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From kids content to prime-time comedy – DHX Media’s President and COO, Steven DeNure, talks about how the company works across multiple platforms to build audiences nationally and internationally.
Steven DeNure from DXH Media explains the success of his content monetization strategies in national and international markets. With divisions in production, licensing, broadcasting, and worldwide sales, DHX took on the digital transformation of media and invested in the subscription video on demand platforms. Among their content monetization strategies are: revaluing existing libraries for SVOD platforms; monetizing YouTube content with their Wildbrain division; creating partnerships with other content producers and broadcasters; and managing consumer product opportunities for brand owners. DHX also make their own content platform-agnostic to be able to take advantage of media digitization and SVOD channels. Successes like Degrassi on Netflix and Teletubbies on their own Family Channel have followed.
President and Chief Operating Officer, Executive Producer, DHX
“Kids really are some of the earliest adapters of the technology..”
“For us, this has been a really interesting step into the world of the way that kids are consuming content now, because YouTube is where they are. They’re on YouTube and they’re on Netflix.”
“We’ve spent the last 10 years and for me more than that, having founded Decode, building an international kids’ television business or kids content business that happens to be based in Canada.”
“We believed early on that the digital transformation would ultimately revalue libraries, and that there was content that did not have a place on linear platforms, there simply wasn’t enough shelf space, enough room, as many channels as there are, but that there would be some home for it on demand platforms.”
“Comedy is the other thing that knows no bounds when it comes to these new platforms.”
“I will start with Degrassi which, of course, is hugely well-known. It’s been around, I think, almost 32 years. There’s over 400 episodes produced. We acquired Degrassi Company a few years ago from Linda Schuyler and Stephen Stohn. Linda is the original creator of the series and is still working with us on the show.”
“The remaking of the Teletubbies could have gone horribly wrong. It originally aired in 1997 and it had millions of fans around the world. It turns out there are some people that didn’t like the Teletubbies at all the first time around, and asked ‘Why with 365 episodes we would want to make more?’.”
“We actually went to the BBC and said, ‘We think there’s a way of using new technology.’ In fact, instead of going to a farmer’s field and building… if you can imagine, in England where it rains at least half the time, trying to have these extra large characters outside, impossible production scenario.”
“Then, I just thought I’d put Inspector Gadget up here, another show that has real heritage and legacy.“
“They took a camera and they went and shot a few episodes and put them on YouTube. In a very short time, it had hundreds of thousands of views. It’s very funny, it’s very dry, and for the people who have ever spent any time in the Ontario countryside it’s highly recognizable, so relevant to a lot of people.”
Steven: Thank you. Since I see a few friends in the audience who promised to hackle, maybe we’ll just open this up to questions along the way if you have any questions. That way I can disarm any hecklers, I’m hoping. Please, come in and have a seat.
Just in case you don’t know much about DHX, I’ll give you a quick overview. You heard briefly that we’re 10 years old now. In fact, May the 19th is our 10th anniversary. We’ve spent the last 10 years and for me more than that, having founded Decode, building an international kids television business or kids content business that happens to be based in Canada. We now have 4 parts to our company. Our core business was production. We have studios in Vancouver, Toronto and Halifax. Animation studios in Halifax and Vancouver, about 800 people in Vancouver, 250 in Halifax. Then we have a live action studio here in Toronto. We also produced, I think, 4 or 5 series last year in the U.K.
The other real core part of our business has been the worldwide international sales part of our business. One of the things we’ve done is we’ve grown this company over the last 10 years as acquire libraries. We believed early on that the digital transformation would ultimately revalue libraries and that there was content that did not have a place on linear platforms, there simply wasn’t enough shelf space, enough room as many channels as there are, but that there would be some home for it on demand platforms.
We’ve been building that library over many years, both through acquisition of existing libraries and the original content that we create. We also have a … A couple of years ago, we acquired the Family Channel assets in Canada, so we are broadcasters … of course, every producer dreams of being a broadcaster so they don’t have to go and pitch and gravel, but somehow we’re still pitching, not graveling so much.
Then, we have a licensing unit because one of the key parts of the kids business, of course, is that it often has a strong connection to consumer products. Our licensing group, our brands group happens to be based out in the U.K. and we really do have a significant international footprint with offices throughout the North America. On our licensing businesses we have offices in London, Paris, Barcelona, Milan, Munich, Amsterdam, Stockholm, Warsaw[inaudible 00:04:14], recently Athens and Dubai. We manage consumer products opportunities for a number of different brand owners, not just ourselves. For example, we managed the Minions across all those territories for Universal Pictures and a number of other brands.
