TV Kids Licensing Expo and NATPE Budapest Edition 2018

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TVKIDS

WWW.TVKIDS.WS

MAY/JUNE 2018

LICENSING EXPO & NATPE BUDAPEST EDITION

L&M Strategies / Studio 100 & m4e’s Hans Ulrich Stoef

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CONTENTS

Toy Circle of Life

FEATURE 8 PLAYTIME! A spotlight on strategies that help build successful L&M campaigns for children’s programming.

The long and powerful reign of once-mighty global retailer Toys“R”Us is slowly but surely coming to an end—at least in much of its vast kingdom—as stores are shutting down in the U.K. and U.S.

Ricardo Seguin Guise Publisher Anna Carugati Group Editorial Director Mansha Daswani Editor Kristin Brzoznowski Executive Editor Joanna Padovano Tong Managing Editor Sara Alessi Associate Editor Victor L. Cuevas Production & Design Director Phyllis Q. Busell Art Director Simon Weaver Online Director Dana Mattison Senior Sales & Marketing Manager Nathalia Lopez 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 © 2018 WSN INC. 1123 Broadway, #1207 New York, NY 10010 Phone: (212) 924-7620 Fax: (212) 924-6940 Website: www.tvkids.ws

It all started in late 2017, when Toys“R”Us filed for Chapter 11 bankruptcy protection. Then, earlier this year the company revealed that it was winding down business in the U.K., as well as in the U.S., where Charles Lazarus founded the mega-retailer more than a half-century ago. (Lazarus, unfortunately, passed away in the midst of all this restructuring unpleasantness.) Toys“R”Us recently secured a buyer in Central Europe, and the company has said that it is “working to minimize the impact of the U.S. liquidation on the Canadian and other international markets,” but the outlook for the overall empire remains uncertain, to say the very least.

While the news of the Toys“R”Us closures might not have come as a shock to most, it is still sad to witness the downfall of a beloved store that once brought so much joy to youngsters, whose persistent begging resulted in their parents buying them a shiny new toy that could be played with, shown off to friends and then ultimately, forgotten about when it wound up collecting dust in the back corner of a dingy attic.

(When said youngsters become adults with homes of their own, their parents—much like my father—will start politely pressuring them to either take or toss out these physical representations of their childhood.)

But licensing and merchandising (L&M) executives needn’t fret about where to sell their wares in the wake of Toys“R”Us’s ongoing demise. With online marketplaces such as Amazon and Alibaba making it oh-so easy to tick items off of little ones’ wish lists, there are still plenty of ways for kids to find toys based on their favorite shows—toys that, like many others that came before them, will likely end up in a dusty attic, per the inevitable “toy circle of life.”

This issue of TV Kids includes a feature that analyzes some of the L&M strategies for today’s children’s programming. There is also an illuminating interview with Hans Ulrich Stoef, Studio 100 Media and m4e’s CEO, who shares how he’s managing the combined companies’ licensing and merchandising business given the challenges that are currently facing the sector.

—Joanna Padovano Tong

INTERVIEW

13 Studio 100 & m4e’s Hans Ulrich Stoef The CEO discusses the integration of the two companies, M&A opportunities, managing scale and crafting the ideal development and production pipeline.

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CJ E&M

Robot Trains / Rainbow Ruby / Pucca Friendship, teamwork and problem-solving are some of the main themes in Robot Trains, a new animated property that CJ E&M is highlighting at Licensing Expo. “Many licensees are already on board for various categories, including local toys and games, publishing, stationery, promotions and more in Europe,” says Joseph Kim, head of the global animation business division at CJ E&M. “We are looking forward to entering into many other categories in the near future.” The company is also promoting Rainbow Ruby, a girl-skewing animated brand featuring “vivid colors” as well as “multiple professions and educational activities,” according to Kim. “Rainbow Ruby delivers the message that children can become anything they want.” Then there is Pucca, a popular animated character from Korea that is slated to appear in a new CGI series next year.

Pucca

“We will be attending this year’s Licensing Expo with our most competitive and well-made IPs.” —Joseph Kim

Mondo TV Heidi Bienvenida / Robot Trains / Invention Story At Licensing Expo, Mondo TV is putting a major focus on the live-action Heidi Bienvenida and animated Robot Trains.

