As the switchover from analogue to digital transmission creeps across Europe, new digital terrestrial television (DTT) broadcasters are popping up, creating a larger market for kids content. And in turn, producers, distributors and broadcasters are dealing with the growing pains produced by a huge shift in reaching audiences.
‘It’s a lot more complicated than it used to be,’ says Josh Scherba, VP of distibution at Toronto-based international distributor Decode Enterprises. ‘There’s a higher premium on market knowledge than there ever has been because the technologies are changing so quickly and each country has its own idiosyncrasies.’
And that might be something of an understatement. According to industry tracker European Audiovisual Observatory (EAO) there are 224 children’s channels in Europe to date and 17 of those sprung up just last year. In fact, the incidence of children’s channel launches was second only to that of dedicated sports channels of the 245 that launched last year.
EAO also reports that 24 countries now have DTT systems up and running, while three more are in the process of launching them and, at the end of 2009, there were more than 730 DTT channels bring broadcast on the continent. As it stands now, DTT services have been completely implemented in six European countries – Germany, Denmark, Finland, Luxembourg, the Netherlands and Sweden. Next to follow are Austria, Belgium, the Czech Republic, France, Italy and the UK. Malta, Spain and Slovenia are lined up after that. And earlier this year, EAO noted France, Italy, Spain and the UK – the four markets with a large terrestrial TV audience – had reached high levels of DTT penetration, as they near analogue switch-off.
A level playing field
Along with an emergence of more kids channels comes a plethora of new buyers hungry to snap up content. Karine Leyzin head of programming at French network Gulli, says there are far more opportunities now for independent producers. She contends DTT channels often have quite a bit of airtime to fill and are more open to experimenting and willing to schedule shows that likely wouldn’t get a chance on major terrestrial networks. Gulli, a DTT channel owned by parentco France Télévisions, which launched four years ago, airs from 6:30 a.m. to 11 p.m. and has an average of 150,000 daily primetime viewers.
Moonscoop president of worldwide distribution Lionel Marty, whose series Code Lyoko is airing on Clan TV (Spain), RAI Gulp (Italy) and France 4, agrees that the DTT kids channels have a strong appetite for new programs. He particularly likes that their scheduling practices often provide numerous slots and a lot of repetition and exposure for a series, as opposed to the limited real estate available on terrestrial channels. In fact, he credits Moonscoop’s ability to roll out a Code Lyoko licensing program in Spain to the success its had airing on Clan TV.
The vast number of channels has also created somewhat of a level playing field for broadcasters – leaving distributors scrambling to make more sales. ‘One would have hoped with the emergence of these digital free-to-air channels that it would be another supplementary way to sell to the market, but the truth is that most of the kids pay-TV channels consider the digital free-to-air channels as direct competition,’ he says.
Gulli, which has become a major player in France, is an example of a channel that terrestrial powerhouse TF1 considers to be direct competition. However, Sherba explains that as dedicated kids channels, pay-TV broadcasters such as Nick and Disney also consider DTT newcomers to be direct competition. ‘As a distributor, it gives us more places to sell, but perhaps diminishes the value of each of those places,’ says Scherba.
Overshadowing the increased sales opportunity, in fact, are the smaller license fees that come with a DTT deal. Bristol, England-based Aardman Animations’ head of sales Alix Wiseman says it’s challenging adapting to the new landscape, in which you can’t demand 30% of a production fee on an acquisition anymore. However, she’s choosing to look at the bright side, contending the increased exposure gives companies the opportunity to build brands.
‘In the old days, if both the free-TV and pay-TV broadcaster said no, then you had nowhere to go,’ Wiseman says. ‘Now, at least you have an initial platform to work off and potentially make enough success of a show that it raises the eyebrows of bigger channels.’ She does admit that accepting a lower license fee is part-and-parcel of this strategy.
