{"id":15594,"date":"2019-01-18T05:00:10","date_gmt":"2019-01-18T10:00:10","guid":{"rendered":"https:\/\/dev2.worldscreen.com\/tvkids\/worldscreen.com\/"},"modified":"2019-12-13T16:04:32","modified_gmt":"2019-12-13T21:04:32","slug":"play-with-us","status":"publish","type":"post","link":"https:\/\/worldscreen.com\/tvkids\/play-with-us\/","title":{"rendered":"Play with Us!"},"content":{"rendered":"<p><em><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-210119\" src=\"https:\/\/worldscreen.com\/wp-content\/uploads\/2019\/01\/Kids-business-200.jpg\" alt=\"\" width=\"200\" height=\"139\" \/>Kristin Brzoznowski checks in with producers and distributors about the state of the kids\u2019 media industry.<\/em><\/p>\n<p>While OTT players have been dipping their toes into the children\u2019s content pool for a few years now, there\u2019s good reason to believe that some of the streamers are now ready to dive into the deep end. Making a splash, Netflix recently acquired the rights to adapt the works of Roald Dahl, the author of beloved children\u2019s stories such as <em>Matilda<\/em> and <em>Charlie and the Chocolate Factory<\/em>\u2014shelling out a rumored nine-figure sum to do so. In what was billed as a \u201chighly competitive situation,\u201d Apple scored a deal with DHX Media for exclusive new Peanuts content, featuring Snoopy, Charlie Brown and the rest of the gang, as the tech giant builds out its upcoming streaming platform. The market is also bracing for the impact of the forthcoming Disney+, which will feature not only the studio\u2019s venerable animated movie catalog but also a bevy of fresh originals.<\/p>\n<p>Indeed, 2019 is already shaping up to be an interesting year in the kids\u2019 programming landscape, which has been experiencing its fair share of ups and downs as producers and distributors adjust to the new realities of doing business in an increasingly on-demand world.<\/p>\n<p>\u201cWe\u2019re transitioning from a world of programming with a finite amount of shelf space, linear, ad-based, to a world that, at least for now, is over-the-top-driven, subscription-based and has an infinite amount of shelf space,\u201d says Vince Commisso, co-founding partner, president and CEO of 9 Story Media Group. \u201cWhat you put on those infinite number of shelves is a function of what the OTT players find keeps audiences, both in terms of subscriptions and reducing churn. There is no better genre that does that than kids. That makes the overall demand for kids\u2019 [content] robust.\u201d<\/p>\n<p>Andy Heyward, chairman and CEO of Genius Brands International, agrees that, by and large, demand for children\u2019s programming is strong as there\u2019s a plethora of platforms to place it on. \u201cThere are endless outlets!\u201d he declares. \u201cThe marketplace has lots and lots of opportunities, but they don\u2019t pay as much. You have to be more creative and find ways to use consumer products, and everything else, to make the calculus work. But there are probably 25 or so good outlets today that are all doing kids\u2019 programming.\u201d<\/p>\n<p>\u201cThere are certainly enough outlets, but there\u2019s still not enough money for all that content,\u201d echoes Ulli Stoef, CEO of Studio 100 Media and m4e. \u201cNetflix and all these digital players are coming to the market talking about the huge amount of originals they are producing, but the reality is that with Netflix, the majority of it is together with U.S. companies. They are producing some original content in Asia and other markets but not that much in Europe at the moment, especially not on the animation side.\u201d<\/p>\n<p><strong>SHAKING THINGS UP<\/strong><br \/>\nAllen Bohbot, founder and managing director of 41 Entertainment, has also taken note of how the proliferation of on-demand platforms has shaken up the kids\u2019 content business. \u201cWe are now in phase two of this development,\u201d he says, \u201cjust like we saw when the U.S. linear players went global. In both cases, phase one was to commission animation from outside groups, independents and studio animation divisions, leading to diversity and much success, followed by a financially-driven desire to convert to 100 percent in-house productions to own all IPs. The U.S. linear networks did that, and there are indications now across the board that they are revisiting that strategy due to steep declines in ratings. The U.S.-based digital groups today have separate strategies, but the financial temptation is to produce in-house so as to own, and, in time, perhaps they will see that historically this has been proven as not the best way to succeed in the kids\u2019 space.