The core part of our business and our key customers have always been broadcasters. We sell to traditional broadcasters around the world. In fact, when people ask about us as a production company, I always say, “We’re a sales focus company that happens to be in the business of making content to feed our sales and opportunities and we have great relationships with traditional broadcasters around the world.”
The other part of the business is the growing SVOD AVOD business. We have been one of the leaders in selling content to these new platforms when they as and when start up and wherever they happen to arise. I had note this morning saying that Amazon just launched the direct video, so this is truly late breaking news. All right. It’s a screenshot from my email. There were some questions today around what are we doing about that? Are we in business with them? The answer is yes, of course, but the thing that Amazon is now doing is really going to, in some ways, compete with YouTube.
That really brings me to the next part of our business which is something we really just unveiled a couple of weeks ago called Wildbrain. This is a company that we’ve been incubating in-house since 2012. For me, it’s been an interesting story and an evolution and some people have heard it. A number of years ago, we spent time, at least our lawyers spent time sending cease and desist notices to people who were putting in what we call user-generated content up. We call them friends and fans, not pirates, but there’s a lot of pirates there.
We were sending cease and desist notices and then YouTube’s or Google’s content claiming system evolved to a point where instead of asking people to take the content down that we own, we started to claim it and monetize it ourselves. Again, I don’t know how much you know about that, so we’ll just go into it a little bit. If we can demonstrate to YouTube … YouTube doesn’t care where the content comes from. If you put a Caillou video up and you say you’re the owner, then as they sell ads on that they will send you the check. If you can demonstrate that you’re the legitimate copyright owner of that content, they will instead send you the check because [inaudible 00:07:19] platform.
We started to monetize our content on YouTube that is strictly by claiming. It actually created some small controversy inside the company because there were people in our brand group who said, “Hang on, we shouldn’t be serving ads against Caillou for the youngest kids.” One of the things that we said on the commercial side was, “But somebody else is putting that content up and there are ads being served against anyway. Why don’t we just step in the line and collect?” That’s what we started to do. We developed an interesting and good relationship with YouTube and then they launched the series of subscription services. Again, I don’t know if anybody remembers this but there was quite a bit of publicity and promotion around the launch of YouTube subscription services.
We signed up and had, I think, 3 channels in 10 countries in different languages and it a massive thing to set up. One of the things that we started to do out of that opportunity was build a massive database which we call MegaData for our some 12,000 episodes. I think we’re now up to 17,000 separate assets in our catalog. The first step in this was actually building this. MegaData and it really is a meta data database of every title that we own, so that we could use them as reference files when figuring out where our content was around the world on YouTube.
We signed up for a few of these subscription channels. We loaded a bunch of content up from our database. There were conflicts with the existing licensees and some of the territory’s traditional broadcasters didn’t necessarily like this. Guess what? The YouTube subscription model didn’t exactly work. I think we had 5 subscribers. Maybe it wasn’t 5, but it wasn’t very many. What it did give us was a really great close relationship with YouTube. They were interested and impressed in the way that we had constructed our database and understood our library in quite a deep way. That’s 2012.
This has grown into a point now where, I think, we’re up to 750 or 800 million views a month of all of our content. We manage content for a number of other companies, including people like Turner, some of their content. It’s been a significant and growing part of our business. One of the things that it’s done is … This will be, I think, a bit of a theme through what I have to say today. For us, this has been a really interesting step into the world of the way that kids are consuming content now because YouTube is where they are. They’re on YouTube and they’re on Netflix.
At this point … Yes, some of my slides are better than others. What this shows really is that the kids channels are really some of the most popular channels on YouTube. Kids and music. Justin Bieber being right up here at the top almost. One of the things that we’ve done is really worked to manage our various channels. At this point, almost all of our content is actively managed by our team, which has been partly based in Toronto and partly based in the U.K. I’m here to talk about some of the other things around discoverability. This is, I think, again, there’s a number of different things that you’ve heard about, whether there are recommendation engines, algorithms, there’s a whole litany of new terms to go with this notion of discoverability. Again, when it comes down to it, we’re still traditional broadcasters and producers of long form content where the primary market is international broadcasters.
I thought what I’d do is just shift gears and talk a little bit about what we’re doing actually on the content side, irrespective of some of the distribution platforms. I think this is for us one of the things is to be platform agnostic, overall have your content on every possible platform, but understand which platforms are actually paying the way. I’m going to divide it up into 2 things. The first thing I’m going to talk about are a few of our legacy properties, because in a library like ours, we have a bunch of different legacy properties that are very well-known. When it comes to the issue of discoverability, it’s much easier to get an audience that’s interested in those.
I will start with Degrassi which, of course, is hugely well-known. It’s been around, I think, almost 32 years. There’s over 400 episodes produced. We acquired Degrassi company a few years ago from Linda Schuyler and Stephen Stohn. Linda is the original creator of the series and is still working with us on the show. A year after we acquired it, the key U.S. long-term broadcaster called us up and, basically, canceled the show. In fact, what they said was, “We’d like to wrap up the show by doing maybe a couple of specials and by the way, could you get Drake in it?” Which we politely said, “No,” and came back to Toronto and huddled and strategized. We’ve already developed the next series, the next season, as it is the next class.
Our next step was, actually, to take the team to Los Angeles and go and pitch what might be replacement partners for our traditional broadcast partner. We didn’t even go to the traditional broadcast partners. We went to Amazon, Netflix and each one of them showed a huge amount of interest in the show. We ultimately made a deal with Netflix and we’re now on our second series with Netflix. The thing about this show for them that was appealing was a built-in audience, built-in awareness. I think some of these things are really obvious. For us, even though it’s obvious in retrospect, we had no idea when we’re going and pitching. We had a pretty good idea that those new platforms would be the most likely buyers of the content, but we were amazed at how quickly they responded and the way that they assessed the property was so different from a traditional broadcaster. In this case, it was all about the data. It was data driven. Of course, Netflix doesn’t share the data with other people, but their research department certainly does a deep dive into this to understand exactly what position this property holds in the minds of audiences. Again, we don’t really know how well it’s done in its first season on Netflix, but it did well enough for them to order another season.
By the way, we have this on the Family Channel in Canada and Netflix has it worldwide. One of the issues … and you never know who you’re going to run up against, but because Degrassi is serialized, because we’ve carved it a window for Family Channel in Canada, one of the issues we’ve ran up against with this was the spoiler alert. I think, again, one of the great themes of the new platforms like Netflix is that they really forced drama to … they made drama better, in my view. Especially when you at serialized drama that really engages audiences. It’s great if you can find it the first time, but if you get hooked, you watch the whole thing, everybody knows about binge watching. Degrassi is serialized and because Netflix doesn’t have it worldwide, we have effectively and primarily in Canada, one of their biggest concerns was spoiler alerts on social media, if it aired in Canada first.
At the opposite edge of the age range, the Teletubbies-
Dough: Steve, Steve?
Steven: Yeah? Oh, Dough!
Dough: What happened with the social media? How did that end up?
Steven: It was a concern before the broadcast. It didn’t turn out to be that big a deal, so we hear. Again, it’s hard to get real hard evidence of this. It didn’t seem to affect the viewing. I think the conclusion, ultimately, was that Degrassi fans would go to watch Degrassi whether they know what’s going to happen or not.
Dough: They put it up all to once, so that people could binge watch it.
Dough: You had it staggered over a schedule.
Steven: That’s right.
Dough: All right.
Steven: There’s a whole thing about negotiating windows in that case.
Dough: The Canadians would have [inaudible 00:16:28] and the other thing is that the Canadians couldn’t get access unless they had a VPM wire on.
Dough: Degrassi have been at the center of the Canadian … they were angry that Netflix is cracking down on the-
Steven: It could be. I haven’t heard that.
Dough: Oh, sure.
Speaker 4: It’s [inaudible 00:16:50]
Steven: Yeah. We’ve got others? Now I’ve lost my place, Dough.
Speaker 4: [crosstalk 00:17:02]
Steven: Really? Thank you. Thank you.
Dough: We can take over at any time.
Steven: I know.
Dough: [crosstalk 00:17:14]
Steven: I know. It’s good to have friends.
The remaking of the Teletubbies could have gone horribly wrong. It originally aired in 1997 and it had millions of fans around the world. It turns out there are some people that didn’t like the Teletubbies at all the first time around and asked by with 365 episodes we would want to make more? There were a number of different reasons. One of them is that the original Teletubbies were done before HD television. They’re actually shot in a farmer’s field that was sculpted and landscaped. They really don’t hold up to a traditional broadcast. They look okay on a small screen, but not in HD. We actually went to the BBC and said, “We think there’s a way of using new technology.” In fact, instead of going to a farmer’s field and building … if you can imagine, in England where it rains at least half the time, trying to have these extra large characters outside, impossible production scenario.
What we did is, basically, used the technology that made Lord of the Ring and Harry Potter possible, green screen technology. We built, basically, a model. I think it’s 4 meters across. Basically, we built what is a model of the Teletubbies world and we shot them all bluescreen in the studio. I don’t have a clip here today but it is absolutely seamless, the show looks great. It’s a hit in the U.K., it’s been doing very well. We’re launching the U.K.’s in the U.S. soon. The reason I want to talk about the Teletubbies is it targets the youngest viewers. The BBC has a tradition of doing shows that are really at kids’ bedtime, 6 or 7 o’clock in the evening. They’re probably the only broadcaster in the world that actually has ever made shows that are for kids under 3. In lots of territories there are no ratings for kids under 2. In most places people don’t think kids should be watching television before they’re 2 or 1, but anybody [who 00:19:36] was a 2-year-old … I don’t, but I’ve seen 2-year-olds with iPads and they’re way better than I am with an iPad. Kids really are some of the earliest adapters of the technology.
Again, for us, that’s one of the themes. We are targeting a generation, Monsieur Blais talked about the group that they had, which was, I think, teenagers, 15 to 18-year olds, 17-year-olds. Of course, our audience is really up to 13. The reason I want to talk about the Teletubbies is that they were no longer on the air and we were … Again, this is go back to the YouTube theme. We were looking at YouTube. This is even before we acquired the company that made them. We’re looking at YouTube and realizing two things. First of all, that there were tens of millions of views a month, like 25 million views a month worldwide of the Teletubbies. First of all. Secondly, that nobody was monetizing them.
Ragdoll, the company created by Anne Wood, who created the Teletubbies and a number of other iconic British shows was co-owned [inaudible 00:20:44] between Anne and the BBC and they decided to sell it. We acquired it, but when we were doing the due diligence and the research trying to figure out what that company was worth, a big part of our due diligence was based on the YouTube figures that we looked at to see what the viewership was for things like the Teletubbies and the number of the other shows in the library. What we realized … Two things. First of all, that they were more popular than we imagined, still, with kids and parents. In terms of discoverability … because, again, this is the thing, this is the legacy brand, is that parents or grandparents were directing their kids to this kind of content on YouTube.
The other thing is that we use that as evidence for broadcasters to say, “This is still popular and if you, broadcasters, are having a hard time with brand new shows, getting people to tune in and watch, we’re going to make a great version of a well-known brand already and you will have an easier time in terms of your ratings or [inaudible 00:21:50].” We also then actively started to manage the Teletubbies content on YouTube to the point, now, we’re, I think, up to 90 million views a month. It represents a big chunk of the viewership that we have. By the way, with YouTube, we know where people are watching, we know what device they’re on, we know which territory they’re in, what city. We know how long they watch. We generally don’t know who they are, though, but we’ve got a pretty good idea. Yes. That’s the Teletubbies. Any questions on the Teletubbies?
Speaker 5: How do you monitor that?
Steven: YouTube serves commercials against it and that … This is AVOD, so for us, on YouTube it’s AVOD. The new episodes are not on YouTube, only the old episodes are and then some clips and games and some other little bits and pieces. The new episodes are traditional monetization through broadcast sales and then there are some other toy deals and a whole long list of other consumer product deals for that. Dough?
Dough: You’ve said you’ve got into this arena because you found that your shows were being put on YouTube by users?
Dough: In a fact, there wasn’t any kind of a scheduling [inaudible 00:23:25] now, you’ve said we’re moving to more managed due diligence. What does that mean when you say manage and what proportion of the revenue comes from the manage side as opposed to the user-generated?
Steven: It’s an interesting area and the statistics change every week. We’ve set up official channels for many of the titles that we own. What we’ve seen is as the user-generated content … There’s lots of user-generated content, that truly is piracy. As pirates have been discouraged, what we’ve seen is the user-generated drop and the official channel rise quite simply.
