they can be pitching it almost immediately. We don’t have to wait for a distributor to go out to them with a format, work out deal terms, and so on. The moment we’ve got a pilot, an idea, a tape of something, we can immediately call up ten or 20 territories and say, How about this? Is this interesting for you?”

Disney’s Pyne agrees that financial resources are a part of turning such properties into megabrands, “although they’re not always the catalyst for creativity. These kinds of properties spring from great content first and foremost. When you have great content combined with the unique strength of Disney in creating and monetizing brands as an integrated company, it can be a winning combination, and the brands can resonate in a cluttered marketplace, reaching new consumers and delivering value for our whole company.”

So with megabrands capable of raising the financial fortunes of an entire enterprise, TV executives are always on the lookout for that new show that can spin off seemingly endless contributions to the corporate bottom line.

Nickelodeon’s Grieder believes that Ni Hao, Kai-lan, which launched in the U.S. in February on Chinese New Year, could emerge as a megabrand. The animated show focuses on a Chinese family and the relationship between a little girl and her grandfather.

“The curriculum here centers on managing your emotions and learning how to get along with others,” says Grieder. “The characters have a broad appeal even outside the preschool group, to tweens and teens.”

With more than 300 brands in its portfolio, BBC Worldwide has its eyes on Doctor Who and Dancing With the Stars as programs whose scale and profitability can be increased, says BBC’s Arthur. “We’re looking at how we can extend them from a global franchise point of view.”

FremantleMedia’s Ellender thinks that Merlin has such potential. The CGI-plus-live-action series transports viewers back to the days of the legendary King Arthur and the magician of the program’s title. The program was created and produced by Elisabeth Murdoch’s Shine Group. FremantleMedia Enterprises holds exclusive distribution, licensing and home-entertainment rights outside the U.K.—where the program will air on BBC One.

Endemol is hopeful for the U.K. game show Golden Balls. “People take a little time with game shows; they don’t get them instantly,” notes Osman. “Deal was a very slow burn for us in terms of selling around the world. Golden Balls is another example. It’s now in season four in the U.K. on ITV, and we’re just starting to roll it out across the world and do pilots in various territories.”

Exploiting megabrands and their cross-platform, multiterritory opportunities is not just about generating revenue, however. It’s also about corporate culture and synergy.

David Zaslav, the president and CEO of Discovery Communications, cites Deadliest Catch. “It’s one of the top shows around the world for men, and we’ve placed it in 173 countries,” he says. “The old thinking would be to take Deadliest Catch, put it on cable, and sell advertising and promote it. Now we try to think a little bit differently. One, we move the content around the world much more quickly. Two, we launched a Deadliest Catch video game on Xbox. Three, two years from now Deadliest Catch will also be syndicated in the U.S. on a broadcast platform.

“We are using pieces of it either on discovery.com, which we offer around the world, or on the website HowStuffWorks.com [recently acquired by Discovery] to further inform viewers. So we are trying to look at our content in a 360-degree fashion, not just domestic and worldwide, but really assess how we can use that content to inform on all platforms,” Zaslav says.

“No one is in the mode of producing shows and just putting them on TV,” says Nickelodeon’s Grieder. “The value [comes from many sources] and they all have to fit together.”

And make a profit. “Multiplatform exploitation is all part of the margin these days,” says FremantleMedia’s Ellender. “Profit margins on TV shows alone are being whittled away, content is more expensive to produce, and broadcasters are being challenged because they may not be able to fully finance shows out of dwindling ad dollars. We’re looking to cover some of those deficits, if there are any. We’re looking for margin.”