TV Kids Brand Licensing Special Report 2019

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TVKIDS

WWW.TVKIDS.WS OCTOBER 2019

BRAND LICENSING EUROPE SPECIAL REPORT

L&M Strategies / Toon2Tango’s Hans Ulrich Stoef

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CONTENTS

Toy Time As a child of the ’80s, I spent many a Saturday morning plopped in front of the TV set with a bowl of sugary cereal, taking in the latest cartoons.

Ricardo Seguin Guise Publisher Anna Carugati Group Editorial Director Mansha Daswani Editor Kristin Brzoznowski Executive Editor Chelsea Regan Alison Skilton Associate Editors David Diehl Production & Design Director Phyllis Q. Busell Art Director Simon Weaver Online Director Dana Mattison Senior Sales & Marketing Manager Genovick Acevedo Sales & Marketing Coordinator Andrea Moreno Business Affairs Manager

Ricardo Seguin Guise President Anna Carugati Executive VP Mansha Daswani Associate Publisher & VP of Strategic Development TV Kids ©2019 WSN INC. 1123 Broadway, #1207 New York, NY 10010 Phone: (212) 924-7620 Fax: (212) 924-6940 Website: www.tvkids.ws

From Inspector Gadget to She-Ra: Princess of Power, My Little Pony to The Magic School Bus, it’s safe to say that I have a healthy dose of nostalgia when I look back to the shows of my childhood that have since made a comeback for a new generation. It was while watching these blocks of back-to-back animated series as a kid that I’d learn about the newest toys I’d be begging my parents for moments later or adding to my birthday or Christmas wish list. Watching flashy TV commercials for the next must-have doll, plush or miniature plastic figure was one of two ways I could discover what new playthings were out there. The other was by perusing the aisles of the toy store.

For kids today, neither of these is likely to be their primary point of toy discovery. Children’s viewing habits are much like their adult counterparts, with ondemand programming now a regular part of their media diets. The concept of a commercial break is somewhat foreign to them (as is the idea of having to wait to watch their favorite show at a specific time).

With the collapse of Toys “R” Us and brick-and-mortar stores, in general, feeling the squeeze from the online market, the days of spotting new toys while being wheeled through the aisles of a mass retailer are also rather distant.

Nowadays, brand owners and retailers are getting creative in the ways they work together to bring awareness to licensed products. Platforms, too, are figuring out how best to handle the issue of advertising with regard to kids—some not so successfully. Earlier this month, YouTube was slapped with a whopping $170 million fine for allegedly violating children’s privacy laws, facing allegations that the popular video site was collecting personal information from children without parental consent and using the data to target ads to kids.

TV Kids examines the current state of the licensing and merchandising industry in this issue, with a feature that explores the ways IP owners are navigating these new waters. We also hear from Ulli Stoef, who has had a long career in brand building and recently launched a new production and distribution operation. He weighs in on his approach to building 360degree properties.

—Kristin Brzoznowski

FEATURE 8 OUT OF THE BOX Changes in consumer viewing habits are forcing those in the L&M industry to adapt and overcome.

INTERVIEW

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Toon2Tango’s Hans Ulrich Stoef The m4e veteran discusses the plans for his new company, which will center on building 360-degree properties and developing strong ties with leading creatives.

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One Animation’s Oddbods.

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OUT OF THE BOX

Changes in consumer viewing habits are forcing those in the licensing-and-merchandising industry to adapt and overcome.

By Alison Skilton

W

hen the bastion of American toy sales, Toys “R” Us, vanished from the U.S. retail landscape last year, the kids’ licensing-and-merchandising business braced for the worst. Clamoring against Disney to score precious shelf space was challenging enough. Now there was even less available. And just as ecommerce has put the squeeze on brick-and-mortar retailers, the rise in on-demand viewing has upended all the traditional models for building a viable kids’ brand.

These days, rather than daily appointment viewing, it’s far more likely that a child is binge-watching a show that they’ve chosen from a curated selection on a streamer. And with changes in viewing habits come the inevitable shifts in the ways consumers interact with the products associated with their favorite shows and movies.

MOVING FASTER “The key is to innovate, to work hard and also to adapt to changing viewing and buying habits as well as new marketing channels,” says Valentina La Macchia, Mondo TV’s licensing director. In response to these changes, Mondo— which manages the kids’ animated property MeteoHeroes as well as the non-broadcast IP Feisty Pets, among others— has thrown its hat in the digital space, representing a web series, House of Talent, for the first time. The show follows as a crew of 20 influencers, who have a combined half a billion monthly impressions, come together in the real world to live together. It has over 260 10-minute episodes that 8- to 14-year-olds can watch, engage and even interact

with. “And they can do this on any web-enabled device, because, let’s face it, that’s what they’re used to: entertainment on the move is a teen and tween lifestyle choice and we mean to reflect that,” La Macchia says.