Speaker 6: How do you collaborate the YouTube viewership in your marketing campaign to bring people to the new show?
Steven: That we do territory by territory. We have to do that in a partnership with broadcasters. Broadcasters in different territories have different attitudes towards that as a positive or a negative thing. What we do have is we have, basically, short teaser content of the brand new Teletubbies on YouTube, so it’s very limited. What we’re really trying to do is make sure that we’re encouraging the content, the viewers to go to our broadcast partners. Sure?
Speaker 7: Just a quick question. Do you think that the YouTube videos reduce your ability to make linear sales of this library contents or is your logic that you made all the money you can from these broadcast deals?
Steven: So far it hasn’t. Again, that’s such an evolving area. As I say, broadcasters in different territories have different attitudes towards it. This will on Nickelodeon Jr. in the U.S. One of the things that they insisted on was that they limit the number of episodes we have on our official channel. Each territory is different that way, depending on who the broadcast partner is. [G.G 00:25:39]?
Speaker 8: Just going back to Degrassi, if you don’t mind?
Speaker 8: Did you discuss with Netflix or did you think about doing another version for them without the next ons or whatever they considered a spoiler alert? What was that discussion? Did they just take the content that you created and said-
Steven: They bought it before we made it.
Speaker 8: [Crosstalk 00:26:04] two versions.
Speaker 8: Just think about doing one without the next on. I don’t know what they would consider a spoiler alert in the binging world.
Steven: We had developed a new series in anticipation of our U.S. partner continuing. When they passed we just took the new version to Netflix and then did some new development for them around that. That’s all separate from the spoiler alerts stuff. The spoiler alert stuff is all on social media.
Speaker 8: They were just worried about that the people were talking and you didn’t worry about what was in your next on or what was in your previously on or anything like that? That’s not part of the equation?
Steven: Not really.
Speaker 8: Okay, I get it.
Steven: Yeah. Then-
Speaker 9: Can I ask another quicky?
Speaker 9: The traditional role of a Canadian broadcaster, say, with the series of [inaudible 00:27:07] production is that they would have executive [inaudible 00:27:10] of the show, look at every script, get notes and so on. I know that from Stephen and Linda, that the tone of [inaudible 00:27:18] series changed [inaudible 00:27:19] considerably with the new series that [inaudible 00:27:22]. What this role does Netflix play? Does it play a role that’s, in terms of content and creative supervision, does it play a role that’s like the Canadian broadcasters used to or did or do?
Steven: Well I think, again, that’s one of the really interesting things for those of us who’ve grown up selling content to broadcasters is … No, they do not play quite the same role. In fact, they’re hugely creator-friendly. I think it’s one of the things that they promote about themselves. They do have opinions and they do have executives signed, but it’s very, very different from working with a traditional broadcaster. Initially, most of those companies or platforms had more people analyzing data than they did analyzing scripts.
Then, I just thought I’d put Inspector Gadget up here, another show that has real heritage and legacy. It was initially produced as a Canada Friends co-production, 1983, Michael Hirsh was one of the executive producers. We re-launched Inspector Gadget a couple of years ago. It’s done very, very well around the world. I think that one of the things here is that, for me, it’s a … Degrassi started in ’79, this show started in ’83, Teletubbies in ’91. If you look at this, there are parents who grew up watching Inspector Gadget, who were actually … The numbers, again, from YouTube, when we’re looking at, the numbers for Inspector Gadget were huge. We believed that it was, of course, parents sitting down with their kids saying, “Do you want to see a really great show?” Of course, you look at them and you say, “What? It was never that slow when I was a kid.” That’s a different subject.
What’s my next slide there? Okay. I’m going to move from the legacy brands to the new. I think that for us, as broadcasters, we spend a huge amount of time trying to figure out what we think is going to work as far as new shows. Certainly, there have been creators who’ve said, “If you only focused on recycling old ideas, what about some of my new great ideas?” Of course, we continue to believe that fresh new programming is one of the things that drives ratings and viewership and so on. I guess, that comes back to the core of discoverability is how do you get people to notice those new shows?
