Spreading the Love

Telenovelas are generating a lot more than loyal audiences—they are spinning off successful ancillary businesses as well.

June 2007

Who would have ever imagined that the telenovela, which has its roots in such traditional media as newspapers and radio, would turn out to be so new-media friendly? Today’s novelas—those often glossy productions, averaging about 120 episodes and always dealing with love, passion and intrigue—have not only hooked audiences around the world. They are also finding lucrative life beyond the small screen.

The connection that some novelas create with the audience is so strong that viewers want to extend the TV experience into other aspects of their lives: whether it’s catching a mobisode on a cell phone while commuting to work; reliving the excitement of an episode on a DVD; listening to a CD of a novela soundtrack while driving in the car; reading a magazine dedicated to a favorite novela; or wearing a T-shirt with a novela’s logo.

Of course, it takes the right kind of telenovela to generate these kinds of consumer products, and the right kind of distributor with the necessary know-how to exploit it through all these ancillary businesses. “The telenovela lends itself to as many distribution outlets as any other product,” says Marcos Santana, the president of Telemundo Internacional, who points out that this is possible as long as the essence of the novela is properly adapted to all the new windows.

Latin America is no longer the exclusive domain of telenovelas. The genre has caught on in Europe, and in a particularly big way in Germany. “In television, only a few programs are suitable for generating ancillary products,” says Jens Richter, the managing director of SevenOne International, the company that produces and distributes the very successful Verliebt in Berlin, the German version of the mega-hit novela Yo soy Betty, la fea. “Mostly formats and entertainment programs create brands for a channel and then products can be launched from them. In the fiction category, novelas work very well for ancillary products. [Airing daily] they are amazing brands and attract a young, primarily female audience.”

And, as Telemundo’s Santana maintains, as opposed to a movie that premieres only once, a telenovela is on the air for six months, Monday through Friday, generating tremendously loyal audiences. “If the music and the characters catch on with the viewers, and the brand is strong, there are usually an endless amount of offers from mobile-phone operators, music companies and others who want to buy the rights to the brand and its content.”

As youth and teens are the most eager to try new forms of media, it is not surprising that novelas targeted to the younger demographics have been very successful in generating ancillary businesses. “The products derived from novelas aimed at children and teens are the ones that offer the greatest opportunities,” says Michelle Wasserman, the head of international sales at Telefe International. “The experiences of today’s younger generations are strongly reflected in the world of fiction, and this creates a strong tie to the audience groups that develop a loyalty to novelas. And this drives the consumption of ancillary products.”

Among Telefe’s most successful youth-targeted novelas is Flinderella, produced by the Cris Morena Group and RGB Entertainment, which has aired in more than 35 countries in Latin America, Europe and Asia. Its format has been acquired by TVN in Chile, RCN in Colombia, Bandeirantes in Brazil, SIC in Portugal and Televisa in Mexico. Besides generating apparel and accessories, the international success of Flinderella spun off CDs that went double and triple platinum in Argentina, and a theater production that toured Latin America and attracted more than a million people.

“The youngest generation is the one that adapts the fastest to changes and is the most influential within the family nucleus,” says Wasserman, who adds that 80 percent of a family’s purchasing decisions are made by members who are between 10 and 20 years old.

GOLD MINE

Knowing how to properly exploit a novela across multiple platforms can translate into significant additional revenue streams for a distributor. At the end of 2006, Dori Media Group (DMG), which produces novelas in Israel and Latin America, reported an increase of 105 percent of its revenues compared to 2005. Part of this increase was due to merchandising, DVDs and CDs, most of which were connected to the novela Rebelde Way, which aired in Mexico, Brazil and the U.S. “DMG’s telenovela business model does not focus exclusively on TV sales, whether local or international,” says Silvana D’Angelo, the head of international sales and marketing at Dori Media Distribution, the commercial arm of DMG. “It also concentrates on the development of numerous ancillary businesses derived from our programs.”

D’Angelo explains that telenovelas targeted at youth and teens are the perfect vehicles for developing licensing and merchandising. And at times these businesses can amount to seven times the revenues generated simply by TV sales.

Rebelde Way is one of the most successful youth-skewing novela franchises in recent years. The Mexican version, produced by Televisa, generated excellent results in licensing and merchandising. “Rebelde Way has more than 3,000 products that range from stationery, toys, apparel, accessories, food [and] beverages [to] promotions,” says Maria del Carmen Rotter, the general director of licensing and merchandising at Televisa. “This was possible because Rebelde Way became a social phenomenon that really connected with the viewers.” And not only with the Mexican audience. Supported by the powerful know-how of Grupo Televisa, which had not only acquired the rights to Rebelde Way scripts but also exploited its merchandising and licensing potential, the property generated music CDs, concerts and two seasons on DVD. In addition, a satellite channel on Sky Mexico airs the series RBD: La familia, which includes reruns of the novela as well as related concerts and videos.

