Kids content companies are creating new media divisions at break-neck speeds and relying on a new crop of execs to turn emerging platforms into revenue generators. But right now it seems like they’re either way ahead of the curve, or playing a game of hurry up and wait.
While 21st century digital media may not be quite ready for its close up, it is waiting impatiently in the wings for the chance to take center stage. In the last six months, announcements proclaiming the formation of a digital media division, or the appointment of an exec hired to lead the digital charge have been coming down the pipe fast and furiously. Content creation and distribution companies are increasingly giving credence to the notion that digital downloading and on-demand viewing is moving media consumption from a pull to a push model – especially with tech-savvy kids. For the most part, however, revenue models haven’t been established and a lot of questions as to how this digital business will take off have yet to be answered.
And this is where the new generation of executives responsible for integrating digital content and distribution into traditional media companies find themselves: Straddling the fence between tomorrow’s brave new multi-platform world and today’s analog business models and strategies.
Because of the highly competitive and uncertain climate they find themselves in, exec members of the digital ranks are holding their cards close to their chests. They’re reluctant to identify viable enterprises within their companies (lest their competitors get any ideas) but a few have opened up about the lay of the land for us.
Hurry up and wait
Although it’s no longer a question of if, but when digital media will become the norm, for many the process remains slow going. Take Claire Tavernier, senior VP of interactive for FremantleMedia in the U.K. and Germany. When she joined the company four-and-a-half years ago, she says digital was pretty much an afterthought on any production. ‘It was something you did once the program was produced and broadcast. Only then did you talk about ancillary exploitation in digital or mobile or on-line,’ Tavernier explains.
But the tables have turned. Her interactive department now gets involved in the earliest stages of a project’s development and digital is an integral part of how the company approaches entertainment initiatives.
Art Roche, creative director for Cartoon Network New Media, says large media companies were hesitant because of a fear of the unknown. ‘The traditional parts of our business were afraid of cannibalizing the audience,’ he says. Roche admits CN tiptoed into the new platform space, but now it’s moving full steam ahead to get to any platform that kids are on.
And expanding that business often means forming new alliances. New York’s Scholastic Media looked to Deron Triff’s past experience as VP of digital ventures at pubcaster PBS when it hired him late last year to help boost its digital media presence as its VP of business development. Certainly his experience in launching PBS Kids Sprout VOD and digital channels in ’05 will come into play as Triff starts setting up new media businesses for Scholastic IP such as Clifford and toon Maya & Miguel.
His first order of business is to look at how Scholastic can work with companies outside its comfort zone of television, traditional publishing and consumer products. Internet companies, computer manufacturers and consumer electronics hardware manufacturers are on his hit list.
Don’t believe the hype (entirely)
There’s been a lot of talk about the potential of the digital space, but with the exception of a few examples (iTunes’ eight million and counting video downloads comes to mind), the business has yet to prove itself. And this new generation of digital execs is for the most part, wary of getting too caught up in the buzz.
Dan Fill, who joined pubcaster ABC Australia’s new media and digital arm as head of development last December, says there’s a compulsion to be on every platform coming down the technology pipe, but you need to consider the needs of the content first. ‘I believe that good experience for a user still starts with an entertaining story, great characters and settings. Technology is there to enhance the content – not to replace it,’ he says.
That said, he acknowledges audiences (including kids) want content on-demand, delivered in formats and to devices that suit them. ‘The audience has become more sophisticated and increasingly insists on playing an integral role in the content offering itself. They want their voices, images, video and artwork to be incorporated into the experiences.’
While the pubcaster has yet to create a project involving content generated by its kid viewers, ABC did get a start with its adult audience last year. ABC Video Lives invited viewers to send in self-made videos, depicting their life stories. A large collection made its way on-line and the winning piece debuted on the net’s new digi spin-off, ABC2. The concept has since been turned into a weekly show.
DIC director of business development and strategic planning, Leila Pirnia, says execs need to make sure the content remains relevant to both the consumer and the company’s business model. To date, digital add-ons such as mobile games and wallpaper have worked for DIC in building brands like Trollz, but it has yet to greenlight a show intended solely for a digital platform.
But DIC is looking at new media for its traditional offerings. Horseland is good example. Developed from website www.horseland.com that was built by a father for his daughter who loved to race horses, the 26 x half hour toon will debut on DIC’s Saturday morning CBS block this fall. And both platforms will figure into the property’s brand strategy.