I’ve got a few shows here that are Family Channel shows that have had some kind of an international profile. The first one, The Next Step, which is produced by Temple Street, created by Frank van Keeken. There’s a number of things about this show … actually, the Shaw Rocket Fund was instrumental, both in terms of its initial creation and they’ve been a key funder of it from day 1. That should probably stop any questions from them on it. Maybe not.
Anyway. The Next Step launched on Family Channel when the Family Channel actually had Disney program. Again, this is one of the other themes, is that in terms of discoverability there’s nothing like putting a new show next to currently performing show in order to get people to pay attention. It’s an old strategy, it’s worked, it continues to work. The Next Step, first of all it’s a great show. It is a little bit different from the comedies that Disney was making. It was carefully scheduled in program right from the very beginning at Family Channel. It’s a scripted [foe 00:31:30] reality dance show. That’s all right, Agnes?
Steven: Yeah? It’s proved to be hugely popular. For us, one of the things about this was then let’s figure out where else and what else we can do with this? Temple Street did a good job of getting this placed internationally. It happens to be huge hit in the U.K. on the BBC. We partnered with Temple Street to create a live show, so this is completely outside of the social media and digital world. The other thing, and again, I think from the CMF discoverability essay that came out last week, one of the things they talk about is marketing. They talk about stunt events and would expand that to include live events. One of the things that has happened with The Next Step is we’ve got a live tour that started in Canada. It started out relatively small. It grew to the point where last year, actually, we did 60,000 admissions across Canada. Basically, live touring show in theaters targeted really at viewers and kids under 13 years old, 14 years old. That was successful enough and the show’s been enough of a rating success in the U.K. and Spain that we expanded the live tour there this year. We had sold out shows in both of those places.
The interesting thing for us in this is that … Again, I suppose it’s another one of the themes is you have to be, even if the key platform is traditional television, you have to be across every other platform that there is. The live events platform has proven to be a really great adjunct to the promotion of this series.
Speaker 11: I have a question.
Speaker 11: When you sell it to a broadcaster, international or worldwide and they buy the rights to it, you’re monetizing it on a SVOD or an AVOD or YouTube, maybe. Do you hold back the windows so the broadcaster has a chance to monetize it first or how does that relationship work? Is that negotiated?
Steven: This is an evolving area of our business. It used to be that for some of the SVOD services, they didn’t mind … or even traditional broadcasters, they didn’t mind. Even in the early days of Netflix, we could make a traditional over the air broadcast sale as well as a Netflix sale in territory and they didn’t mind. It reminded us, actually, of window sharing with cable. Cable first … when the proliferation of specialty channels came out. That’s, actually, evolved now where they want exclusive windows on both sides. The good news is that that’s actually driven the price up. For people selling content there are better license fees because of that. People pay for exclusivity.
The next show I’m going to talk about. This is a show called Hank Zipzer, which is a huge hit in the U.K. It’s a show that we produce with a company called Kindle and the U.K. and distribute worldwide. We’ve put it on the Family Channel before we got rid of the Disney content. We had a program around some of the Disney comedies and it performed very, very well. Then when we stopped airing the Disney content, for some reason, the ratings on this show did a bit of a dip. They’re coming back up now. Again, this is a part of theme how do you get kids to discover shows? This is a very English show. The kids wear uniforms, they have accent. Of course, we’ve tried to figure out why does this show, which does very well in other territories, have this kind of lumpy time in Canada? Everybody has a different theory, there’s no real science around it. The real reason I wanted to show it is because it was created written by a guy who’s, actually, well-known, dyslexic and the main character, Hank is dyslexic, but very verbal. The creator of it is none other than Henry Winkler.
You think Henry Winkler would be promotable, but it turns out kids have no sense of nostalgia. Who knew? Unless they were watching Arrested Development, which probably not a good idea. Anyways, these are books, as I said, written by Henry. A huge passion project and he’ll go anywhere and everywhere to promote the show. That has worked, I’d say, very well in the U.K. We haven’t done a lot of promotion with Henry here, but one way or another, we also think it’s an audience where that doesn’t really matter. What matters is whether the show is funny and whether they like the kids and so on. Again, Hits and misses, this one’s a little bit of a mess.