\u201d<\/p>\n<p>This has also had implications from a distribution perspective, says Genevieve Dexter, founder and CEO of Serious Lunch. \u201cWe have found that there is a drop in the amount of content available to distributors,\u201d she notes. \u201cThat does tend to be cyclical. I remember in the \u201990s, people were paying big minimum guarantees for kids\u2019 content\u2014though it excluded boutique kids\u2019 startups at that time. When I set up CAKE in 2001, that was no longer the case. We couldn\u2019t find significant minimum guarantees from distributors to close financing but were able to find the gap elsewhere and in so doing, retained the distribution rights\u2014and hence the birth of CAKE Distribution.<\/p>\n<p>\u201cSkip forward ten years and the birth of Serious Lunch coincides with the rise of Netflix and Amazon providing us with large license fees in individual territories,\u201d she continues. \u201cBut, skip forward another five years and the same clients are moving to new business models that provide producers with a one-stop shop, and it makes life difficult for a distributor to find new content. That\u2019s a big shift.\u201d<\/p>\n<p>It\u2019s different from a production point of view, adds Dexter, who is also founder and CEO of the animation studio Eye Present. \u201cAs a young production company, the SVOD one-stop shop has provided us with a lot of opportunities, so we hope by straddling both production and distribution we can benefit from the cyclical changes in the market.\u201d<\/p>\n<p>The sizable funds that the on-demand players have been putting into their originals have made companies like Cyber Group Studios, which also enjoys a view of the market as both a producer and distributor, up their game. \u201cWhat\u2019s happening with the big SVOD platforms and their budgets is that there are millions and millions of dollars that did not exist before that are now being poured into productions, and consequently the production quality is increasing massively,\u201d says Pierre Sissmann, Cyber Group\u2019s chairman and CEO.<\/p>\n<p><strong>QUALITY COUNTS<\/strong><br \/>\nRemaining competitive, the company has been putting more money toward image quality and technology, Sissmann says. The budget for the first season of <em>Zou<\/em>, for example, was around \u20ac5.5 million to \u20ac6 million. The first season of <em>Gigantosaurus<\/em>, which hits Disney Channel this month, was about \u20ac8 million, while the budget of the upcoming<em> Sadie Sparks<\/em> is in the ballpark of \u20ac11 million to \u20ac12 million. \u201cThe goal is to see this additional money in the final image on the screen,\u201d says Sissmann.<\/p>\n<p>For Guru Studio, focusing on quality (over quantity) has been top of mind, according to Frank Falcone, founder, president and executive creative director. \u201cBecause of the volume of content being produced, the point of differentiation now is the depth of engagement\u2014that\u2019s what kids are going to begin looking for more and more. They are looking for things that help them connect in a stronger way.\u201d<\/p>\n<p>The strategy, he says, is to have many touchpoints around a show\u2014\u201ca range of them, if only to discover what the meaningful ones are. I don\u2019t think we can ever be all things to all people, and certainly a show shouldn\u2019t be all things to children, but it can be meaningful in the ways that it provides the most value for them. It\u2019s our job as producers to find out what those touchpoints are and respond to them. We need to listen to our audience insofar as the various platforms allow us to. We\u2019re all aware that the VODs\u2014and, in particular, Netflix\u2014do not share audience insights, and it\u2019s hard to listen to your audience when there\u2019s a filter there. So, it behooves us as producers to reach out to our audience with other touchpoints, if only to understand what they are enjoying about our shows so that we can bring them more of what they like.\u201d<\/p>\n<p>Among those touchpoints, consumer products have become a bit trickier to exploit in this age of on-demand programming.<\/p>\n<p>\u201cThe kids\u2019 content business has always attracted many participants because of the revenue upside in licensing and merchandising,\u201d says 41 Entertainment\u2019s Bohbot. \u201cRecently, we have not been able to capitalize as much on the L&amp;M, as we chose digital-first strategies or SVOD originals. We are now looking far more aggressively at linear-first strategies based on the traditional co-production model, although perhaps with new market partners, so as to maximize the L&amp;M potential and then monetize the SVOD rights after\u2014soon thereafter but thereafter nonetheless. Perhaps, in fact, the more things change, the more they stay the same?\u201d he posits.<\/p>\n<p><strong>PLATFORM POTENTIAL<\/strong><br \/>\nFor the majority of the companies surveyed, linear television remains the bedrock of their sales\u2014at least for now. Mediatoon Distribution, for one, reports that two-thirds of its business is with linear players and one-third is with nonlinear. \u201cThe nonlinear side is still growing a lot,\u201d says J\u00e9r\u00f4me Alby, managing director. \u201cWhat is not performing well is TVOD. We had thought that DVDs would be progressively replaced by TVOD consumption, but it\u2019s not working that well. We can sometimes see that what we lose with linear we gain on SVOD, but what we lose on DVD and home video we don\u2019t gain on TVOD.\u201d<\/p>\n<p>For Serious Lunch, too, the majority of sales remain with traditional broadcasters. \u201cWe tend to deal mostly with pay- and free-TV; we\u2019re not doing so many local SVOD deals at a distribution level much anymore,\u201d says Dexter. \u201cThat\u2019s largely driven by a change in the SVODs, in that they used to be happy to pick up individual territories and now that position has changed quite substantially. They are getting much tougher on what they require, and that is often hard to marry with our interest in IP and distribution rights. Multi-territory SVOD commissioning terms now mirror studio deals, and co-commissions require a lot of the finance to come from elsewhere and also to be compatible with your finance plan, which is often hard. As a second-window acquisition, it is a requirement that your show be a number one-rated program in key territories. The vertical integration of the SVOD platforms is already happening with in-house licensing and merchandising teams and homegrown animation studios.\u201d<\/p>\n<p>Dexter adds that although the major SVOD platforms are not picking up second windows for many properties, there is an emergence of new worldwide special-interest channels that are, \u201coften without the requirement to deliver in multiple languages, and those deals have been lucrative for us.\u201d<\/p>\n<p>Rights negotiations with the various nonlinear players add to the complexity of the current deal-making marketplace and can be rather tricky to navigate. \u201cThe level of exclusivity and holdbacks required by some partners makes it quite difficult and almost pushes you to try to work in a more traditional way, like first having it on free-to-air television, where the holdbacks and exclusivity restrictions are smoother,\u201d says Mediatoon\u2019s Alby. \u201cSome of the SVOD players, both local and international, are now buying a bit more like how pay-TV broadcasters were buying a couple of years back, with massive holdbacks and exclusivities\u2014that\u2019s tricky. You really have to take a close look at your P&amp;L and make sure that you don\u2019t put all of your eggs in one basket.\u201d<\/p>\n<p>9 Story\u2019s Commisso adds, \u201cThe streamers generally want content for worldwide; sometimes you can carve out territories and sometimes you can get holdbacks, but that\u2019s not the way it\u2019s trending. It\u2019s trending toward, you sell this to a big OTT player and that\u2019s it, it\u2019s sold. There is no value to be garnered in the content thereafter. That is changing the paradigm for [producers and distributors] like us. Of course we want to be in that business, but we can\u2019t be in that business with every piece of content. So, we have to look at what is the marketplace when our shows aren\u2019t being commissioned by our good friends and partners in the streaming world, and how is the content construct different, both in terms of format lengths and number of episodes ordered. There is starting to be two sides of that coin; you\u2019re either on one side of it or the other. In our case, we have to be on both.\u201d<\/p>\n<p><strong>THE RIGHTS STUFF<\/strong><br \/>\nNegotiations also get complicated when everyone is asking for the same set of rights. \u201cThe linear broadcasters are now looking for extended catch-up rights, which then cuts into the rights of the streaming services,\u201d says Studio 100 and m4e\u2019s Stoef. \u201cFor example, the broadcasters here in Germany\u2014if it\u2019s an acquisition, not a German co-production\u2014are looking for 30 to 60 days, sometimes up to 90 days, of catch-up. That is something that Netflix or Amazon wouldn\u2019t accept. On the other side, a German linear broadcaster, which contributes a good amount of money to a co-production, doesn\u2019t accept that we cut out a long window for a streaming service in the key territories.