ACROSS THE ATLANTIC

In Europe, companies such as FremantleMedia Enterprises have witnessed the kind of viewer loyalty that a telenovela can generate, and they have learned how to extend that success to other media.

But the key to generating successful ancillary businesses lies in knowing the product very well, and its target audience and its consumer habits even better. Such was FremantleMedia’s experience with novelas like Bianca—Road to Happiness and Julia, for which the company asked the pop star Melanie C to sing the title track. The song “First Day of My Life,” written by Guy Chambers and Enrique Iglesias, made its debut on the German charts at number three, then moved up to number one and remained there for a long time. In the case of Bianca, with its slightly older viewership, Cora Publishing (a joint venture between Harlequin Enterprises and Axel Springer) released 10 magazine-books, one every 4 weeks. FremantleMedia also released DVDs of Bianca every six weeks.

While FremantleMedia was able to develop a profitable ancillary business around Bianca and its older and less affluent audience, SevenOne International has had success with another telenovela, Verliebt in Berlin. But this one appeals to a much younger, upwardly mobile demographic.

“In 2005, when we launched Verliebt in Berlin, we were taken by surprise by its enormous success,” says SevenOne International’s Richter. “Our research showed that the audience was highly educated, upper income and progressive rather than conservative—a very desirable demographic for advertisers. So the high ratings of the novela, in combination with the specific target audience, were perfect for developing ancillary products.”

Sat.1 created a mobile phone channel around Verliebt in Berlin. It also launched a fashion line, a magazine, a book, a computer game and a DVD, which was a best-selling DVD in Germany last year.

SevenOne International also launched a French version of Verliebt in Berlin called Le Destin de Lisa on TF1. It airs at 5:30 p.m. and attracts working women, which, as Richter explains, is a good demographic for licensing partners. “The ratings are going very well and we are launching consumer products.”

NEW-MEDIA HORIZONS

Perhaps the most lucrative of all novela ancillary products are DVDs. Televisa Home Entertainment, for example, has a library of 150 titles available across the Americas, from the U.S. to Argentina. “The sale of DVDs has worked extremely well,” says Televisa’s Rotter. “It is one of the most reliable categories of product we have, in terms of revenues.” She goes on to explain that 80 percent of the programs for which she handles licensing include one DVD edition. These are compilations that summarize a novela in 12 one-hour episodes. Classic novelas, such as Alborada and Amor real, have sold more than 120,000 units in the U.S.

As Telemundo’s Santana explains, the DVD market has provided a very valuable additional window for novelas. “We are quite aggressive with DVDs,” he says. “Last year we launched Pasión de gavilanes in Spain and sold more than a million units through a direct-to-consumer business model.” Pasión de gavilanes DVDs were sold in conjunction with a Spanish magazine that each week, for 13 weeks, offered consumers a special one-hour condensed version of the 180-episode novela.

Venevision International (VVI) has edited down several of its telenovela titles, which have sold an average of 30,000 units in the U.S. market. “Since Luis Villanueva joined VVI as president, he has had the vision of exploiting our product across multiple platforms,” says César Díaz, the VP of sales at VVI. “And using the telenovela as the backbone [of our business model], we have created several separate businesses.” VVI manages the brands VeneMusic, FonoLibro, VeneMovies and VeneMobile, a division that exploits VVI product and third-party product for mobile and wireless.

“The premise of VeneMobile is to offer all of our products on a mobile platform,” explains Díaz, who adds that the company has already developed images, ring tones, wallpaper and contests connected to novelas for mobile users. “When we deal with clients who own businesses across various media, we have the advantage that we can exploit our novelas on multiple platforms.”

Telefe International is also active in the mobile arena. It has created a division called Telefe Móvil, which, since 2004, has been offering its audience interactivity through SMS text messaging. As Telefe’s Wasserman explains, the company has ridden the mobile wave in Argentina and has staked out a leadership position. It has exponentially expanded its mobile business by generating 70 million SMS messages between 2005 and 2006.

Besides providing downloads of wallpaper, ring tones or images of the stars, Telemundo Internacional is developing 40-second clips of its novelas, which are similar to slide shows and are offered in low-resolution in order to facilitate their reception. “The idea is that phone companies can offer their subscribers a menu of content which includes Pasión de gavilanes in short-form capsules,” says Santana.

And Dori Media has created a new-media division that produces for mobile not only content from its youth-targeted novelas but also from the rest of its productions. One example is the novela The Champion, about a football star. Dori Media has created 25 mobisodes, each three minutes in length. “This novela has become a real hit in Israel, and its format is in demand by various international labels for the numerous revenue streams it can generate,” says DMD’s D’Angelo.

In today’s new-media world, as long as novelas attract loyal audiences, distributors will have the opportunity to exploit that success across multiple platforms. But they will have to be savvy and know which media and consumer products are best suited to their novelas. As SevenOne International’s Richter says, “People will be cautious about launching ancillary products around a show, because it is always a very expensive proposition, but if you get it right you can create [a major success.]”