These days, when a kids producer makes a TV show, there is a strong expectation from broadcasters and financial partners that they will also have given serious thought to new media platforms such as CD-ROMs, DVDs, websites, interactive games and wireless applications.

In some respects, this multimedia approach raises new issues for players in the production chain. But in others, it is a familiar story. The best kid companies have extended brands across books, video, film, games and merchandise for years.

The factors driving companies into new media are mostly the same as in old economy brand extensions. Depending on whether you are a broadcaster or rights owner, new media can enhance your (character or network) brand, provide cross-promotional support, and drive advertising or licensing revenues.

Europe’s thematic channels have embraced new platforms with enthusiasm-largely because their vast archives of intellectual property rights have made it easy for them to do so. At Cartoon Network Europe, for example, there are dedicated websites in the U.K., France, Spain, Italy, Poland, Holland, South Africa and Scandinavia. Fox Kids, meanwhile, has 10 websites mirroring its localized TV networks.

Cartoon Network’s London-based new media creative director, Dorenna Newton, says her company’s websites ‘are not just marketing tools. They are platforms in their own right. We produce four games a month as well as character trivia, competitions, schedules and screensavers.’

In addition to websites, Cartoon has an agreement to create interactive cartoons for British Telecom’s new PC-based broadband Openworld platform. The network also has plans to make games for interactive TV platforms (possibly for cable company Telewest), and just launched a wireless service called Cartoon Network World for WAP-enabled Nokia and Motorola phones.

There are similar developments at Telewest content division Flextech, according to managing director of TV and broadcast Jane Lighting. After the success of a web-based teen concept called Flash Boyfriend, the company has created a series of six-minute interactive animations for the Trouble TV network based on the same characters.

These initiatives are about ‘ensuring our content is available to the audience no matter how they want to consume it,’ says Lighting-who adds that Trouble is also poised to launch on radio.

The advent of new media does, however, come fraught with problems. The potential to build new kids destinations on-line and unlock income streams via e-business applications means control of digital rights is set to become a major bone of contention.

Unlike Cartoon Network, which owns content and distribution platforms, most producers and networks have yet to establish who controls what digital rights on emerging properties. Many broadcasters take the view that because they are responsible for driving a property’s awareness levels, they have a legitimate right to take commercial advantage of on-line activity. But bigger producers are digging in their heels.

BKN senior VP of international TV and video Leslie Nelson couldn’t be clearer when she says: ‘We want to control all TV, video, licensing and merchandising and new media rights worldwide in perpetuity. It would be a grave error if we relinquished our on-line rights to broadcasters.’

John Bullivant, managing director of German producer/distributor TV-Loonland, takes a similar line. ‘The issue of who controls on-line rights will be one of the big fights in the next two to three years,’ he says. ‘I expect broadcasters and producers to lock horns over it.’

In addition to rights conflicts with networks, producers have to grapple with the incremental production costs involved in new media ventures. With no guaranteed value attached to such activities, there is a real risk that production companies will be forced to add a line to the budget that they can’t recoup within a meaningful time frame.

Decode Entertainment partner Steve DeNure is developing digital applications for shows such as Angela Anaconda and The Click (working title). His cardinal rule is not to finance TV shows against the theoretical future value of new media spin-offs. ‘Just as with L&M and box office, we regard the revenue potential of new media as potential upside. But we enter production based on TV commitments.’

This does not mean that digital spin-offs are neglected. With TV production and distribution such a marginal business in its own right, producers need to investigate all means of generating future value from their properties, says DeNure.

In addition, broadcasters ‘increasingly ask about your on-line plans because they are worried about their audiences being eroded by the Net.’ In the case of Angela, which is a digitally animated production, a deal has been struck for Decode to create an interactive game for Cartoon Network’s website. ‘All broadcasters are figuring out how to increase their visibility and enhance the user’s experience.’

