At this year's KidScreen in New York, Heather Kenyon surveyed the participants on how they're surviving the recession and what we all should do to keep the animation industry afloat.
The KidScreen Summit in New York City is now a major market. Rivaling MIPTV, KidScreen is a significant event to move one's projects forward. This year arriving just seven weeks before MIPTV, the hardcore group of kids' business professionals descended upon the Hilton New York in Midtown for meetings, panels and schmoozing.
I would have said a year ago that there were three must-attend kids programming markets -- KidScreen, MIPTV and MIPCOM. However, as travel budgets get cut, it seems this year a lot of people are choosing between KidScreen and MIPTV, attending one or the other. If this trend continues, I can see KidScreen having an edge on MIPTV. It is amazing the amount of people that are sitting out MIPTV this year, waiting for MIPCOM. Why travel to Cannes and float around the massive Palais, where programming of all genres is on sale, when one can visit the Big Apple and concentrate on the select companies that make our business go around, they say?
Plus, the New York location is well suited -- easy for the all-important Canadians, a short flight for Europeans and a similar but different long haul for Asia and Australia. That being said, this year buyers were sparser at KidScreen, but everyone was still busy and talking -- talking about how to do business in this new economy and without using the old models. Attendance also seemed more focused -- and no one minded! KidScreen's power used to be that only folks "in the know" would appear and this year was a harkening back to that. Everyone enjoyed the fact that there was plenty of seating and, that "crazy guy with the bug project" wasn't there. ("Does he have to hum the theme song the entire time his wife is pitching?")
While at MIPCOM, the first spasms of how bad this downturn is were just beginning to reveal themselves, by now we are all well aware of the new reality we are facing. It seems almost fitting that the setting was New York, probably one of the most impacted U.S. cities. The city felt like L.A. did during the WGA writers strike; a little quieter, a little slower, a little emptier.
For me, I have seen a marked difference since MIPCOM. Prior to MIPCOM, there had always been a number of jobs pending. However, in the month after MIPCOM, most of these opportunities disappeared. Either the companies are now not approving new headcount, are in serious financial trouble with rumors of bankruptcy or have lost their angel backers. From new start-ups to major media conglomerates the story is the same: "Hiring is on hold." However, I have seen interest in my consulting services triple. Where companies cannot afford to hire someone full-time, they are now hiring a consultant. Small, simple jobs are also being outsourced. I was recently hired to help with a company's one sheets. The task used to be handled by their marketing department, but when a department of five is now down to two, some jobs just can't be handled internally anymore. Since my life has changed so markedly in the past few months, I wondered how others were faring and what they were doing to ensure their success through these difficult times.
Here is what they had to say...
Certainly these are challenging economic times. We want to believe that it is all part of a cycle and will come back. We want to subscribe to the old adage of buy low, sell high, and invest during the downturn to be stronger when the economy turns around. It takes courage and resolve and a whole bunch of other buzzwords to actually follow through.
The challenge this time around is that in addition to the downturn, TV and traditional media are evolving and transforming (some would say dissolving) before our very eyes. We are truly in the midst of some of the most important changes to media, and the ways in which it is consumed, the world has ever seen. TV has only been around for 60 or so years. Nothing is forever. Luckily (kind of), the animation and kids business has been forced to redefine itself over and over again for the last 15 years. The days of the U.S. broadcasters paying 100% of the budget of a show and the producer being able to own 100% of the show are long gone. In the process we have grown up and been forced into the role of hyper-entrepreneurs -- starting over every time we get a new show off the ground, each time a miracle in itself.
So how has it changed our approach? Well for one, it reminds us that the most important thing as an independent producer is to make sure that you invest in the development of IP, which means great, great shows. It has always been the only leverage we have. We don't have deep cash resources, and we don't have executive teams that cover every aspect of building a children's brand globally. What we do have is resourcefulness, creativity and the drive to survive.
It is amazing what can be done when you have to perform or its game over. When it's like that every day, you develop a keen survival instinct and you focus your energies into the areas that make the most impact. So from our point of view, we are being very careful where we spend our investment dollars and ensuring that our properties will attract the right partners who can help make things happen.
