The Business of Children s Content 9/12/2014. Tim Westcott, Principal Analyst Anna Stuart, Analyst

Transcription

1 The Business of Children s Content Tim Westcott, Principal Analyst Anna Stuart, Analyst IHS Technology TV Programming Intelligence technology.ihs.com Cannes, France 9/12/2014 Picture: TeleScope 2014, TV Licensing

2 Key issues for producers of children s content Screen Digest (now part of IHS Technology) first examined children s TV in The Business of Children s Television found that the main issues facing the industry then were: Broadcasters were reducing their funding for children s programming Support from public sources government-backed support schemes and not-for-profit public broadcasters was vitally important The spread of cable and satellite TV and the advent of digital television was already dramatically extending the airtime for children s programming With the Walt Disney Company as the model, a number of companies understood that licensing particularly home video, toys and publishing was key to success in the genre A handful of companies succeeded in making the investment case for children s TV and floated on the stock market The internet was clearly going to be a big thing but no-one was quite sure about exactly how.

3 Coming to terms with an evolving market In 2014, we are publishing a fifth edition of the report, which we are now calling The Business of Children s Content. What are main issues now? There is a mixed picture for broadcaster funding: some do not provide any funding, but some producers still get most of their funding upfront Support from public sources government-backed support schemes and not-for-profit public broadcasters remains key. Some schemes (tax breaks for animation in the UK and Italy) have emerged recently Children s programming has largely migrated from generalist services to children s channels and blocks. Most major markets have transitioned to digital television Licensing remains key, but the home video market has steadily declined Producers have struggled to make an investment case for children s TV; many of the high fliers of the 1990s and 2000s have gone bust, merged or been acquired The internet is clearly a big thing we can no longer talk only about linear TV, because online, on demand content is now well and truly mainstream

4 Children s TV is no longer just about the TV The number of connected devices (PCs, tablets, smartphones, smart TVs, consoles) is increasing Children are enthusiastic early adopters Media consumption on non-tv devices is evolving rapidly IHS Technology forecasts 4.4 billion connected devices worldwide in 2014, up from less than one billion in 2005 In the UK, 42% of children used tablet computers in 2013 vs 5% in % of children aged 3-4 had access to a tablet (Ofcom). In the US, children aged 0-8 spent 12 minutes less watching TV in 2013 than in 2011 (Common Sense Media)

5 but the glass is still nearly full, isn t it? Children are using other devices to watch TV Children s TV viewing up 2.2 hours a week over last four years (Nickelodeon, The Story of Me research, November 2013) Ofcom: 98% of children (5-15) watch TV virtually the same as in 2012 Common Sense Media: children spend more time watching TV on a TV than on any other activity More devices may just mean more opportunities to view and more consumption.

6 Broadcasters: the challenge of a multiplatform world Television is still the main outlet for children s programming but it has been transformed by the growth of pay TV and digital Launch of Nickelodeon (as Pinwheel) in the US in 1979 pioneered the idea of a children sonly channel. There are now more than 400 children s channels worldwide Nickelodeon, Disney and Turner operate channels in the US and every major market Generalist broadcasters have either migrated their children s programming to branded specialist channels or blocks or transferred commissioning to specialist channels Public broadcasters remain significant players typically at national level Children s channels are crucial to pay TV because operators generally target families Children s content is a key driver of on demand offerings (Comcast Xfinity offers over 1,000 hours of kids content) Content is being made widely available on non-traditional platforms TV Everywhere services (Viacom study, May 2014: 98% believe TVE adds value to pay TV

7 IHS Technology children s content survey (Summer 2014) A questionnaire covering key themes in today s children s TV market was sent to over 300 broadcasters and producers. Every major global territory was represented, with responses from 28 countries. 58% of the producers that completed the survey said they receive upfront funding. Most producers have less than half their children s TV production funding contributed by broadcasters. Source: IHS TV Programming Intelligence