“Both shows have strong content with wide-ranging appeal, offering diverse opportunities for rich product development across a number of categories,” says Valentina La Macchia, the director of consumer products. These brands are “gaining strong audience interest in an increasing number of territories.” Another L&M highlight is Invention Story, an animated series that is slated for delivery next year. La Macchia says that there is such “enormous potential for Invention Story across both play and learning-related licensed product that [co-pro partners] Henan York Animation and Mondo TV have already committed to five seasons. This is not just a vote of confidence for the series itself but is also encouraging for licensees.”

ZDF Enterprises

“Differentiating your brand from those of your competitors is key, requiring quality and innovative products.”

—Valentina La Macchia

Heidi Bienvenida

Mister Twister

School of Roars / Lassie / Mister Twister Animated and live-action programs, including a show for preschoolers, are among the highlights ZDF Enterprises (ZDFE) is presenting at NATPE Budapest International. The preschool comedy School of Roars seeks to prepare kids for their first year of school. The mini monsters in the show learn about math, music and finding new friends. “School of Roars is already widely placed with CBeebies and Universal Kids, among others, and season two is coming up,” says Jan-Frederik Maul, the director of ZDFE.junior. There is also the animated series Lassie, a “classic brand with wide recognition,” Maul adds. Season one has performed well, and the second installment is expected to appeal to international buyers. In the live-action space, ZDFE.junior has the book-based family-entertainment show Mister Twister.

“We can offer around 1,000 hours of content in key CEE languages such as Russian, Polish, Hungarian, Czech and Romanian.”

—Jan-Frederik Maul

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Product from eOne Family & Brands’ PJ Masks.

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Joanna Padovano Tong spotlights strategies that help build successful licensing and merchandising campaigns for kids’ programming. s shelf space becomes more and more crowded, L&M executives must arm themselves with knowledge about current trends to give their properties the best chance for success and, if they’re lucky, staying power in today’s challenging retail landscape.

Much like TV-watching habits are analyzed to track viewers’ preferences, trends related to the purchase of licensed products must also be evaluated so that retailers and L&M execs can stay in the know, make consumers happy and keep profits flowing. Recently, global information company The NPD Group unveiled its U.S. Kids License Tracker, which provides “a holistic view” of licensed purchases in the country for kids up to age 14. The new service explores how license spending and buying behavior varies across such categories as apps and in-app purchases, arts and crafts, baby gear, books, clothing, footwear, school supplies, toys/puzzles, accessories and more. Insights include purchase methods and occasions, pricing, items bought, and demographic profiles of both the buyers and children.

“NPD’s new service will provide our clients with a complete view of the kids’ licensing market and key insights to help retailers and licensors identify new opportunities,” said Joanne Hageman, the president of NPD’s entertainment sector, when announcing the launch of the U.S. Kids License Tracker. “The cross-industry coverage enables clients to refine their license’s positioning, become more strategic in their marketing and product-development efforts and guide their efforts toward understanding what is most important to their target audience.”

NPD also recently reported that across the 12 global markets it tracks, toy industry sales inched up 1 percent in 2017.

In the U.S., they rose by 1 percent to $20.7 billion. Mexico and Russia experienced the fastest growth, partially due to inflation, with sales rising 12 percent and 11 percent, respectively. Sales were flat in Germany and Italy, while the U.K., France and Australia experienced declines.

A

BUILT TO LAST In this challenging environment, having a strong brand is necessary to rise above the fierce competition.

“We have a company mission, which is to create everlasting memories for children, and that is the central focus for everything we do with our brands,” says Ami Dieckman, the senior VP of international licensing at Entertainment One (eOne) Family & Brands. “What this means is that we’re creating

global brands with longevity and making sure that they remain relevant.”

While some companies have a renewable pipeline of content, when it comes to its L&M catalog, eOne Family & Brands prefers to hone in on a few high-quality properties that will hopefully continue to thrive for a long time. PJ Masks has been in the marketplace for nearly three years, and the now evergreen Peppa Pig will celebrate its 15th anniversary in 2019.

“Our overarching global strategy leads with investment in content,” adds Dieckman. “It’s about keeping it relevant, keeping true to the spirit of the original brand but also making sure that people are feeling like they’re getting quality at every point of engagement. If you get that part right, it simply translates to product around the world.”

Atlantyca Entertainment takes a similar approach to investing in a brand’s longevity by ensuring that the content always remains fresh. “We look for strategic partners who are open to building long-term” collaborations, says Marco Piccinini, the company’s licensing manager. “And we develop new style guides in order to refresh our brand and consistently update/transfer the key values of the properties onto the possible retail products.”

