TBI Distributor’s Survey 2020 – Part 4: Kids

Few areas of the content business have adapted as quickly over recent years to the vast changes in the business as the distribution sector, with companies large and small adeptly planning and executing savvy strategies to ensure they remain relevant. The effect of the Covid-19 pandemic has again tested this sector’s resolve and it is clear from this year’s findings that the past six months have had a considerable toll on sales. Yet there are positives and an overwhelming optimism that the industry can rebound.

Kids: The kids are alright

Federation Entertainment’s Squish

The children’s TV sector has remained resilient in the face of the Covid-19 pandemic, with many distributors enjoying strong animation sales despite delays from uncertain clients

Demand for animation remains high in the kids’ TV sector, which as a whole appears to have weathered the worst of the pandemic, with parents the world over turning to their television screens to help keep youngsters occupied during the height of lockdown.

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However, though some in the sector remain optimistic that things will improve in the coming 12 months, almost as many remain uncertain.

Some companies have clearly been seeing out the storm better than others, with more than 38% of respondents in the sector claiming that Covid-19 had cost them little in terms of annual revenue, and only around 7% claiming losses of more than 50%.

In-fact, 15% of respondents said their revenue had actually increased by as much as 25% in this period, perhaps due to the increased demand for children’s programming as schools and nurseries were closed and youngsters spent more time than ever before switching on to be entertained.

Furthermore, only 23% had felt the need to take advantage of government support schemes in order to help them to stay afloat, while the overwhelming majority – 92% – said they had not had to lay off any staff as a result of the pandemic.

However, with broadcasters and platforms around the world tightening their purse strings, and in line with other sectors of the industry, it was not surprising to see that 92% of respondents said that their clients have delayed decision-making, either when acquiring or greenlighting shows.

Dominic Gardiner, CEO of London-based Jetpack Distribution says that was to be expected, given the circumstances: “Uncertainty within the market and the migration to remote working did slow things down initially, quite understandably.”

Anna Verbovska, head of sales and acquisitions at Ukraine-based MKMG (formerly MK Media Group) agrees: “Covid-19 has brought an uncertainty in budgets and future plans of acquisitions for some of our clients,” she reveals.

“Our strategy was to define the type of content that will be on-demand in next months and prepare our catalogue for the moment when clients will get some clear image in their acquisitions, reacting quickly in this case. We received more requests for educational and edutainment titles; thus we enriched our portfolio with such proposals.”

Monica Levy, head of sales at Paris-based Federation Entertainment, perhaps proved to be the exception to the rule, describing the situation as having been “business as usual”.

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Expectations that business will improve over the next year were divided, however, with only 54% believing things will get better for their companies, and just the same percentage foreseeing an improvement in the market as a whole.

Given the particular increase in TV viewership among children during lockdown, it was no big shock to see that animation continues to do well, with 77% of respondents claiming that it is leading in terms of their sales at this time.

Fragmentation and consolidation

Outside of Covid woes, 46% of respondents said their greatest concerns faced by their businesses over the year from September 2019 to August 2020 had been falling ad spot revenues at networks, followed by 38% who were worried by further fragmentation of the market.

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Respondents on the whole (around 69%) believe that it is mid-sized firms of around 20 to 50 members of staff that are currently most under threat from market conditions, but it is clear that there are a variety of opinions.

MKMG’s Verbovska suggests that all sizes of companies should expect to feel the pinch. “Large companies can suffer more from necessity to lay off staff or to postpone productions. In the meantime, such companies generally have large libraries that can help [them] to stay.

“Small firms and mid-sized firms can feel the influence from acquisitions decrease. But finding the right niche can be very helpful in this case and even play a good card for such companies.”

Ed Galton, CCO & MD at London-based Cake Entertainment had a different perspective: “Small firms are at risk as they are dependent on distribution sales and don’t necessarily have the cash reserves to withstand a sharp decline in market conditions.”

Meanwhile, Gardiner suggested the opposite: “Larger firms have bigger overheads and are more likely to struggle to adapt to the market downturn.”

An overwhelming 92% majority, however, said that they are expecting further market consolidation in the upcoming 12 months.

“I don’t think people can pay to have so many services and sooner rather than later, not every player will be able to survive,” said Federation’s Levy, while Jetpack’s Gardiner commented: “I think there will be more consolidation among the medium sized players to try to close the gap between some of the giant mergers of more recent years.”

Industry insight

“With an evergreen catalogue of educational and edutainment content, and animation production unhampered by Covid, kids’ entertainment has seen the upside of the proliferation of streamers, providing ample opportunities to monetise their entire catalogue.”
Ian McKee, Founder & CEO of Vuulr


Platform power

Meanwhile, in a year that saw numerous new streaming services launch into a crowded market, almost half of all respondents – 46% – said that global streaming services had been a positive impact on their business, with 23% going so far as to claim a “very positive” impact on the kids TV sector.

And against a background of content markets going fully online, an unequivocal 100% of respondents said that MIPCOM was the must-attend event of the year.

Part 1: Scripted

Part 2: Unscripted

Part 3: Formats

Part 5: Conclusion

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