CAKE’s Ed Galton Talks Brand-Building, Windowing

Ed Galton, the CEO of CAKE, discussed his perspectives on exclusivity, windowing and navigating current market conditions at the TV Kids Festival today.

You can watch the keynote conversation, moderated by TV Kids’ Anna Carugati, in its entirety here.

“The landscape has been very challenging, not only for the kids’ industry but for the entire entertainment industry—but the kids’ industry is feeling it more so than other genres, certainly in the audiovisual space,” Galton said. “A lot of that has to do with the market constricting. The wars between the big streamers seem to have sort of come to an end. Netflix and the likes of Netflix are understanding better what their audience is looking for. They’re becoming more narrowly focused, which means when they were once open to looking at all different types of kids’ content, now they’re zeroing in on fewer, bigger brands. That’s a challenge for all of us independents out there trying to get new shows away. The advertising market has become very difficult. All of those challenges combined make it very difficult.”

Consumption habits, of course, are also still in transition. “Kids are not necessarily watching linear television anymore. They’re not necessarily watching any sort of content anymore, or at least not in the same way that they used to. They’re playing and living on game platforms a lot more than they had in the past. They’re snacking on content and not necessarily sitting down and watching a whole bunch of content on their own. When kids do that, it’s probably more in the family space with their parents. So, a lot of the broadcast partners are saying, We need content that’s going to work for co-viewing. Those are some of the challenges that we’re experiencing.”

As for opportunities CAKE is pursuing, Galton noted, “We’re small enough and nimble enough that we can withstand the down cycle because we’re not laden with debt and we’re not employing hundreds of animators. We still have a strong distribution business. When content is not getting produced, there’s still a need to fill platforms with content. That’s where the distribution business becomes handy. Finished content, library content becomes more important. We use that as an opportunity to wait until the market gets a little bit better, and then we can bring content that’s new. We choose our projects pretty well. We do see opportunities in small pockets here and there.”

The session then moved to brand-building amid a fragmented media market. “We can do so much on our side; it’s really what our broadcast partners could do with those projects and how they help them sustain a life with their audience. We can give them as much ammunition as possible to help them succeed. That’s generally in delivering a really good show that has great storytelling and good characters. Ultimately, we have to figure out a way to connect with the audience. We’re always working with the broadcast partners to help them do that. In this new world where you can share more, putting the shows on multiple platforms seems to allow known IP to have greater success.”

Galton then discussed his perspective on exclusivity and rights sharing. “I’ve been an advocate of non-exclusive rights for as long as I’ve been doing this. Especially in the kids’ business, the need for content to be everywhere is really important. We’re finally seeing a willingness to share more than ever before. Part of that has to do with the economics. Platforms are saying, Well, if we can pay less, but we can share windows, that’s a win for us, and it’s a win for you. Is it a win for us, economically speaking? Maybe a little bit; maybe not—that’s still yet to be determined. But if the show that we’re putting on the platforms can be more successful as a result, then that’s the win. We’re seeing more of that happen now in the economic downturn than we had in the past. I also think people are starting to see the data, and the data supports that they don’t really have a degradation of audience by having these non-exclusive rights work with particular brands.”

Galton sees opportunities in FAST but is cautious about that space at present. “If you talk to people in other genres, they’re seeing a better return. The advertising market hasn’t matured enough yet. While there are going to be opportunities, and I’m a big believer in the AVOD space, I don’t think it’s really provided the type of return that we would hope for so far. I certainly wouldn’t want my business model to be reliant on AVOD revenues. Moving down the line, once it matures, it’ll be an interesting business.”

Gaming, too, holds potential. “We understand the power of Roblox and what’s going on there. We’re trying to figure out how our content can live on that platform. The challenge is how do you monetize that? How do we turn that into a meaningful business? There are some conversations that we’re having in that space, too, but they’re still in their somewhat infant stage.”