The next show I want to talk about is Gaming Show (In My Parents Garage). So Our creative executives Michael Goldsmith, in particular, at the Family Channel, observed that we kept … What he said is, we’ve had websites, we thought we had to have websites to engage kids [inaudible 00:36:54] every channel had a website, every channel had a bunch of different content they put on the website, games, other activities, bios, lineups, character descriptions and so on. What we could see is that the traffic was falling off, so one of the thoughts was kids, where they’re going? They’re looking at games or playing games, let’s make games and put them on our website. Of course, it didn’t take us too long to figure out that we’re never going to do games that are good enough to compete with where kids are going for the game experience.
Michael had a very simple, but I think, smart idea. Why don’t we make a show about gaming? He pitched the idea or discussed it with a great little company called Banger Media based here in Toronto who we’d worked with before. They came back with an idea that was let’s create a fake YouTube show where 3 kids literally review games in their parents’ garage, thus the title Gaming Show (In My Parents Garage). We cast these kids, we made a pilot. The pilot was just okay. We showed it to Disney, they said, “This is terrible, we would never have anything like this on our network.” Pass, pass, pass. Then, we put this on YouTube.
Again, to come back my theme of how we’re using the different parts of the universe and different platforms? We put this on YouTube and we had our YouTube group put little tags at the end of some of our most popular episodes or shows that we thought would appeal to the target audience for this. Basically, it’s a little recommendation engine, it says if you like this or Johnny Test, go watch this. We had within 8 or 9 weeks of putting this on YouTube, 2 million views of this pilot. Just raise your hand if you’ve ever heard of a Canadian pilot ever getting 2 million views ever. I thought so. Dough was raising his hand.
We knew that there was something that connected with kids. We’d actually gone ahead, ordered the show, made the show and it was about, I think, 6 weeks into the YouTube campaign that the show went on the air-
Speaker 11: Where did it go on the air?
Speaker 11: Family.
Steven: Family Channel, our channel and [charged 00:39:33]. It has been one of our number 1 rated shows ever since. We move it around to the different channels. It’s got lots of extra content. It’s fun, it’s not that expensive. It really fits with … This is the thing about think about where kids are. Go where they are, make content that is similar and looks like what they’re choosing to watch. It seems obvious when you state it that way. By the way, Disney bought it.
Time for a video interlude. I’m going to show you the opening title sequence to this, from YouTube, of course.
Jesse: Hey guys and welcome to Gaming Show In My Parents Garage’s YouTube channel. Gaming Show In My Parents Garage. I’m Jesse.
Julia: I’m Julia.
Ian: And I’m Ian.
Jesse: Come check us out to see what we’re all about. We’ve got let’s plays, [inaudible 00:40:47] ever.
Julia: We like collaborating with a lot of big YouTubers. There’s a lot of Minecraft.
Ian: All the Minecraft.
Jesse: So much Minecraft. We get to see what different gaming companies are up to.
Jesse: Can you get some donuts for us? Oh, nice. Goal.
Ian: Yes, that was awesome. That’s exactly how you work in the game.
Speaker 15: This is happening. [crosstalk 00:41:15] that’s what they tell me.
Jesse: Maybe a bit more slow? You’re Charles Martinet, right?
Speaker 17: You’re the voice of Mario!
Charles: It’s me Mario!
Speaker 17: What’s the development of [inaudible 00:41:27]?
Speaker 18: That’s my coffee.
Speaker 17: By the way, it’s still warm.
Ian: I’m not going to lie, sometimes things around here get pretty, pretty, pretty weird.
Julia: Pretty awkward.
Speaker 19: It’s good job, [Pato 00:41:37].
Speaker 20: Jesse you’re kind of a weird dude.
Speaker 21: I get that a lot.
Speaker 22: Are you here to interview us about [Guacamole 00:41:45]?
Speaker 23: Si.
Jesse: Watch the game, feel the beat.
Julia: I’m feeling it.
Speaker 24: You’re not racing this car. In fact, you can’t even look at this car. Don’t look at it.
Speaker 25: I’m looking.
Speaker 24: Stop.
Speaker 25: Okay.
Speaker 24: Okay.
Speaker 25: Okay.
Speaker 26: You look like you could replace the young me.
Speaker 27: That means so much.
Julia: What video game do you think I’m from?
Speaker 28: I’m going to go with Pong.
Speaker 29: Why do you get that sword? It’s [crosstalk 00:42:12]
Speaker 30: [inaudible 00:42:18]
Speaker 31: What did you say about me, Ian?
Speaker 32: The first driving game that is color.