Our experience on The League of Super Evil, our newest series set to launch this March in North America, is a good case in point. We developed that show over a three-year period, and in the end we were able to attract the best broadcast partners on every continent, and are now set to roll out doom across the globe! (All in good fun, of course!) Without great writing, compelling animation and lots of laughs, we would have nothing.
It's true that the effort required to maintain this feels herculean. One minute we're on the precipice of great success! ... And then we start all over again with the next project. The clock is ticking! But we'll figure it out. After all, we've got the courage, the resolve and all those other buzzwords.
What we have been doing in this time of global recession is focusing our energy and financial resources on making the most of our existing brands, rather than investing in new brands. In January, we therefore decided to commission more episodes of proven successes and ordered 35 additional episodes of our flagship show, Little Princess, bringing the total number of episodes up to 104. This will support the L&M program, which launched in the U.K. in 2008 and is rolling out in France, Germany, Spain, Australia, Scandinavia and Eastern Europe this year. In the same manner we are commissioning not one but two new seasons of Raymond, bringing the total number of episodes to 78x7 (we currently have 26x7). Both series will be delivered between Q409 and Q210. For 2009, we were lucky to have put in production our show My Life Me (52x11) in early 2008 so that we do have a completely new show to offer at this year's MIPTV despite the recession.
Ivanka Hahnenberger, General Manager, SN-VIP
We were probably more ready than other companies for this challenge since we purchased VIP out of receivership in July 2008. When we took over the company we were already thinking about creative ways to pull it out of the ground. Furthermore, before we bought the company, we did, not only a company, but also a market analysis. From this we learned that MG [minimum guarantee] rates were going down and retail real-estate for licensed products was being reduced, which was leading to licensees taking on fewer licenses. For instance, we heard from one potential licensee that two years earlier there was a retail outlet that took products from up to 100 licenses and that by 2008 they were limiting themselves to 30. Finally, we discovered that companies such as Nickelodeon were opening more and more local licensing divisions. With this environment ahead of us we decided to apply the following strategies:
Look for unique licenses in other domains than television but that intrigue the youth market. Since August we have added to our portfolio licenses that come from the Internet, mobile and graphic design worlds and take advantage of styles and subjects that are very popular with consumers today (Spiss, Drop720, Gummibaer, Honeybee). We decided to diversify the portfolio across age groups and segment appeal so that the properties did not compete with each other in-house, as well as in front of licensees. We now have a portfolio of licenses for target groups from 0 to 65.
We also decided to focus one part of our business on a new type of license: architectural copyrights. In France, in particular, and soon globally, building designs are copyrighted so that if anyone wants to take a photo, shoot a film or use the design of an architect's work, they have to pay a royalty. This concept came from the fact that we inherited the Grande Arche de la Defense and that my business partner and VIP's president Gregoire Parcollet is an architect by trade.
Moreover, we all know that in hard times people turn to comfort values and comfort foods so we added Choco'Miss, the chocolate icon, to our licenses. We have put strong emphasis on Alain Grée, a European classic, and Sarah Kay, the property that was the idol of many young girls in the '70s and '80s. As a result, she has a nostalgic element and her artwork and values lean heavily on nature, the environment, organic products and caring for pets and animals.
Commercially, we are growing VIP as an international brand and we are looking to use local sales reps and business partners internationally, as well as a small, very select number of sub-agents. These strategies have us facing these economic times lean and diverse in a bigger arena.
Kelli Bixler, President/Exec Producer, Bix Pix Ent., Inc.
I had the most productive time ever at KidScreen this year. And in spite of doom and gloom everywhere, 2009 is the year for stop-motion! While you might think Coraline is part of the reason, the other is this "whole recession vibe." There is an energy brewing all over the world that realizes we have to rethink. We must do things differently and that means moneywise, creativewise, peoplewise! I feel these changes can bring huge opportunities to Bix Pix, a stop-mo studio that has been doing things differently since our inception...