Cosgrove Hall managing director Ian Pelling says there is a similar commercial pragmatism at his studio. In the case of off-line digital products such as DVDs and pocket games, the strategy is very much a product of market demand. ‘As with publishing and L&M, it is a question of whether you can find a partner who sees a market for such products.’

On-line, however, is fundamentally different. For all of the current animated series coming through Cosgrove Hall, such as Fetch the Vet, Albie and Mouth & Trousers, ‘we make sure there is a web proposition that can sit alongside the TV show.’

While digital income projections are not used to greenlight a TV show at Cosgrove, that does not preclude creating content for the web alone. ‘When we have an idea, we ask if 2-D, model or digital animation is the right approach,’ says Pelling. ‘Increasingly, we also ask if the property should be a TV program at all.’

U.K.-based Entertainment Rights managing director Jane Smith believes that an on-line presence also benefits shows that already have firm TV commitments. ‘You can begin to build consumer and business-to-business awareness before the TV property is ready for transmission. On-line can also provide information that feeds into the brand management process. If you are serious about creating a global kids franchise, you should always make sure that the audience can tap into it in any way they want to.’

Smith’s key property at MIPCOM will be preschool model animation show Magical Mystical Merlin (see ‘Merlin gets in touch,’ August 2000, page 16). Co-produced with U.K.-based The Little Entertainment Company, the series will air on ITV in Britain and will be distributed on video by Buena Vista. Smith stresses that these types of deals are still critical in building a brand. ‘The business is more sophisticated since the arrival of digital. But the involvement of partners like Buena Vista still provides credibility. Broadcasters know the level of off-air support they are likely to get.’

Other companies are already going it alone on-line. Aardman Animations, for example, introduced a web-exclusive character called Angry Kid in May. Within two months, Angry Kid’s 25 one-minute episodes had generated more than one million plays on entertainment website www.atomfilms.com.

A key issue for most companies is to find an internal structure capable of managing properties effectively across media. Ken Faier, former executive VP of KidScreen pubco Brunico Communications, recently joined Alliance Atlantis Kids as VP of distribution with exactly this in mind. According to Faier, ‘a big part of the challenge is integrating activities across development, production, distribution and L&M so everyone is working towards the goal of building global, converged brands.’

Early AAC Kids activities include interactive web support for dramas like Drop the Beat and I Was a Sixth Grade Alien. However, Faier believes a new production joint-venture with TV-Loonland will lead to further activity. ‘We plan to produce up to nine series a year over the next three years, of which six a year are likely to be animation,’ says Faier. ‘All of them will be developed with interactive components in mind.’

In Europe, BBC Worldwide pioneered the brand-led approach with preschool properties like Teletubbies and Tweenies. BBCWW Kids head of marketing and business development Tracey Hinchliffe says: ‘Our raison d’tre is to develop brands on a cross-media basis. The most important thing is the editorial quality of the TV show. But we also look across video, books, magazines, games, CD-ROM, DVD, L&M and on-line from day one.’

The newest project on the BBCWW slate is Captain Lightning, a 26 x 30-minute mix of live action and CGI for six- to 12-year-olds. The show, about a boy who has his own superhero, is set to air simultaneously in the U.S. and the U.K. in fall 2001, although a U.S. broadcaster had not been announced at press time. Clearly there is video game potential, but the commercial implications of on-line are as yet unclear, says Hinchliffe. ‘On-line has the potential to be extremely far-reaching because it cuts across traditional boundaries. We are studying it closely, but it is too early to say what will happen.’

The TV/on-line model is increasingly visible across Europe. Hahn Film’s Gnarfs and Egmont’s Crime Crackers are designed to roll out across several media platforms. France Animation and Alphanim are also active in this field, with the latter launching shows on its www.verysmallcity.com website.

Egmont Imagination UK managing director Tatiana Kober says Crime Crackers is an animated whodunit that will encourage children to go on-line at the end of each episode by leaving ‘soft cliffhangers’ to solve. For kids without access to a PC, Egmont plans to develop game-based features for publication in newspapers.