\u201d<\/p>\n<p>Guru\u2019s Falcone likens the rights situation with the digital and linear platforms today to what was happening in the cable and free-to-air space in the \u201990s. \u201cIf rights are available after their premiere on the digital platforms, they start to make their way into the channels space. I do think that there\u2019s great value in that,\u201d he says. \u201cThe volume of content on the VODs means that some of it does not see the light of day. So, there is value in some of the shows created for the digital platforms that isn\u2019t being properly exploited.\u201d This means there are opportunities for linear broadcasters to give new life to content that hasn\u2019t been fully marketed or may not have found its audience yet.<\/p>\n<p>Looking ahead, he adds that having control of rights, or at least a degree of control, is going to be increasingly difficult as the digital platforms strengthen. \u201cIt becomes much harder for independent producers to compete for rights when large international multibillion-dollar-valued companies are also acquiring rights,\u201d Falcone says. \u201cAs an independent producer making shows in Canada, it\u2019s definitely a David and Goliath situation. The digital players need to foster creative upstarts and smaller studios that have a different culture than their own. They are aware that everyone has got to play together at some point. It\u2019s increasingly challenging when you\u2019re trying to find content and you know that you\u2019re in competition with Apple, Netflix, Amazon. They are doing the same thing that we are but with far more resources and capital.\u201d<\/p>\n<p>Nathalie Pinguet, deputy managing director of sales and acquisitions at Superights, observes that while production values and budgets are increasing, broadcaster spending is still tight. \u201cIn this context, we do need to have more partners than before and also to close presales as soon as possible to help our producers lock their budget,\u201d she notes.<\/p>\n<p>Pinguet says that co-productions remain \u201can efficient way to combine key partners and countries.\u201d<\/p>\n<p>\u201cNobody on the independent scene wants to take the risk alone,\u201d says Studio 100 and m4e\u2019s Stoef. \u201cBefore you greenlight a show, you need to have your key broadcasters, and then you have at least one or two additional broadcasters with studio services in the region so that they can contribute with tax credits and subsidies to the financing model in order to fill those budgets. The reality is that the price per minute is going up, while the budgets of the key linear broadcasters around the world are not growing. They can spend less money per minute. That requires safer financing and a more diversified co-production portfolio.\u201d<\/p>\n<p>41 Entertainment\u2019s Bohbot says that broadcasters today are as interested in co-producing and co-owning as they are in making straight acquisitions. \u201cWe are seeing co-production opportunities in new markets, and this is extremely exciting in our financial model because if a market that historically was valued at 5 percent now can generate 33 percent of the budget as a co-production, that is a huge trend line.\u201d<\/p>\n<p>Sissmann says that Cyber Group is doing more co-pros nowadays than it was before. \u201cThere are three reasons why you do a co-production: technical capacity, financial means and creative,\u201d he says. \u201cThe first thing that drives me to co-produce is the creative, then it would be technical or financial.\u201d<\/p>\n<p>Serious Lunch\u2019s Dexter, meanwhile, is seeing fewer co-pros in the kids\u2019 landscape these days. \u201cPeople want to find a way of financing their shows that doesn\u2019t involve official co-production\u2014they seem to be shy of it,\u201d she says. \u201cWe\u2019re exploring U.K.-Ireland-France co-production and U.K.-Ireland-Germany co-production. But, generally speaking, there doesn\u2019t seem to be a willingness to go into that scenario.\u201d<\/p>\n<p><strong>TEAM SPIRIT<\/strong><br \/>\n\u201cI really enjoy European co-production,\u201d Dexter adds. \u201cIt is hard, but the tendency to want to simplify everything and not really integrate with other cultures is quite sad. You can make really good and long-lasting relationships, which can lead to bigger things at a corporate level. If you can do a co-production together, you can pretty much do anything together.\u201d<\/p>\n<p>\u201cThere used to be a lot of co-pros that were going on with France and Canada, but candidly, those are not as attractive as they used to be,\u201d says Genius Brands\u2019 Heyward. \u201cThe co-productions that are meaningful are the ones that are being done in Asia. If you look at the numbers for ones that have historically been done in France and Canada, the obligations that you have to take on in terms of spending a certain amount of money in those territories and spending a certain amount on local talent offset the benefits that can be garnered from the tax credits or subsidies in those places. We\u2019ve been doing co-productions in Ireland quite a bit in the last couple of years because we\u2019ve been able to take advantage of certain subsidies and tax credits there\u2014but I don\u2019t know if those will continue. So, you\u2019ve got to constantly stay on your toes.