Making digital work
While platforms such as VOD and broadband have been used largely as promotional vehicles in recent years, companies are starting to make moves to eventually turn those digital spaces into revenue generators.
Perhaps the most aggressive player right now is network titan Nickelodeon. At its recent advertising Up Front, the number-one U.S. kids broadcaster announced a multi-million dollar development slate for non-linear productions. In other words a number of the net’s shows will be culled from broadband and video game sources. It certainly suggests the net’s confident about digital media’s revenue-generating potential.
Shows such as Mr. Meaty, which got its start on broadband platform TurboNick, will be migrating to broadcast. Moreover, Nick is setting up the Inkubators Lab in its Burbank, California studio for the sole purpose of developing animated content specifically for digital platforms, including wireless, portable video devices, broadband and gaming. Heading up the net’s expansion across digital and future platforms is recently promoted Steve Youngwood, former senior VP of entertainment products, and who is now executive VP of Nickelodeon Digital Media.
Cartoon Network is being somewhat more cautious, it seems. Roche says a lot of his division’s activity to this point has been in repurposing content for VOD, but the net’s actively looking at developing original content for the space. The Burbank, California animation studio is working away at making two-minute spin-off eps of current CN shows such as Foster’s Home for Imaginary Friends. The plan is to take the original shorts and put them on every digital platform going, where possible. However, Roche isn’t quite ready to divulge distribution details.
Scholastic, on the other hand, has turned to digital hardware to expand its brands. Triff points to last fall’s launch of the Read with Me DVD interactive book format. ‘It is really interesting when you think about trying to work off the principle of literacy, which is what we are all about, and translate that to media,’ he says. Read with Me DVD, with its read-along elements and interactive approach to reading represents all the things that you can do in a media environment that analog ink and paper makes somewhat difficult – like hearing how words are pronounced, for example.
At newly formed Warner Bros. Home Entertainment Group, which oversees digital content delivery to consumers, things are moving slower still. ‘We are creating content that works in the ecosystem,’ president Kevin Tsujihara says. It’s primarily short form content that’s suitable for a number of platforms. Although DVD, network and cable sales still drive the lion’s share of industry revenues right now, he explains.

Treading cautiously
Bringing in revenue means approaching pay-for-play models, such as charging per mobile download, more cautiously. ‘We are extraordinarily sensitive to anything that could look like exploitation,’ Fremantle’s Tavernier says. ‘We don’t want to have kids that want to access something to get charged US$20 at the end of the month.’
Similarly, Roche admits CN encounters difficulties that brands with older audiences just don’t. Kids don’t have their own credit cards, for one. And there have always been safety issues and COPIA rules surrounding kids use of the internet to contend with. ‘It can become a challenge for the business model of products because you don’t want to be selling to kids all the time,’ he says.
However, Tavernier points out that even though they tread lightly things are changing, at least in Europe. ‘People are getting more comfortable with the concept of paying for content – that’s both parents and their kids – as long as you are being very transparent about it and very clear as to what value you’re getting by paying,’ she says.
Then there’s the issue of digital rights. ‘The traditional media companies have been organized in such a way that was really setup for physical distribution,’ says Tsujihara. He points to the advent of iPod TV downloads as an example. ‘It might seem like a simple straightforward deal, but the network contract that we have didn’t [cover] this new revenue stream.’
‘When you’re negotiating for rights, it can be tricky,’ Roche agrees. Despite the fact that broadcasters hold a lot of the bargaining chips when it comes to rights negotiations, by the time older shows reach CN, the broadband rights have been already sold or it’s been running on a website.
Most executives agree the broadband space is the most developed digital platform currently for kids. ‘The whole on-line space is a great business to be in right now,’ says DIC’s Pirnia. ‘Advertisers are already comfortable spending money so there is a viable economic model there. You can create more engaging content, whether it’s a website, social network or streaming video site. The kids are already there and it’s very viral.’

The digital jury’s still out
The consensus is that among kids, portability is key. But as to what digital platform is best poised to break away from the rest of the pack remains a crapshoot. Despite the current buzz, Tsujihara says, ‘I’m not sure iPod is going to get the same kind of market share that it’s taken for music because… video consumption comes in so many forms that consumers will soon be agnostic.’
Portability and on-demand functionality strike Tsujihara as the two components kids want most in a device and believes that models following Sony’s PlayStation Portable design may get the leg up on the iPod. Good graphics, bigger screen and better durability will win more kids over than the small, sleek and stylish video iPod setup, he says.
Gary Carter, chief creative officer of new platforms at FremantleMedia, says he doesn’t believe mobile will be able to sustain its current momentum as a content platform. ‘I suspect that in the history of all this change, the mobile moment is just going to be just that – a moment. I think there will be a convergence with phones and portable laptops.’
Like ABC Australia’s Fill, Carter believes the future may involve more direct audience participation with digital content. ‘The 14-year-old kid behind the computer understands what we are doing almost as well as we do,’ he says. ‘I’m [not] all in favor of a amateurism; [but] if you want to engage the audience that is migrating away from television rapidly, you have to understand that they know what’s going on.’