Egmont is following this platform-neutral approach wherever appropriate, says Kober. Another TV property, Skipper & Skeeto, is based on a successful Danish preschool CD-ROM. For MIPCOM, there will be another new property launch from Egmont with digital applications-though Kober is not yet ready to reveal details.

The growth in kid portals like verysmallcity is the biggest unknown in the new media realm. The fundamental question is whether producers who retain rights will be able to launch kid sites rivaling those of the TV nets.

Sesame Workshop is one operation that has recognized this issue. On the one hand, the prodco is building multiplatform properties such as Dragon Tales, Tiny Planets and Sagwa the Chinese Siamese Cat for international broadcast distribution. On the other, the Sesame brand heritage means it is ideally positioned to narrowcast in its own right.

Sesame Workshop group VP of international TV and licensing Martha Van Gelder is seeking a middle way that allows the company to have some on-line exclusivity while continuing to support broadcast partners effectively. ‘Our philosophy is that we want our programming to be available to as many children as possible. So it is important that we support broadcasters in a viable way.’

Cinar Europe managing director David Ferguson has two new projects in Europe. Thirteen 24-minute eps of The Twins, an animated series created with Flextech Rights about the adventures of a sugar-n-spice twin and her mischievous sister, have been commissioned by ITV in the U.K. Treasure, a 13 x 24-minute prime-time animated comedy about the ups and downs of a girl who’s ‘nearly 15,’ is an idea for the BBC that may play outside the traditional kids block. Both are being developed with cross-platform exploitation in mind.

Ferguson is philosophical about the tussle for rights. ‘Some networks want control of enhanced interactive rights without paying,’ he says, ‘and we obviously can’t give it away for free. But I understand the networks’ concerns. There is always a conflict of interests inherent in deals-particularly when you are trying to establish a value.’

BKN has found accommodation with some network partners. In the case of Roswell Conspiracies, which will debut soon on Germany’s Super RTL, there are direct links from the broadcaster’s website to BKN’s site. The same arrangement is expected to be used for 26 x 30-minute shows Kong and Capertown Cops (due out this month and in December, respectively), as well as The Lost Continent and Journey to the Centre of the Earth, which are both in development. Kong also has game deals for the CD-ROM and Nintendo Game Boy platforms.

Egmont’s Kober is another who is ‘very wary about handing over on-line rights to networks because of the potential revenue streams attached.’

But she warns that ‘every territory has a different regulatory framework, and every broadcaster has a unique mandate. Some public broadcasters are not allowed to have hotlinks that connect them to sites with advertising. Others are wary of hotlinks for commercial reasons.’

Imagine, for example, a kid who links from your network website to the site of a producer that has made popular shows for your rival. In two clicks, that kid could be in your rival’s domain. Bullivant, who wants to create a local TV-Loonland kids portal, says this is a risk that networks will have to take. ‘The nature of the Internet is that users will become frustrated if you try to ringfence them in one site-so it would be a mistake to try.’

The debate will shift as more companies vertically integrate distribution and content creation. But in traditional broadcast licensing arrangements, the outcome of negotiations will increasingly depend on the level of the broadcaster’s investment in a show-or its significance in building a franchise.

If networks are too insistent on the control of rights, then producers may seek new types of commercial partners, argues Bullivant. He believes local versions of on-line networks like Yahoo or Lycos could become an important part of the financing equation in some territories. Sesame’s Van Gelder reports that she is having ‘increasing numbers of meetings with broadband and on-line companies at markets like MIPCOM.’

Cinar’s David Ferguson is also seeking to embrace the new media, but he shares DeNure’s concerns over the economics of the sector. ‘With growing pressure on TV budgets, producers are using projections from other media to justify greenlighting shows. But they may be chasing fool’s gold. Right now, the only mass market medium that can reliably support production budgets is TV.’