Rob Spindley, senior VP of commercial development for the U.S. and EMEA at One Animation, the Singapore-based content producer behind the Oddbods property—which has amassed over 10 billion views on YouTube—agrees that L&M schemes need to shift drastically to meet consumers’ needs.

“Traditionally, buyers were primarily focused on looking at the free-to-air broadcast figures—that was the key focal point of the retail and licensing sector,” he says. “If you had a prime broadcast slot, that’s where the buying decisions were generated from. Brand support as consumers transition to alternative platforms to view content has created a big disturbance to that previous methodology. A strong online presence is now also key.”

He continues, “We’re seeing brand emergence and decline moving faster than it ever moved previously.

YouTube and digital channels can elevate brands from zero to hero and back again in a heartbeat, as kids have consumed everything they want to consume and they’ve moved on to the next thing.”

Spindley points to the “playground chatter” afforded to shows in the past, which saw kids watching an episode of a show each week and then talking to their friends at school about it, creating a slow buzz and feeding a longterm appetite for the show. In today’s viewing world, Spindley observes, “Children can sit down and they can

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Genius Brands International is working on the brand plans for Llama Llama, a Netflix original.

just watch an entire series [in one sitting]—which is great for the brand for that very short period of time, but the consumer then is moving on to something new.”

For this reason and many others, it’s harder now than ever to get onto retailers’ shelves. Jennifer Coleman, VP of licensing and marketing at Konami Cross Media NY, which manages the Yu-Gi-Oh! brand, points to Fortnite as a prime example of how much money and time it takes for new and untested IP to reach shelves. It took years for a game that has become a cultural phenomenon to get into stores. “In order to secure that shelf space, you have to show that you’ve got that proven audience in there,” she says. “You have to show that you have the eyeballs, show that you have the engagement. And once you can prove that, it’s much easier to get on the shelf. So it’s a substantial investment in marketing, content development and production.

There are high barriers to entry.”

Mondo TV’s La Macchia agrees with Coleman: “Licensees prefer to wait for identifiable demand—that’s not ideal for a broadcast business that thrives on new ideas.”

PAIRING OLD AND NEW

Thankfully, Coleman says, Konami’s Yu-Gi-Oh! property, as well as its classic gaming IPs Frogger, Bomberman and Contra, have the brand recognition that gives them that foot in the door. Konami’s legacy brands stand somewhat immune to the fickleness of consumer interest, delivering much-needed stability, Coleman says.

Genius Brands International is in a similar situation when it comes to its known IP, says Lloyd Mintz, senior VP and head of worldwide consumer products. Of Llama Llama, a Netflix original, Mintz says, “We have one advantage that most of the other shows that might suffer from bingewatching don’t have, which is we also have a ten-year-oldplus best-selling book series. There are over 25 million books in print. There are about half a dozen new titles every year, including a featured hardcover title. Those usually shoot to the top of the best-seller list. Because they are hardcover, they get a lot of attention. I think with some shows, people do binge-watch and then move on. But

when you’re a book series, you do benefit because you’re part of the bedtime reading routine. You get into that rotation of books that constantly get read. That’s one thing that helps us compared to others who may not have that publishing heritage.”

Coleman says that Konami is expanding its online Yu-Gi-Oh! store and working more with streaming platforms. “That’s been one way for us to try to make sure our content is still finding its way into the hands of our fans and continuing to keep that audience engagement,” she says.

Mintz outlines a similar strategy that Genius is taking by focusing on the online market. “We just started a Llama Llama YouTube channel,” he says. “We’re not only reacting to the market, but we’re picking up on best practices from other properties that have gone before us and what’s worked for them and what hasn’t. We know that YouTube helps elevate that engagement.”

Mintz adds that it is crucial to time L&M rollouts carefully to allow the brand to build recognition in the market.

“We’ve seen too many properties that have been in too much of a rush to get product out there. I don’t know if anybody can point to one that has followed that strategy and been successful. If people don’t really know and ultimately love the property, then the product is not going to sell.”

EXPERIENCING CHANGE So how do companies get their products on shelves in a world where e-commerce reigns supreme? “How do you keep [customers] coming in the doors when you can’t beat the Amazon price? What else can you offer?” Konami’s Coleman asks.