8 IHS Technology children s content survey Broadcasters spending on children s programming Half of the broadcasters who replied to our survey said they spent more on programming in 2014 than the year before, while 20% spent less More than half spend a majority of their budget on originated programming Clearly, serious investment in children s programmes is not a thing of the past Source: IHS TV Programming Intelligence

9 Producers: threats and opportunities Unlike broadcasters, producers do not have to defend the real estate of a TV channel. They can sell programming to anyone The long term perception is that budgets for children s programming are being squeezed (IHS survey) Children s producers unable to fully fund their programming with broadcaster licence fees. 42% of surveyed producers receive no upfront funding from broadcasters (IHS survey) Another factor is that children s programmes are repeated much more heavily than other genres, with much greater reliance on archive programmes. Evergreen properties occupy airtime and retailers shelves The proliferation of networks has not translated into an increase in production funding. Specialist broadcasters buy in volume, and can drive a harder bargain in rights negotiations The result is a tough environment for children s TV producers. Many companies have gone bust or struggled after an initial burst of success: EM TV, Entertainment Rights, BKN, TV Loonland, Moonscoop, Zinkia

10 IHS Technology content survey The rights wrangle Overall, producers overwhelmingly report a reduction in budgets available to them. Broadcasters almost always acquire digital rights as well as linear TV rights. In addition, broadcasters also expect a cut of licensing revenues or take these rights as well. Source: IHS TV Programming Intelligence

11 IHS Technology children s content survey Keeping content on proprietary sites Two thirds of respondents host content either on proprietary sites, or on a mixture of their own and others sites. This breaks down very differently by territory. While European and Middle Eastern respondents favour their own sites, North America and APAC have a very diverse range of distribution. How do you offer full episodes online? (breakdown by territory) Source: IHS TV Programming Intelligence

12 IHS Technology children s content survey Online streaming is a must Nearly 70% of all respondents, both broadcasters and producers, have full episodes of their programming online. Broadcasters almost always have an online offer; producers are much less likely to bring their content direct to consumer. Do you offer full-length episodes of your children s programming online? Source: IHS TV Programming Intelligence

13 IHS Technology children s content survey Going digital: where is the money? Overall, free/ ad-supported and SVoD are tied in popularity as distribution types Source: IHS TV Programming Intelligence

14 IHS Technology children s content survey Going digital: more maturity means more subscription The world picture is very diverse. As is to be expected, some developing markets have less reliance on paid models, and no territory is more reliant on SVoD than North America Free platforms are biggest in the Middle East, while APAC has the slowest take-up of digital platforms. What type of digital platforms are generating the MOST significant revenues for children's content? (breakdown by territory) Source: IHS TV Programming Intelligence

15 Summary Producers of children s content have had to get used to working without significant upfront funding from broadcasters but it has not disappeared altogether Funding support schemes, and the support of not-for-profit public service broadcasters, is of crucial importance in the children s TV sector With broadband internet now a mainstream medium (at least in developed media markets), online is well established alongside linear television Children s content has largely migrated to specialist channels away from generalist channels In an online, multi-platform world, producers are facing a battle to retain digital rights against broadcasters reluctant to allow viewers to stray outside their own walled gardens Free ad-supported and subscription video-on-demand (SVoD) services are most likely to deliver revenue streams for producers and IP owners online.

16 About the Author IHS TV Programming Intelligence What do TV companies spend on producing and acquiring TV programming? IHS TV Programming Intelligence offers data on 130 groups, which spent $99.2 billion on programming between them in Data runs from 2000 and is forecast five years ahead Service includes insight reports, commentaries on breaking news and analyst access For more information visit: technology.ihs.com This report is brought to you by Our websites MIPTV/MIPCOM To follow us: MIPTV & MIPCOM are the world s leading content markets for creating, co-producing, buying, selling, financing, and distributing entertainment & TV programs across all platforms. MIPTV & MIPCOM respectively take place every April and October, each bringing together over 12,000 professionals from 100 countries To download our MIPTV / MIPCOM app: