Once considered the low-budget, low-profit ghetto of kids entertainment, preschool is finally earning respect as shows like Maisy and Teletubbies land key slots on Nickelodeon and PBS respectively-and licensed goods surrounding them start to dominate floor space at retail. This year’s preschool newcomers bear little resemblance to Barney, and their staying power is largely unproven. As these key players in preschool explain, the category has unique demands and requirements, many of which have to be met in order for producers to make a business out of that market. In the final analysis, one fact is clear: as a sector of kids entertainment, preschool’s not tiny anymore.

Lucinda Whiteley is senior vice president of production at PolyGram Visual Programming, based in London, producer of the Maisy series in the U.K. Maisy will join the Nick Jr. block in spring 1999.

‘Obviously, when you’re looking at preschool overall, you’re looking at parents as well as children, which is a crucial difference in terms of marketing. [Maisy] is one of the last remaining modern classics. It is such a strong character with good pedigree, so we were able to go to Nick and they knew instantly what we were talking about.

In preschool, you’re always renewing the audience. With the six to 11 [demographic], the whole issue of fashion comes in, whereas in preschool, the very young child has very similar needs across all borders. As they get older, [children] have different cultural experiences.

Preschool product from the U.K. seems to be traveling back into the U.S. Today, the U.K. [producers] are very heavily dependent on making a U.S. sale first.’

Mark Lieber is senior vice president of children’s programming at PolyGram Television, the U.S. distributor of Maisy. ‘If you’re a preschool producer, you have to find the best [outlet], and for Teletubbies, Barney and Sesame Street, this was PBS. However, Nick is encroaching on that [dominance] now with Blue’s Clues.

Preschool product demands a very successful distribution platform, and we’ve already got that with Maisy. Nick has been an integral part of the creative process, contributing interaction and thoughts. [The people there] care about the show, and to them, the creative comes first and all the rest follows.

Environment [in preschool] is crucial. A successful show in the U.S. generally translates to success overseas.’

Kenn Viselman is the founder and newly named chairman of the board of New York-based The itsy bitsy Entertainment Company. The three-and-a-half-year-old marketing and licensing company holds the exclusive rights to preschool phenomenon Teletubbies, as well as Noddy, Shining Time Station and Tots TV. The latter, from Teletubbies creator Ragdoll Productions, debuted on PBS in October 1996, and is slated to join PBS’s daily lineup this fall.

‘I signed onto Teletubbies in September 1995, when it was just a concept. The concept was right because there were no shows for the very, very young child. I think I’m the only one making a business [solely out of preschool] today.

For us, the licensing fees are not lower, not as long as you provide quality programming. PBS paid a tremendous amount of money for Teletubbies.

I opened the company with the very specific knowledge that the focus of the major players-Disney, Viacom and Warner Bros.-was age seven and up, whereas the target for the merchandising was age six and under. My own feeling was that kids over seven are not playing with toys. This was obviously something the toy industry was not publicizing. Yet, the retailers were devoting up to 24 feet of space to preschool. Right now, there’s a thing going on at retail where Godzilla is at one end [of the store] and Teletubbies is on the other-the two [lines] are fighting over the space.

When it comes to selling TV shows or merchandise, for me, the two things are united-it’s all part of an organic process. You have to be involved with what goes on the TV screen to be involved in the stuff offscreen. It’s too choppy when [show producers] just pass the baton onto the next guy-you lose continuity.

We won’t do a Teletubbies feature film. I could see parents taking their kids to a [Teletubbies] theatrical release, but it’s not appropriate. A one-year-old is too young to sit through a feature film.’

Gary Knell was recently named executive vice president of operations at Children’s Television Workshop (CTW), where he oversees all production, from Big Bag to Sesame Street.

‘Sesame Street is the longest-running preschool show in the world. As a multi-media company, we have our roots in television that engages kids and parents. Later, books, magazines, CD-ROMs, Nintendo [products], toys, clothing and other items were taken into the marketplace, which had the effect of leveraging our brand.

The international market has grown in importance. Today, we approach the business in a global way. Sesame Street is the most powerful international children’s program in the world. Overseas, [producers] add indigenous segments in territories such as Israel and Palestine.’

Sue Bristol is vice president of marketing for Lyrick Studios, creator of the preschool television phenomenon Barney, as well as the recently released feature film Barney’s Great Adventure: The Movie and numerous videos.

‘Barney was the first [preschool] character to launch on video versus TV-this was different than the norm. The challenge is how do you build that character, keep it fresh and stay true to the integrity and core of the character?

Videos such as this year’s Barney in Outer Space . . . have combined the strength of the character with basic early learning concepts. The thing about Barney that differentiates [the property] is it covers all areas of child development-cognitive, pro-social, physical and themes like manners and sharing. Parents appreciate it. They write and say, `Barney taught my child to say, `please’ and `thank you.’

There are a lot of new players in preschool. When we started, there really wasn’t that much merchandise out there. Barney will always have its share, but now there’s Rugrats, Blue’s Clues and lots of classic characters, like Winnie the Pooh, [that] are doing really well in preschool.’

Margaret Loesch is president of Jim Henson Television Group Worldwide, producer of the preschool series Bear in the Big Blue House and creator of The Muppets.

‘`Preschool’ is almost a dirty word in our business. If you want to build a business in preschool, it’s a long-term build. You cannot rely on gimmicks or fads. In preschool, you have to keep it simple, but imaginative. The challenge is to keep [the shows] both fresh and consistent.

The biggest profit-creating potential is in licensing and merchandising [of] consumer products because [producing] preschool is expensive. You usually produce on a deficit. Apparel, for instance, is very big in preschool. If the kids are asking for it, the trick is not to disappoint them, but not to flood the market either by having too much stuff out there. Unfortunately, there is no formula for just how much is enough.’

Suzanne Faber is children’s project manager of Anchor Bay Entertainment, which holds the video rights to U.K. producer Britt Allcroft’s preschool hit Thomas the Tank Engine. Anchor Bay also holds the rights to all three Tots TV videos.

‘There’s a huge difference between the six to 11 market versus the two to six. They’re different in that with six to 11, you can market much more towards the kids. With two to six, you spend much more of your marketing dollars on parents.

The market is very different now than five years ago, when Anchor Bay entered it. The competition in children’s preschool now is huge, as is the competition in children’s video. Now, you need a whole well-rounded marketing plan in order to make it work, unless you happen to get a lucky break. You need successful promotions.

There are a lot of people who are trying to make the next Barney, but the [majors]-Sony, Disney, Universal-have so much product out there from which to pick, there’s so much thought going into what is going to be the next great children’s property. It has to be both parent-friendly and have a great story. Parents want edutainment, moral-based themes in video. Some of the best sell-through videos for Thomas have been moral-based, on themes like the importance of good behavior.

There is so much competition out there-so many great videos that are cute and entertaining, but if they don’t have [the support of] a big toy line and TV series, they’re not going to make it. The mass-market retailer is looking for a property that is going to have more awareness-that has more licensees. When you have 50 major licensees, for example, with Tots TV, this says to retailers that all these people have faith in the property.’

Carol Weitzman is senior vice president of production at Sunbow Entertainment, producer of Salty’s Lighthouse, which airs concurrently on PBS and The Learning Channel.

‘Licensing fees are generally lower [in preschool] than in six to 11. It’s more difficult to sell internationally. We explored ways to produce preschool that could be cost-effective and stand out from the rest of the shows out there. Salty’s Lighthouse blends animation with quality live-action boat footage in a show that addresses preschool-age kids.

If the merchandise takes off and our international sales are strong, we recoup the money spent on production. We don’t have presales in the preschool area, but if you have a clever and smart preschool show, people

notice it.’

Toper Taylor is president of Nelvana Communications Inc., producer of numerous preschool shows, including Rolie Polie Olie, a computer animated preschool series, Franklin, which will air on CBS this fall, and a series of shorts entitled Katie and the Ferocious Beast, which will debut on Nickelodeon this fall.

‘There is such an enormous amount of production in the preschool area right now that the internationals are saying, `enough.’ However, Nick and PBS shows are selling around the world.

Preschool shows currently have the longest shelf life, for instance, Care Bears has been on Fox for a very long time. What’s making preschool a business are two basic assumptions: that properties have a longer library life, and that there’s a greater potential at [licensing and] merchandising, for instance, a larger income potential from video.

Studios have not done well, however, with episodic TV on video for the six to 10 audience. Disney spent considerable money launching videos of its TV series, and sales were poor compared to [its] made-for-video specials and movies.

Videos serve as a babysitter. There are [fewer] outside activities in general for a preschooler. In preschool, the parents do the buying, and they feel comfortable and safe [buying] within the preschool market.’

Robby London, executive vice president of creative affairs at DIC Entertainment, has seen the studio’s Madeline property, which targets a two- to 11-year-old audience, through runs on The Family Channel and ABC and its current successful run on Disney Channel. The video line for the property, handled by Sony Wonder, has experienced consistently strong sales.

‘[Preschool] is really a challenge. The problem is the preschool audience doesn’t get properly measured by Nielsen, so the only gauge of success has been the merchandise sold. Also, animation is so costly that revenues [from preschool] generally don’t support the shows. The irony is I’ve always felt that preschool was underserved-that it was a disenfranchised audience-and that it is a measurement issue.

Before Barney, everyone ignored preschool. When Barney hit, everyone saw an opportunity. Frankly, I think Barney opened the floodgates for preschool. In its wake, producers saw there is clearly an upside, a market and a way to extract money from a preschool property. Still, TV isn’t the way-TV probably didn’t even make a dent in [financing] Barney. It was the merchandise.’

Marc du Pontavice is the president of Gaumont Multimedia in Paris, producer of the new preschool series Tune of the Moon, scheduled to air in spring 1999.

‘If you’re able to land [a preschool show] on Nick, you can get [production] money, but no one is going to invest a spectacular amount of money upfront for preschool. In preschool, however, you can still make serious money in video, whereas right now the video market for six to 11 is terrible.

Tune of the Moon is a co-production between France and Canada. The partners [Cactus Animation in Canada and Canal J in France are co-producing the series with Gaumont] had a common idea about preschool, which works really well with subsidies from both countries.

With a preschool show like Tune of the Moon, it would be a mistake to merchandise the program too early. With a property that is classic or soft, you look for ways to help it grow old without being dated. You cannot be purely toy-driven or short-term in preschool.’