Barcelona-based Elastic Rights president Ignacio Orive admits you have to pound the pavement a bit harder to make more sales to meet revenue budgets, but he’s also seeing an opportunity in the proliferation of DTT in building exposure. Spain is an example of a formerly closed broadcast market that began opening up to content producers worldwide with the issue of DTT licenses five years ago. Orive estimates that DTT is now available in 80% of households in the country, and that will jump to 100% penetration in April when the switch off happens. ‘The channels that used to lead the pack a few years back had a 30% share. Now the highest-rated channel in Spain has approximately 14% to 15%, and there’s a large number of channels that are entering between 0% and 5%,’ he says. And right now, Elastic Right’s kid-targeted telenovella, Patito Feo, is delivering more than half a million viewers every night on Spain’s DTT Disney Channel.
And Orive says DTT success in Spain is also benefiting the series’ sales elsewhere. ‘We would have cancelled all hope of selling the series to any of the major Spanish players,’ he says. ‘But the success we’re enjoying on Disney is so huge that they revisited their decision, and Telecinco took the series on Saturdays and Sundays behind the Disney premiere.’
Rights, rights, rights
In an effort to overcome lower license fees and ring as much revenue as possible from their catalogues, windowing broadcast rights – as Orive did with Patito Feo for Disney and Telecinco – has become the go-to strategy. Fellow Barcelona-based distribution company Imira also uses this as a method of structuring deals, as channels will pay higher fees in order to secure first-run/first-window rights. ‘Then we sell the show to other channels, which can come in months or a year later at a lower license fee,’ says Imira’s head of distribution and marketing, Christophe Goldberger.
However, some broadcasters are balking at the idea of windowing as the competition for viewers grows ever-tighter and their acquisition budgets get smaller with the influx of these new DTT channels. For her part, head of acquisitions at Norway’s NRK Super, Elin Raustol, admits the amount of available airtime has prompted the need to buy more programming, but at the same time, she’s working with a much lower budget. She says her team, which programs the DTT channel targeting kids two to 12, now has to acquire more episodes, obtain longer windows and get more runs out of a single licensing deal. ‘One run on a digital channel has less value than it had on a main channel,’ she says. ‘We need about three or four runs on different slots to reach the same amount of children as before.’
In a tight market, where there are more kids channels to choose from, NRK Super attempts to lure viewers (as most kidcasters do) with exclusive programming, blocks and promotions. Raustol also makes a point of harnessing catch-up video rights for use on the channel’s website. She says these rights have become increasingly important as NKR Super branches out on multiple platforms.
Similarly, Gulli’s Leyzin contends, ‘We know that kids’ behavior of consuming media is changing. We compete with the Wii and the internet now. So for a brand like Gulli, the personality of the channel is very important.’ In short, branding and channel identity is becoming just as big an issue for DTT players as it is for established networks like Disney or Nickelodeon.
CBeebies controller Michael Carrington says thriving in the UK market, which now has 24 dedicated kids channels, means connecting with its specific target of boy and girls under six. He says license fees for kids programming in the UK actually went up when DTT channels started launching and have remained static over the last three years. He also says his channel looks for longer windows to strip the series on DTT, and it buys exclusive terrestrial and digital rights in the same package.
Striving to build a brand means giving viewers what they want on multiple platforms, which has made investing more in order to acquire multiple exclusive rights to a property the epicenter of many a drawn-out negotiation process. And it doesn’t look like deal-making sessions are going to get any shorter. Besides online rights, broadcasters who want to make sure they have all bases covered are increasingly asking for IPTV rights as part of the package. Decode’s Scherba, who has been dealing exclusively in selling IPTV rights to Korea, says the digital platform is also quickly taking hold in markets that never had an established cable industry, as another vehicle for existing pay-TV broadcasters. Scherba also ID’s Australia, whose massive size never lent itself well to the logistics of a cable system, as an emerging market for IPTV as a platform.
Imira’s Goldberger is more sanguine about the situation. ‘The industry is still working the same amount of money being recycled from the same business model, trying to expand content as much as possible,’ he says. ‘People are talking about the importance of paying every time you see something on the web, but until we put together solutions that will inject new money into getting series made, the kids TV industry will be in a difficult position.’