Distributors Weigh in on Windowing Trends

Jetpack Distribution’s Dominic Gardiner, WildBrain’s Caroline Tyre and Guru Studio’s Jonathan Abraham took part in this morning’s opening panel at the TV Kids Summer Festival, discussing their approach to crafting distribution strategies that maximize IP across the value chain.

The Window Watching panel, which you can view here, was moderated by TV Kids’ Anna Carugati and kicked off the third day of the TV Kids Summer Festival.

“There are opportunities exploding, but there’s also change happening all the time,” said Tyre, VP of global sales and rights strategy at WildBrain, pointing to the raft of new players on the market. “It’s adding more opportunity for competitive offers. On the AVOD side, things are exploding. Whereas on the linear side, I think they’re just shifting [to their own online services]. Everybody is trying to shift their audience where kids are. There are some ebbs and flows, but right now, I feel like there is a lot of opportunity.”

Gardiner, CEO of Jetpack Distribution, observed, “In terms of linear and on-demand streaming platforms, it’s becoming increasingly harder to differentiate between one and the other. The rights required are almost universal now across every platform. There was a time when there was linear and only linear, and now those times are almost behind us. That doesn’t necessarily mean there aren’t windows. I think the windowing structures are not as simple as free and pay or streaming and linear. I think it’s more of a complicated market where the windowing is much more carefully managed than ever before. And it’s more important than ever before.”

Abraham, VP of sales and business development and Guru Studio, added, “Even linear broadcasters are generally looking for the VOD rights to the show. The reality is that when a linear broadcaster commissions or even acquires a show, they’re doing that on a three- to six- to ten-year term, depending on whether they are commissioning or acquiring. They don’t know if they’re going to be a linear channel two years from now, and if they don’t have the VOD rights and then they shift to a digital channel, then they’re shelving a program they’ve paid for. It’s going to come down to just good negotiation and good partnerships and trust. It will also depend on what that commissioning or acquiring broadcaster plans to do with the show. Do they have a backend on a consumer-products program? Then they’ll be more willing to allow you to create more awareness by being on different platforms for more eyeballs.”

On the considerations that go into deciding whether to take an all-rights global deal or opt for territory-by-territory, Gardiner said: “Whoever makes the best offer. That’s my flippant but serious point to make. You can sit down and look at so many scenarios in this game. Quite often, going to plan is a luxury we don’t have. We have to think on our feet and react. There’s a difference between selling a show and pitching a show. We try to take an approach where we have to pitch as many people as possible during the opportunities that arise. You plan it out, you pitch, and then hopefully, you might have a choice of whom to go with. But quite often, you don’t have a lot of choice. You go with the one that works. I don’t want to be flippant about it. There is a strategy, but it is often defined by that particular time and place of the show you put in front of a buyer. Generally, we follow momentum, and then if we’re lucky, we can pick and choose at a later date. But we all know that’s quite rare.”

“It doesn’t necessarily have to mean the best offer financially,” added Abraham. “When you’re trying to finance a show, we are looking at making sure we have enough to start the programming. But from an acquisition base, it depends. Sometimes positioning with a certain broadcaster may be [a lower] financial offer than another competitor, but it’s the right eyeballs to build out the core brand.”

Gardiner agreed that L&M “is a significant decision-making” factor. “You’re thinking about how many times they will play the show on repeat. When it’s not an L&M-driven series, or it’s not fully financed, the finance is everything. Until you’ve got the finance together, there is no show. In those situations, closing the gap, you have to start with the people who are set up and have the deep pockets and can get the show made. At the same time, you always want to think, well, maybe there’s a second window we can bring early. If you can bring the second-window player at a very early stage for presale, then you’re guaranteed that not only are you going to finance it, but there’s a longer-term future as well.”

“The door-to-door sales are tough right now,” Tyre noted. “As distributors, we would rather have something where we can finance it with two broadcasters, and we get the rest of the upside. It’s financed, and everything else is gravy, and that’s the dream. But I think budgets are so high now, and everything has become so much more premium that it becomes much harder. Also, there’s so much competition on the animation front, even to get talent. You used to be able to finance a $300,000 budget ten, 15 years ago with Canadian financing and maybe an acquisition from the U.S.; now you can’t do that.” But there are some examples, Tyre added, such as Malory Towers with the BBC in the U.K., BYU in the U.S. and Family Channel in Canada.

“The streamers are fantastic,” Tyre continued, “but we can’t necessarily launch toys off that. You have to be flexible. We try to be creative on that front and find ways that work, but I think it’s an evolving process right now to get everybody on board and get them motivated financially.”

For Abraham, the challenge in dealing with the subscription on-demand players is that “data isn’t presented. They don’t need to give us ratings because they aren’t presenting to advertisers like linear programmers are. I think there’s going to be a shift. We’re seeing and hearing rumblings of the big VODs offering AVOD. If they do that, there will need to be some data sharing to attract those advertisers. That could be a game-changer for all of us in the L&M world. When you go to retailers or even licensees, they want to know: what’s your stats, what’s your engagement, who’s watching, what is your rank? That’s why it’s super important to have that YouTube element, whether it’s clips and compilations on the side, and you can at least show this is the type of engagement we have. This is the type of real fans we have, something we can speak to in firsthand data.”

