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Kid prodcos look to Internet distribution

For small- to medium-sized kids entertainment producers fighting for shelf space at retail, the Internet is becoming a welcome and necessary distribution path. Lukewarm retailer response convinced Big Comfy Couch producer, Hollywood Ventures, to start selling its merchandise on its Web...
January 1, 1999

For small- to medium-sized kids entertainment producers fighting for shelf space at retail, the Internet is becoming a welcome and necessary distribution path. Lukewarm retailer response convinced Big Comfy Couch producer, Hollywood Ventures, to start selling its merchandise on its Web site in late November.

‘After spending a few years trying to get retailers to take our products, and them not taking them, we were basically forced into a situation [of finding another way to get our products to our customers],’ says Richard Goldsmith, CEO of Hollywood Ventures.

Hollywood Ventures’ store, named the Benny Smart Internet Store (www.bennysmart.com) after HV’s preschool brand of programming, offers consumers audio, video, toy and apparel products based on its shows at prices comparable to retail, plus shipping and handling costs.

While some retailers are currently carrying Big Comfy Couch video and audio products, none stock merchandise based on its other preschool programs, such as Tik Tak, Winky Dink & You! and Nounou Time.

That’s not to say consumers aren’t interested in obtaining the merchandise, says Goldsmith, who adds that, prior to launching the store component, he received thousands of requests from parents wanting to buy more Couch products.

‘There’s no reason why our retail sales can’t be as good as Barney. Big Comfy Couch brings in one of the largest audiences for a preschool program in the country,’ says Goldsmith. (According to Trac Media, for the July sweeps period, the show grabbed a 1.0 audience share with kids ages two to five in the U.S, ranked fourth with Teletubbies behind Barney at 1.2, Scholastic’s The Magic Schoolbus at 1.3, and Arthur at 1.4). ‘The only difference is that our company is smaller,’ adds Goldsmith. ‘Unfortunately, when we go and talk to a retailer and they have a choice between carrying our product and that of Nickelodeon, the perception becomes greater than the reality. The reality is we have a huge audience for our programs. The perception is we’re a small company, and not worth taking a risk on.’

Bandai Entertainment is another company that’s turned to the Net after experiencing similar retailer disinterest for its animé video titles. Because Bandai’s animé programs don’t have a strong presence on U.S. television, retailers have been reluctant to stock their titles, says Ken Iyadomi, executive VP at Bandai. Launched in September, Bandai’s AnimeVillage.com store features all 15 of its animé series, including the kid-targeted Clamp School and Dragon Ball Z, and will begin selling related toys and T-shirts this month.

Both companies are entering into Net retailing at an opportune moment. A study conducted by e-commerce analysts Solomon-Wolff Associates in the fall identified toys and apparel as two of the top-selling categories for on-line purchases amongst the 1,800 Internet users it had surveyed.

Still, by itself Net retailing is not a quick fix for companies that believe their products aren’t receiving the dedication from retailers that they deserve. Companies need to secure marketing agreements as well, in order to ensure a steady flow of consumer traffic to their sites. To this end, Bandai has opted for a niche strategy, linking its store to a number of other animé-related sites and chatrooms, in addition to advertising its Web address on a good portion of its merchandise. At present, Hollywood Ventures is pursuing marketing deals with portals and other entertainment-based Web sites, but for now, Goldsmith says the company is running its URL address at the end of its programs and printing it on all of its merchandise to raise Benny Smart.com’s profile with consumers.

Although moving products through

traditional retailers remains Hollywood Ventures’ preferred method of distribution, Goldsmith says he can envision a day when his business becomes even more reliant on the Internet.

‘As a tool, the e-commerce world allows a business like ours to become vertically integrated to a degree unlike at any other time in history,’ says Goldsmith. Already, HV is producing audio and video tapes and some books for Tik Tak, Winky Dink &You! and Nounou Time, rather than seeking out licensees for those categories. The potential monetary advantages to be gained makes it worth their while, says Goldsmith.

‘[As an owner of an entertainment property], when you enter into a licensing agreement, you’re only getting a royalty fee-a small percentage of the overall sale. By producing the products in-house, we’re able to keep all of the profit for ourselves.’

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