Stop-motion is not for the faint-hearted! Perhaps in this present climate, the entertainment industry will see what we've been demonstrating for years. Stop-motion can be less expensive than live-action, as slick and smooth as CGI and produced on a much tighter schedule than 2D.
Yes, KidScreen 2009 was less populated than 2007. But people seemed to be more receptive. There was a genuine openness in finding new ways to do business. I had more meetings with people I actually want to work with; and instead of giving lip service to thinking "outside-the-box," I believe there was a synergy present that realizes we must actually be "outside-the-box" in order to succeed!
David Snyder, CEO, Brandissimo!
In this current economic climate, our goal is to continue to push our team creatively -- making good things great and great things even better. It's our way of protecting and motivating our artists and producers. "Worry" isn't a good energy when you're trying to crack kids up. In this environment, it's key for us to be open with our creatives about the state of our business and the security of their jobs and keep them motivated and excited about the work. On the client side, we're applying this energy to current customers by over-delivering on our efforts to entertain kids and build brand equity. We don't want our clients to be able to imagine life without us!
We're finding that companies are still looking for smart, creative solutions for their businesses. For example, with the NFLRUSH Zone, traffic continues to grow as we add creative solutions such as new games and multiplayer games. Our bet is that online environments with fresh, fun and funny content, will continue to add users. We believe families who spend more time at home as a result of the economy are ultimately finding these alternatives and our numbers show more and more kids are flocking to the site. At our Urbaniacs.com site, we're seeing an increase in business since we've upgraded and improved the site with new games. Wedgie Toss 2: Back in the Crack has been a huge hit, proving to us that even in hard times, when the chips are down, there's nothing more redemptive and exhilarating than a good online Wedgie Toss!
Successes such as these have led to a great referral business and we are actually growing this year, which is incredibly fortunate. For us, it all comes down to taking great care of our customers and delivering fun content on a strict budget.
Genevieve Dexter, Partner & Commercial Director, Cake Ent.
Whilst our quarterly profit and loss account is being cushioned by substantial gains in the exchange rate from the Euro and dollar to the pound, we are however having difficulty in making big pre-sales in Europe. This compounds the difficult situation in the U.K. as a result of losing both the ability to sell to two platforms, and ITV as a main player in the kids' arena. As we are small and experiencing early growth, it is difficult to assess the impact as of now.
Luckily for us, the U.S. has been our largest market this year, where in a commercial environment there is always money available for shows that are breaking ratings records. In our business when you look back on your accounts for the year, there are always just three or four deals that made the difference. Since we are a small company as I mentioned, it is difficult to see how we can economize on overhead, so we are looking carefully at each investment and trying to balance it with one or two new shows where we don't have to [invest].
As the animation cycle is slow and orders that were placed over a year ago are still in production, I feel that we will be hit with the recession in the next year in a more serious way, and will rely on good fortune and specific business opportunities to save us from the impact.
Frank Saperstein, SVP, E1 Television, E1 Kids and Animation
The recession is definitely having an impact on the television business. Consumers are spending less, which has caused the advertisers to buy fewer commercial spots or spend less on the advertising spots that they do buy. This has trickled down to the broadcasters' bottom line and I see that they are financing fewer projects and giving smaller episode orders and lower license fees to the few precious series that they are producing.
At E1 Kids, we are being even more selective of the properties that we are putting into development and are focusing on projects with very strong broadcaster interest or with a broadcaster tied from early on as our development partner. Another focus is fully monetizing the properties that we currently have in production by doing everything possible to get second and third season orders so we can fully realize potential revenue through our international sales, home video, music and L&M divisions. I believe the next 12-24 months will see broadcasters ordering fewer series and is a time when producers will need to be very wise about how they devote both their financial and human resources. The silver lining is that when people don't have a lot of money to go out they tend to stay home and watch more TV.
Chris Moujaes, President & CEO, Boomstar, Inc.