IN WITH THE OLD Atlantyca’s main highlights for licensing and merchandising on an international level are Geronimo Stilton, a bookbased brand that has been enjoying success in the publishing, stationery, food and promotional categories in the U.S., Europe and Asia, as well as Bat Pat, for which “collectible is the key word,” says Piccinini. In Italy, the company is also pursuing additional L&M opportunities for School of Roars, a new preschool series, and H20: Mermaid Adventures, for girls aged 4 to 8.

One helpful (but certainly not crucial) ingredient for L&M success is a property that has already proven itself in the marketplace in one way or another—a trend that has been ongoing for years.

“Toy specialists used to be trendsetters and were more inclined to get behind new properties,” says Marie-Laure Marchand, the senior VP of global consumer product and media distribution for the Asia Pacific, U.S. and U.K. at Xilam Animation. Now, they want “established brands with major marketing and digital support behind them in order to limit risks. Therefore, the main challenge for small independent studios is attracting the attention of retailers. Given the unstable economic situation and the plethora of properties

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Xilam is looking to build a consumerproducts program for Paprika, its first preschool brand.

available, they tend to choose the safe brands over potential opportunities from smaller players.”

In response to the demand for tried-and-true properties, Xilam is working on Mr Magoo, a reboot of the classic 1960s series. “We are confident that our fresh take on the show will capture kids’ attention across the globe,” says Marchand. “We have already secured major TV exposure for Mr Magoo through broadcast deals with France Télévisions in France, K2 in Italy, ITV and CITV in the U.K., along with Cartoon Network in Asia, and we have many more partners to be announced soon.” The company’s L&M catalog also consists of the flagship Oggy and the Cockroaches, which is celebrating its 20th anniversary this year, the slapstick comedy Zig & Sharko, and Paprika, Xilam’s first preschool brand.

Mondo TV has also reinvented a preexisting property with Heidi Bienvenida, a live-action franchise that takes inspiration from the 1881 book. “Heidi Bienvenida—a co-pro between Mondo TV Iberoamerica and Alianzas Producciones—is an adaptation of the classic tale of the happy, carefree girl who leaves her beloved mountain home to live in the big city,” says Valentina La Macchia, director of consumer products.

“Alongside that engaging storyline, it also offers an exciting mix of themes attractive to its target audience of teens, such as music, comedy, color, magic, love and technology, all of which in turn offer many licensing opportunities.”

girls’ 2-to-5 that will directly compete with Peppa, and likewise with a boys’ show” that could potentially pose a threat to PJ Masks.

This is a key strategy for Mondo TV, whose L&M highlights include the teen-geared Heidi Bienvenida as well as the younger-skewing Robot Trains, the second season of which it is co-producing with CJ E&M. “These two properties illustrate an important part of our approach: they don’t conflict with each other,” says La Macchia. “They are aiming at two very different target audiences, enabling us to build clearly defined licensing relationships across brands that complement—rather than clash with—each other.” Mondo TV is also seeking a master toy licensee for Invention Story, an upcoming co-pro with Henan York Animation.

South Korea’s CJ E&M, the IP owner of Robot Trains, is already moving forward with product development for the show. “Even though it is in an early stage of business, the animated series is continuously being launched on major TV channels, and consumers will be able to find Robot Trains toys all over Europe,” says Kim. “Currently, Robot Trains’ L&M program is being developed at a rapid pace, with competitive licensees in a number of major categories.”

One of the other important strategies for a licensing program is deciding on the best time to begin thinking about consumer products.

CJ E&M, for example, starts contemplating a brand’s licensing and merchandising potential from the get-go, according to Kim. “We consider the possibilities for L&M success from the early stage of IP development,” he says.

“We think about L&M for our property from the preproduction stage.”

“Atlantyca’s strategy is to pitch the new properties when they are starting on TV,” says Piccinini, “in order to find the

FAMILIAR FACES Meanwhile, CJ E&M is hoping to launch a new animated series next year centered on Pucca, a popular Korean character. “With love and passion as a subject matter, Pucca will be appealing to every consumer group, regardless of age or gender,” says Joseph Kim, head of the company’s global animation business division. CJ E&M is also currently seeking licensing and merchandising opportunities for Rainbow Ruby, a girl-oriented animated show meant to teach children that they can become anything they want in life.

Another way for a company to achieve success with a brand is to avoid making the mistake of “eating its own young.” As obvious as this may sound, it’s also easy to understand why it might be tempting to want to replicate the popularity of a hit property; after all, imitation is the most sincere form of flattery.