Experiential retail might be the answer. It’s a space that the L&M sector has begun to look toward as the future of what will keep buyers leaving their houses to spend money on products that they could likely purchase online, often for less. “To get products to retail is still a must—but getting consumers to retail is no longer about just putting product on shelves,” says La Macchia. “It’s about ensuring a memorable in-store experience for their consumers. Given the strong competition from e-commerce, it’s very important

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to be able to add value to the shopping experience, with events, meet-and-greets and the chance for kids to interact with their favorite characters.”

For the YooHoo brand, based on the Aurora World plush toys and now encompassing the preschool series YooHoo to the Rescue, Mondo TV has secured a customized shopping area in various Mondadori locations across Italy.

“We’re also planning four in-store events in the megastores, featuring YooHoo costume characters along with an engaging format to get kids and families to experience a unique interaction with the brand,” she says. There are also Feisty Pets-themed shopping mall events across Italy.

KEEPING UP Unique buying experiences come in many shapes and sizes. “A prime example might be a birthday cake, for instance,” says One Animation’s Spindley. Using an app, a consumer can scan the packaging, “and the Oddbods emerge on-screen and ‘Happy Birthday’ plays. Added-value interactions like this provide additional layers and deeper brand engagement to the consumer experience.”

“Look at the Trolls experience that DreamWorks has built in New York,” Konami’s Coleman offers. “You’re not just going in there to purchase—though of course monetization is going to be a part of it. It’s more about interacting with the brand so that you’re getting a 360-degree experience—from green-screen opportunities to characters there to a play space. That seems to be a direction that retail is headed in, and I think that even in Toys “R” Us announcing that they were going to be coming back, they mentioned some experiential retail opportunities.”

Mondo TV has also dipped into the world of immersive retail, launching a new AR app for its animated property Robot Trains that allows kids to interact with the characters from the show in real time. “Retailers, too, have the opportunity to demonstrate the innovative immersive technology in-store, encouraging kids to scan products or use an exclusive graphic marker to activate special content and become part of the Robot Trains world,” La Macchia says. “This adds value to the retail experience.”

For anime and gaming IPs, Konami’s Coleman says many experiential retail opportunities center around good old-fashioned human interaction. “In addition to normal brick-and-mortar, there are a lot of [fan conventions] and the expos, so those are a growing opportunity for us,” she notes. Pointing to retailer FYE’s pop-up shop at this year’s San Diego Comic-Con, she says that customers are “going in to interact with whatever that brand or that IP is that’s surrounding that pop-up shop opportunity. Even the retailers are catching on to that and realizing that these are different opportunities where they can certainly monetize and capture new audiences and revenues.”

For brands to stay competitive, they have to undertake multifaceted L&M schemes, ensuring their products are

offered across every category and in every space that consumers might look. One Animation’s Spindley says the company always aims to launch campaigns that “engage our entire ecosystem. All of the messaging we produce is aligned and cohesive, delivering a consistent message across multiple touchpoints and media for maximum consumer recognition.”

Giulia Bertè, licensing and brand manager at the Italian production-and-distribution group Showlab, agrees, saying that launching a brand requires a comprehensive approach to its licensing and merchandising. “We always try to create a project that involves all the commercial elements,” Bertè says. “We want to build a brand in all aspects. So when we start to work on a project, we always think about how many commercial spheres can be involved. We don’t want to just offer a new property to the market; we want to make it a big, big project.”

Adapting to fast-changing consumer buying and viewing habits, exploring innovative partnerships and keeping an eye toward the experiential retail space are key to brand relevancy in today’s market. “There will be many L&M opportunities that will see the business grow now and in the future,” La Macchia says. “What matters is to be ready for them.”

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Mondo TV has launched a new AR app for its Robot Trains property.

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between 2 percent and 6 percent back-end participation, they get paid for the development work and that is it. Here we’ve developed a different system; we’re incentivizing them much better. They develop shows and we will take full responsibility for the management, the financing and the executive production. The creator who had the idea and is the creative mind behind it will have higher participation. It’s what we call fair equity positions.

On the other side, since it’s a new company and we have less of an infrastructure than before with Studio 100 and m4e, we will quite often share distribution with a coproduction partner. We’ll do this in a much broader way than we ever did before. To give you an example, we are developing eight shows over four years for Mondo TV. Hopefully, we’ll bring four to six into production. We are benefiting from Mondo’s existing distribution capabilities and their strengths in certain territories. For other territories, we’ll try to secure the co-production needs and the distribution needs with third parties, and we’ll only take a handful of distribution territories ourselves. For the licensing, we control the brand, undertake brand management and work with the distribution arms of our partners.