Carugati asked the panelists for examples of managing a show’s exposure across multiple windows. Abraham discussed Guru’s experience on True and the Rainbow Kingdom in the U.K., where it has been a hit on Tiny Pop. “They are true partners when they come on a show. They promote and give the attention needed for the show to prosper. We’re on Netflix, we’re on YouTube and Tiny Pop. Those three channels are going to contribute significantly to its success and awareness. We’ve also got a top licensing agent there and an amazing toy distributor in Bandai Toys. When launching any IP in any market, it’s important that everyone’s aligned and has a bit of skin in the game. We have a great marketing team that works with Tiny Pop to ensure that True’s always top of mind. Whether we’re creating custom animations from current assets for their promotions—whether it’s on-air or even on their YouTube channel—these are things we’re working on in the backend that people don’t see, that we do on the fly because Tiny Pop will come to us and say, Hey, we got this campaign going, what can we do? The more you can do for them, the better it is. It’s expensive to create these customized things, but it’s worth it in the long run if you’re creating a whole program behind the show.”

Tyre talked about the classic IP Strawberry Shortcake, which WildBrain recently brought back to the market. “Because Moose Toys is our partner, and we wanted to have it everywhere and get a bigger, broader presence, we did what we call the omni-platform approach. We created 80 4-minute shorts for YouTube. We also have them on Netflix packaged as 9 minutes. We also have them across AVOD through single-property channels for Strawberry Shortcake. We have it on Roku, Tubi, Samsung, Pluto, Peacock. And then, we also are creating some premium CGI seasonal specials, and we sold those to Netflix. Those will be tentpole events and refresh the brand. Both of those are available for linear as well. That’s what we need to do to get the maximum exposure. At least we can have it in numerous places and more markets and get it everywhere that kids are. We’re doing a few different ones like that where it’s a digital-first approach.”

For Gardiner, the best example at Jetpack is Moley. “We were able to presell all of Europe to Warner. They helped with the show’s financing, guaranteed distribution across EMEA, but they had a fabulous marketing team that’s been cooperative. Between us, the producer and the marketing team, we achieved a lot of eyeballs, not just through on-air promotion but also through all the other platforms it went on. We did some Roblox activity. We were lucky to be able to negotiate the second window in Germany at the same time. We had interest early days from ZDF and KiKA, so we could get the guaranteed free-to-air windows. That makes all the difference. When you start talking to toy companies, you’re able to answer the questions that they want to ask straight away: When are you going to be on free-to-air? And because we didn’t sell the whole world in one go, we’ve now got an opportunity to pick and choose whom we might want to work with in North America, in Asia. In Latin America, we also brought Globo on. Sometimes, if you sell the whole world in one go, it’s great. It just means you still have a lot of work to do to reach free to air. How we’re doing it now feels like we can maximize value on a territory-by-territory basis.

Asked if streamers are becoming more flexible on sharing rights or shortening holdbacks, Abraham noted, “It involves convincing the VODs that this is important for the brand if they want to see longevity out of it and want to build it potentially into a franchise brand. What are their plans with this? Is it to fulfill content, and that’s all they need, or do they see the bigger picture? How much backend do they have? If it’s something they know they can see future growth in and can create more subscribers and grow their business, they’re going to be more willing to do so. We’re seeing a little more adaptability to the YouTube space; even Netflix has its own channel where they premiere an episode before they launch. The AVODs are still seen as a competitor, but YouTube, even though it’s an AVOD, is being seen as more of a promotional thing, which is great.”

Tyre added, “For us, having a huge YouTube presence and having that data and knowing the revenue of what it’s worth has been helpful to say, we know what this is worth each year; if you want it, then you need to pay that. It’s a much better negotiation position. Same with AVOD. It gives us the ability to manage that better and push back to sell those rights or not sell them.” On flexibility on the part of the streamers, Tyre added, “Some are tougher, but I think they pay such a premium it makes sense sometimes. It is opening, but it just depends on how you structure and where you start.”

“There’s an expectation that they need to get value for that premium,” Gardiner added. “What that value is and how they get it, I guess that’s sometimes where we have different opinions. Sometimes having something exclusively in perpetuity doesn’t benefit anybody. What we want is a pragmatic approach. You can have a conversation, and it’s not one size fits all. It’s not, These are our deal terms, accept them or don’t. There’s a lot of money to be made if we do this properly and cooperatively.”

On original commissions in the AVOD space, Gardiner noted: “It’s going to be tough for a solely ad-funded network to find enough money to commission shows on a big scale, maybe on a smaller scale. They’ll probably be more looking for non-exclusive rights and those megahits if they can because they’re what advertisers want to see.”

“Dom hit it on the head there,” Abraham added. “Instead, what I think they’re doing is looking at potentially financing unique offerings from current brands, whether that be some shorts, some musical stuff, things we can dig into from our current assets and pull together. Maybe there’ll be some budgets for that in the current state, but I think they all hope to grow big enough to have the budgets that the VOD players have. We hope there are more people with budgets to commission shows. Our budgets, especially in Canada, animation is really expensive right now. Just the cost of labor has gone up almost 30 percent over the last two years. So budgets are high, and you’ve got to get creative at this point.”

On opportunities in the AVOD space, Tyre noted, “There is revenue to be had, but you need a solid library. A lot of it is in the FAST channels, so you need to have numerous seasons to create a singular property channel. We’re doing it with Teletubbies. [AVOD platforms’] license fees aren’t going to be huge. You might lose a bit on the linear side, but you’re gaining on the AVOD. In terms of international, we are starting to do more through Europe and a little in China. It’s a big section of our business right now, which is amazing.”