“We don’t expand our portfolio for the sake of it, and we are conscious not to cannibalize on our own brands,” says eOne Family’s Dieckman. “We actually reject quite a lot of content pitches that we come across—even if we love them. There’s just no point in picking up another

Atlantyca Entertainment hopes to develop more merchandise for its animated property Geronimo Stilton.

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right licensees that will release the product 6 to 12 months after the premiere, and put the products on shelves when the series will have reached a strong audience following.”

Over at Xilam, the company starts “pitching for a master toy partner, alongside the publishing category, straight away,” says Marchand. “In general, for brand-new properties we will wait for the first TV ratings to come in before speaking to licensees and then, once brand awareness has started building and the fan base begins to grow, we will introduce the first products into the market.”

According to La Macchia, Mondo TV also plans a brand’s L&M approach immediately. “You have to work in advance to develop a substantial licensing program; you can’t just wait for the property to be already consolidated or launched on TV,” she says.

La Macchia stresses the importance of staying organized and maintaining close contact with retailers. “Brand owners who embrace retail support will see the benefits of investing in retail to drive the brand message outside their traditional channel. Therefore, we ensure at all times that we keep retailers updated about our properties and our TV and L&M plans.” However, she notes, “It isn’t simply a matter of telling licensees our plans and strategy for an exciting brand and expecting them to jump on board. They want guarantees about TV, marketing campaigns and more; that’s why we always try to secure TV broadcasting on the best free-to-air channels and invest heavily in marketing activities in partnership with retail, such as promotional campaigns and loyalty programs.”

right now—everyone’s been affected by it.” But she also sees this obstacle as an opportunity: “It makes you smarter, forces you to think harder about how to get to that shelf space and drive innovation across your product lines to meet the demands of this competitive landscape. Overall, we work harder as a result to produce a real quality brand experience for the consumer across multiple touch points. Let’s talk about how we can really collaborate with the people that are left out there, and how we can support everyone for the benefit of the whole licensing community.”

GETTING A HEAD START Dieckman says that eOne Family contemplates L&M early on, “but we don’t consider it from the point of view of, how do we make this fit in a toy program?” Instead, the company focuses on “creating a holistic consumer-products program, rather than just a brand that we can sell on the shop floor. It’s important to create a program with international appeal, yet still connect with consumers on a local level.”

But even if a company finds itself in possession of a strong brand with long-lasting appeal and manages to choose the perfect time to kick off a licensing program, there may still be additional hurdles to overcome.

Take, for instance, the shuttering of major toy retailers around the globe. “The closure of Toys“R”Us in the U.S. and U.K., as well as La Grande Récré in France, will not just have an impact on ourselves, but on other smaller independent studios too,” says Xilam’s Marchand. “However, we expect this to be partially overcome with potential new lucrative business opportunities that the digital market presents.” She mentions that the company recently launched its own online store, which “gives fans of all ages the opportunity to purchase a wide array of merchandise” based on Oggy. You know what they say—if you want something done right, you have to do it yourself!

The sheer volume of properties on the market nowadays also presents a bit of a problem. “The number of new brands being debuted every year is definitely a challenge for longevity,” says CJ E&M’s Kim. “It’s a really crowded marketplace,” concurs eOne Family’s Dieckman. “Retail is a shrinking white space

CJ E&M produces the new animated series Robot Trains, which has L&M partners across Europe in various categories.

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The book-based Heidi Bienvenida benefits from built-in brand recognition.

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TV KIDS: How is the Studio 100 and m4e integration going?

STOEF: After the acquisition of m4e by Studio 100, the first goal was to bring the teams together, so we have one business location now in Munich. We have new staff on board.

In some departments there was some downsizing, in others we are building up more people, more expertise. We’re reshaping the whole company—Studio 100 Media was more a distribution entity and together with m4e we are moving the companies into a full content company, from development and production up to distribution and brand management of all rights. We acquired Little Airplane Productions out of New York as our preproduction and development hub for preschool programming, working closely with our studios Flying Bark in Australia and Studio 100 Animation in Paris in order to come up with a wider range of novel programming. After that, we also did some activities with our platform business and scalable areas such as home entertainment, digital, music and audio by renewing contracts, extending our current agreements with platforms like Sky, beIN and others. By doing that we have secured a solid foundation for these business areas, and we are almost done with the integration. And last but not least, we’ve developed a huge slate of new programs and films for the next five years, and also a development slate of approximately 20 projects in various stages that we would like to bring into production in the coming years. We have over 360 episodes of CGI animation in production from existing brands.