TV KIDS: What’s more challenging about setting up a new content company today compared to the early days of m4e? And what are you enjoying more?

HANS ULRICH STOEF

TOON2TANGO

By Mansha Daswani

H

ans Ulrich Stoef has had a long career in building brands. The former Universal Studios and EM.TV executive founded his own rights-management company, m4e, in 2003 and subsequently built it into a powerhouse kids’ and family content outfit with brands such as Mia and me. Stoef moved to Studio 100 after that company picked up a majority stake in m4e. This year, he embarked on a new journey, setting up the worldwide production-anddistribution operation Toon2Tango. Stoef tells TV Kids about the new company’s plans.

TV KIDS: What was the thinking behind the creation of Toon2Tango? How are you positioning the company in the kids’ landscape today?

STOEF: The positioning has two sides. I’m still doing what I’ve always done, which is developing and producing kids’ and family entertainment shows and films to create 360degree IP. We also offer our expertise to third-party creators. We’ve found that, quite often, producers have fantastic IP, but at the end of the day, they are given

STOEF: Consumer licensing is more difficult. Distribution via linear broadcasting is melting down because of the digital opportunities today, and digital is not catching up in delivering the number of eyeballs you need to break a new brand. I have a strong network after many years in the business and deals with prominent companies worldwide. That makes it easier. Even though we are a new company, we’ve been able to go into big deals with companies like Mondo immediately, and broadcasters have asked us if we could do something together on the development, distribution and production sides. That’s what I enjoy—without the heavy lifting of infrastructure and costs. We know it’s a challenging and ambitious market, but we have enough time and experience to put that into balance for our own projects and thirdparty creators as well.

TV KIDS: What qualities do you look for in third-party projects?

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STOEF: I can’t tell you a specific genre because we look at everything. We try to stay away from all the mass-market stuff out there, and there is plenty of it!

We’re trying to be boutique with creative and new shows. [At m4e] Mia and me was a new concept because it was hybrid and nobody in those days wanted to do a hybrid. We’re looking for those kinds of shows.

Third-party creators could have great ideas that maybe don’t fit the market for certain reasons and therefore won’t become commercial successes. We work with them on creating something that is unique but has the opportunity to generate significant amounts of money.

Toon2Tango’s initial slate includes the preschool series Hey Fuzzy Yellow.

TV KIDS: You know the L&M business very well. It’s under pressure right now with the challenges at retail. What are some of the strategies needed to succeed in this space?

STOEF: Many of the traditional retailers in Europe are closing down or buying less inventory; that’s the reality. But if you have a strong brand, a consumer will find it on Amazon, wherever. The play patterns are still the same—I don’t see many new interactive toys coming to the market that succeed, to be honest. In retail, it’s the B-to-C marketing that matters. What we’re talking about is eyeballs, and thus, consumer demand.

TV KIDS: Are you seeing financing models change as distribution models shift?

STOEF: They are not what they were 15 to 20 years ago.

There was tons of money in the market, and everybody

was going into gap financing. That’s not the case anymore. Instead, people are looking for government money, tax credits, subsidies and whatever is possible.

Even upfront distribution guarantees are pretty tough to manage right now. Part of the problem is that there are too many mediocre shows from small distributors or producers who have no idea what they are doing, and they are still getting partially financed by regional or country subsidies. That is going to change. If producers have no real business model behind them, it’s over, and they won’t get the money anymore. In the future, creative talent will have to work even closer with companies like us; otherwise, their shows will not be produced.

TV KIDS: Are you looking at opportunities to adapt existing IP such as books and comics or focusing on new ideas?

STOEF: It could be book adaptations, it could be game adaptations or it could be comic adaptations, whatever we like. We have no intention to produce five to six shows a year. That’s not what we want to do.

TV KIDS: What message do you want to send to creatives about Toon2Tango?

STOEF: We want to encourage them to contact us when they have a great project and they don’t know how to get it to the next stage. They should speak to us. We’re happy to talk, give them some of our suggestions of what we would do. If we like the show, we can find a way to work with each other in a fair way.

That’s very important. We don’t want a me-too product to an existing show or the 110th genderneutral comedy property. That’s simply not us!

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in the G10* YTD July 2019, growing +22% YOY.

Source: The NPD Group / Retail Tracking Service/ G10* = US, MX, CA, AU + EU6

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