\u201d<\/p>\n<p>Heyward says that producers and distributors also need to stay vigilant about maximizing the 360-degree potential of a property in order to get the financial return necessary to compete in today\u2019s marketplace. \u201cHypothetically, let\u2019s say you have a half-hour program costing $250,000 to $300,000 to produce\u2014who is paying those license fees? There may be one or two broadcasters doing that for an exceptional product, but by and large they are paying less than that. So, is everybody going to go into deficit financing and hope for a hit? There is no syndication after-market anymore. People have to figure out how to pay for this stuff; where does the money come from?\u201d<\/p>\n<p>The bulk of it, he says, is coming from consumer products. \u201cYou have to look at it in a holistic way; it\u2019s not just a piece of content anymore,\u201d Heyward adds. \u201cThe content is part of an overall business.\u201d<\/p>\n<p>For Mediatoon\u2019s Alby, budgets and rights are two of the key areas he\u2019s keeping a close eye on as the company navigates the challenges facing the kids\u2019 business. \u201cTen years back, you could have a broadcaster that would finance a very significant part of your show and would get a small level of exclusivity and holdback. Today, we\u2019re in a marketplace where there are lots of different players and in which you have to fight to get exclusivity and holdbacks that are easier to work with and less severe. At the same time, all the prices have gone down. So, you have to sell to a lot more people. You have to really maximize each sale with an augmented number of broadcasters so as to have the same kind of income as ten years ago.\u201d<\/p>\n<p>For now, producers and distributors must continue to ride the highs and lows that come with these waves of change\u2014but shouldn\u2019t lose sight of the traditional businesses that have been delivering all along.<\/p>\n<p>\u201cI think that we are at a point of respecting the growth of SVOD and its financial contribution to our production costs, but that the biggest successes in the kids\u2019 space in the last five years have all had something in common: they have maintained their linear-first strategies, expanded their licensing and merchandising presence all while monetizing their SVOD rights,\u201d says 41 Entertainment\u2019s Bohbot. \u201cWe should not forget what attracted so many of us to the animation space in the first place.\u201d<\/p>\n<p><em>Pictured: Guru Studio\u2019s <\/em>True and the Rainbow Kingdom.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kristin Brzoznowski checks in with producers and distributors about the state of the kids\u2019 media industry.<\/p>\n","protected":false},"author":350,"featured_media":15595,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pmpro_default_level":0,"footnotes":""},"categories":[79,21],"tags":[],"class_list":["post-15594","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-features","category-top-stories","pmpro-has-access"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Play with Us! - TVKIDS<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/worldscreen.com\/tvkids\/play-with-us\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Play with Us! - TVKIDS\" \/>\n<meta property=\"og:description\" content=\"Kristin Brzoznowski checks in with producers and distributors about the state of the kids\u2019 media industry.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/worldscreen.com\/tvkids\/play-with-us\/\" \/>\n<meta property=\"og:site_name\" content=\"TVKIDS\" \/>\n<meta property=\"article:published_time\" content=\"2019-01-18T10:00:10+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-12-13T21:04:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/worldscreen.com\/tvkids\/wp-content\/uploads\/sites\/9\/2017\/07\/Kids-business-featured.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"417\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Kristin Brzoznowski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kristin Brzoznowski\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"17 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/worldscreen.com\/tvkids\/play-with-us\/\",\"url\":\"https:\/\/worldscreen.com\/tvkids\/play-with-us\/\",\"name\":\"Play with Us! 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