The global recession has shown its face in our industry and has had a visible impact on buyers, creators and animation service providers alike. Change is inevitable and I strongly believe that challenging times like these provide opportunities to be very creative. At Boomstar, we've been steadily growing into other lines of business including animated-entertainment film/TV financing, building online media holdings and expanding service offerings to other industries.
The long-term changes will depend on the length of the recession. Creators and IP owners are already seeing a change in buyers' willingness to take risks on new properties. Co-pros will become even more prevalent as partners look to spread the risk and share in rewards. However, I see times like these as a prime time to explore new ideas and properties. Clinging to the old approach, while comforting, is what everyone is doing. What better time to be poised for the economic recovery than now? I mean, the whole world has changed dramatically, shouldn't we?
We've all heard it before, the Chinese symbol for crisis is the same for opportunity. We all now have the opportunity to either commit hari-kari, or go green and grow our own veggies. But there's still going to be bills beyond groceries, and to pay those, business survival strategies in downturns always seem to include: 1. trim budgets, 2. cut costs and 3. cut costs (and repeat).
Smaller independents, "boutiques" like my own company, seem oddly better prepared for downturns, since by the definition of being small, our overheads are too. However, trimming even more is crucial and quickly becoming a fine art: we're using some old fashioned concepts (think of how those pioneers survived) -- by sharing! Sharing costs by splitting costs, even with friendly competitors. For instance, we're sharing our MIPTV booth this year, which cuts our MIP costs in half!
Another survival tactic we're using: time management and trimming wasteful activities. Don't e-mail as much, and you won't get as many emails back. A phone call instead can resolve and troubleshoot problems more quickly. Listen first, pitch second -- hear what your buyers really want to buy and reinforce that you're going target your pitches to them. They appreciate your saving them time too.
Lastly, the back-to-basics recession might have a great impact for indies: perhaps the days of true talent and original ideas will take off again. Inventive content can (and will) spring from great adversity. Let's consider that we're in an "ideal incubator state" for new shows. Once we're over the recession, we may just reflect and say, "That was the best time for experimentation and taking the time to test and improve ideas, while we all waited for the bigger players' budgets to be revived."
So to all big and small industry friends, let's hunker down together, survive and prepare (or help colleagues strategically prepare) new content for the inevitable upturn in the global economy. And if it doesn't happen overnight, that just gives us more time to test our content and see if it catches on with audiences. Get some kind of distribution going, even if it is small exposure to start. It's better than no exposure. Get your content moving, even if money's practically frozen, and keep repeating: springtime will come again.
Here at FatKat, we began trimming our spending a year ago. Sure, there's always more you could trim and several low risk/high reward methods to market your services, but the saying eventually holds true, you have to spend money to make money. Conferences and trade shows such as KidScreen remain a valuable opportunity to keep top of mind in the industry and source out existing opportunities. Our industry is experiencing a slow-down -- not a stop.
Derick Cobden, Managing Director, Airwaves Sound Design Ltd.
A global recession affects everyone whether you are selling a service or a product. As financing becomes more difficult to acquire, fewer productions get made. With fewer productions there is more competition from the top of the food chain down. This trickledown effect just takes time to hit different areas of the industry. The good news is that it's part of a cycle that is not new to us or the industry. The question is how long the cycle will last and who will come out ahead. Being a service provider, our model has always been diversification. It protects us when one industry or another isn't thriving. We also become more selective with the work we take on, qualifying companies we do business with to reduce our risk. The market is currently saturated with content -- some of it is good, a lot of it bad. Eventually with less product, we will see a shift in demand and with that will be stabilization and finally growth. It's basic economics.
Heather Kenyon is currently a consultant specializing in animation and IP development. She is the former senior director of development, original series at Cartoon Network, where she focused on the development of animated comedy, comedy adventure, action-adventure and live-action series for children 6-11 years old. Prior to joining Cartoon Network, she was editor-in-chief of Animation World Network. A graduate of the prestigious School of Cinematic Arts at the University of Southern California, Kenyon began her career in animation at Hanna-Barbera Cartoons as a recruiter and in production.