Keeping the U.S. in balance with the rest of the world

Canadian animation producer Nelvana has had great success cracking the U.S. market, evidenced by this fall's CBS six-pack addition to a long list of kids shows created for American audiences. Toper Taylor discusses the company's diminishing reliance on the U.S. market....
December 1, 1998

Canadian animation producer Nelvana has had great success cracking the U.S. market, evidenced by this fall’s CBS six-pack addition to a long list of kids shows created for American audiences. Toper Taylor discusses the company’s diminishing reliance on the U.S. market.

As a Canadian company that has been producing shows for U.S. outlets for the past three decades, and more recently, running offices in both countries, Nelvana has felt firsthand the changes in the American television market.

Nelvana’s list of children’s programming picked up by U.S. outlets spans from our earliest specials (Cosmic Christmas, Devil & Daniel Mouse), to our first series (Ewoks & Droids, Carebears), to our most recent accomplishments (Rolie Polie Olie, Maurice Sendak’s Little Bear, Franklin the Turtle and the rest of the 1998 CBS Saturday-morning schedule).

With the growth of children’s programming exhibitors in the U.S., there are shrinking economies because the growth in advertising time is outpacing the demand for the same. License fees are coming down, and the ability to distinguish one’s brand-whether a channel, programming or an intellectual property-is becoming more challenging and certainly more costly.

But in what other consumer-driven, commercially oriented country around the world can you flip a switch and be in 70 million to 80 million homes? The power of television in the U.S. is perhaps greater than it’s ever been because there are more dedicated kids services, a broader array of advertisers recognizing children as valuable consumers and a greater variety of high-quality, often educational, responsible programming than any other time in the history of broadcasting. More choices lead to consumer discretion. But when that consumer latches onto a property, there is no other marketplace in the world that can spawn a US$500-million merchandising campaign. The U.S. is the only marketplace in the world in which a second distribution platform can generate hundreds of millions of dollars in profit, such as 20th Century Fox’s The Simpsons relishes now in syndication. Our properties Little Bear and Franklin the Turtle are currently on a launching pad targeting that elusive consumer-products bonanza.

Because of lower U.S. license fees due to increased kids program services and slow upfront advertising markets, and due to Nelvana’s focus on producing only proprietary productions, Nelvana’s financial reliance upon the U.S. is consistently diminishing. Ten years ago, approximately 70% of our revenue was generated out of the U.S. Today, only about 40% originates Stateside. But to ignore the power of the U.S. market would be irresponsible.

Balancing the importance of the U.S. is the international market. Over the past three decades, we’ve witnessed the dramatic increase of children’s entertainment and program services in Europe, Canada and around the globe. Such growth results in increased foreign distribution revenue, more foreign subsidies available for co-productions and higher demand for properties indigenous to the primary funding territories.

Nelvana embraces these market transformations by seeking international properties like Redwall, Babar, Tintin, Rupert Bear and Pippi Longstocking. We endeavor to produce these programs with European partners and, sometimes, without a U.S. exhibitor upfront (but with a U.S. strategy in mind) to create entertainment that is culturally sound in the co-producing countries. Our first prime-time, adult-oriented series, Bob & Margaret, is a perfect example of this thinking: the lead characters speak with British accents, and the series takes place in London, without apology. Comedy Central took an enormous risk with these perceived strikes hampering the show’s potential success. Happily, everyone came out a winner. Bob & Margaret would not have made it onto American television 15 years ago because there were significantly fewer gatekeepers buying programs for fewer exhibition services.

As the economies of consumerism expand internationally, Nelvana launches country-by-country licensing and marketing plans. For example, Babar’s most successful merchandising territories are France and Japan, Rupert Bear’s are Great Britain and Australia, and Pippi’s are Germany and Scandinavia.

Nelvana scours the globe for opportunities. We are partners in Teletoon Canada and advocate its international expansion. We continue to analyze similar business ventures in channel ownership, as well as other forms of vertical integration, such as publishing, a business that Nelvana has penetrated with its recent purchase of Canada’s Kids Can Press.

To succeed, Nelvana must be nimble, produce globally and strategize locally.

Los Angeles-based Toper Taylor is the president of Nelvana Communications.

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