It is a lot of third and fourth seasons of some of our existing brands, like Mia and me and Maya the Bee. We have four feature films in production, and another four to come in the next three to four years.

By Mansha Daswani

It’s been a little over a year since Belgian kids’ and family outfit Studio 100 Group announced it was taking a majority stake in Germany’s m4e. By joining forces, the companies have amassed greater scale and expertise across the children’s entertainment sector, from television production and distribution to licensing and merchandising, live events, games, theme parks and more. Hans Ulrich Stoef, who serves as CEO of Studio 100 Media and m4e, updates TV Kids on the integration of the companies, M&A opportunities—such as last year’s acquisition of Little Airplane Productions—managing scale and crafting the ideal development and production pipeline.

TV KIDS: The heritage of m4e is in the licensing business. That sector has gone through some challenges, including Toys“R”Us going out of business. How are you managing your L&M business, given what’s going on in the sector?

STOEF: Studio 100 was very strong in classic brands like Maya the Bee, Vic the Viking and Heidi, and m4e was very strong in new, original content such as Mia and me and Tip the Mouse. So, it was a perfect marriage. We have established an A-list of our brands, where we are concentrating on some IPs and developing new ones. Of course, we are working closely with Amazon and other digital players in the market to substitute companies like Toys“R”Us. But as Toys“R”Us was leaving the market, others came in and took its place. Amazon plays a big role—their market share is increasing day by day.

The demand still exists, you just have to distribute your licensing products in a different way, and we are adapting to that.

TV KIDS: How do you strike a balance between expanding your scale and investing in IP while also running a fiscally responsible business?

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Studio 100 & m4e are in development on a third season of the CGI-animated Maya the Bee, based on the classic children’s books.

STOEF: The reality is that we still believe in the IP business. If you have a really good IP, you can generate a lot of money. Our mission is to create the next $100-millionplus IP. That’s why we have to produce and develop a lot.

It’s more about managing the risk rather than not expanding. Because of our partnerships and our own platform business, which we control, we are able to limit the risk but continue to grow in terms of creativity, output, our studio business and development. We can manage risk in the portfolio by distributing to some of our own platforms and [through] our existing partnerships. If I’m talking about 20 development projects, it sounds like a lot, but it doesn’t mean we will produce all of them.

We need to have a lot in the portfolio in order to get to the right one, the $100-million brand. What’s happening in the market is scary on the one hand. On the other, there’s still a huge demand for content; it’s just from different platforms these days. We have to adapt our business models, we have to create new formats, we have to be more creative. It’s no longer only about getting access to tax credits and subsidies and so on to make a producer’s profit. It’s about creating IPs. I think Studio 100 as a group has a very solid basis because the revenues are not dependent on animation content only. We have three revenue streams. One is the Belgian core business, with liveaction studio facilities and leisure entertainment facilities. The second column is the theme-park business, which is very successful within the group and creates a lot of cash—that helps us to invest further in the IP business. And there’s the international business, the animation part. The three activities level out quite nicely. If one business is more up than the others, it balances out and allows us to make the necessary investments.

TV KIDS: We’ve talked in the past about the lack of animation production subsidies in Germany. Do you think that has been an advantage in a way, because you know that you have to be able to justify your investments?

STOEF: On one hand, yes, because we have to create a real business model—we have to generate money and profits. Otherwise, we’re out. On the other hand, it’s a bit of an unfair competition in a way, because a lot of the subsidized productions coming from other countries around the world are filling the pipeline to the broadcasters, sometimes even with content nobody wants to see. Some broadcasters still take it because it’s cheap, but that’s not our business. We believe in highly entertaining and valuable content for kids and families. That has a certain price. So yes, we have to create a business model, but it’s harder [to produce without tax breaks]. Without the three columns I mentioned before, it would be very, very difficult for us to do so many productions at the level we’re producing.

TV KIDS: What opportunities are you exploring to expand the Studio 100 and m4e business globally?

STOEF: We’d like to extend our footprint into Asia. We are looking to become more successful in China; [we are] working with great Chinese companies and understanding each other and also helping some Chinese content to travel outside of China.

That’s number one. Number two: we’d like to get better in the U.S. market. By acquiring Little Airplane, we have a home base there. We have certain activities in mind on top of that in the U.S. In the future, Latin America is also an important market where we’d like to have a greater presence. And we’d like to become better in the digital landscape and develop formats for the future habits of entertainment consumption.

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