Speaker 31: That’s great, but I’m trying to focus right now.
Speaker 33: It’s the end of the line, little man.
Jesse: Stick around and check us out.
Julia: We’ll see you guys soon.
Ian: See ya!
41:20 to 44:24 [inaudible]
Steven: Cut out production cost in half. The other thing that we’re doing is taking, again, legacy brands. You wouldn’t know this one, but Brum was a television show from the early ’90s, created by Anne Wood, the same women that created Teletubbies. Very well-known in the U.K. and [inaudible 00:46:11] we’ve got this old brand, the shows aren’t that great, nobody really wants to watch and they get some viewership. Then, one of the other thing that they realize is that there’s a trend [inaudible 00:46:21] videos. Do you know about car wash videos? Okay. Apparently, kids love to watch car wash videos. There are millions of views, literally, of cars going through a car wash. Okay? You learned something here today.
Speaker 34: [inaudible 00:46:45]
Steven: It could be you. Get it up there, monetize it. One of the things our crew did is take Brum and do some animation of Brum and it’s Brum car wash video. It within a few weeks has millions of view. I have the video, I’m not risking another one.
Speaker 35: We want to see it.
Speaker 36: We want to see it.
Steven: Thank you. Are you ready? That’s good.
Speaker 37: Ready?
Steven: That’s The Brum’s Car Wash Adventure. It’s not-
Speaker 37: Is it just that one?
Speaker 36: That was it.
Dough: That was it.
Speaker 37: Okay.
Dough: Can you go back and do that?
Speaker 37: Sure.
Steven: Okay. We’ll just kill that and we’ll move on to the next slide. We’re there anyway. Anyway, you get a bit of the idea of the animation, very simple animation. For us, that’s using a bunch of different things. An old brand, a trend on YouTube right now, new content and immediately with millions of views. Okay. It is true, we don’t just make kids content. I thought I would talk about Letterkenny. If you’re not familiar with Letterkenny, it is an outrageous comedy, I think, trailer park boys in a small Ontario town.
First of all, our comedy business is another small subset. A few years ago, we invested some money in another incubation project, a small company called New Metric Media run by Mark Montefiore and Patrick O’Sullivan. They were focusing on on some new comedy ideas. Jared Keeso is from Listowel, Ontario and he and a friend created a Twitter account that was called Listowel Problems that were about the problems of their small town. It’s all very funny. They realized in a town of 5,000 people they had 1,500 subscribers pretty quickly. They took a camera and they went and shot a few episodes and put them on YouTube. In a very short time, it had hundreds of thousands of views. It’s very funny, it’s very dry and for the people who have ever spent any time in the Ontario countryside it’s highly recognizable, so relevant to a lot of people.
Mark partnered with Jared, created a television show around it and then went out pitching. In the meantime, the YouTube views started to increase dramatically. They had a significant amount of interest but Bell was interested even before they’d started CraveTV. This turned out to be the first CraveTV original. We understand that the show’s done very well for Bell. It continues to get a huge number of views on YouTube. It is definitely not for children. Go watch it in the safety of your own home. Bell has just ordered another season of it. The reason I wanted to talk about this is, of course, comedy is the other thing that knows no bounds when it comes to these new platforms.
I think Bell, in particular, has done a spectacular job of managing and promoting this. One of the other things for me is that size really does matter in terms of being able to promote shows, both in a particular country, but internationally as well. Bell, basically, used all of its resources, all of its different platforms, Comedy, CTV, Crave, etc. to promote this radio. They took advantage of the fact that it had a huge number of views on YouTube, as well social media, etc.
It’s, apparently, the most watched show on CraveTV these days and certainly, a great thing as an original. I think as much as people are looking at Canadian broadcasters and saying, “What are you going to do to reflect to Canada, to Canadians? How do you manage and promote it?” This show is a little surprise. Certainly, it was a bit of a surprise for us. In fact, some people in our company are really surprised when they see it because it hasn’t exactly been our core focus. The other thing that Bell did, which I think, is interesting in terms of talk TV and what consumers seem to want is they promoted it heavily during the Super Bowl. Next year, I’m wondering, will this be promoted in the Super Bowl or will we just get American commercials? Anyway, we are quite pleased with the way that Bell managed that.
By the way, we’ve done some analysis on the YouTube numbers and the content is 5 million views from the U.S. There’s been no effort yet really to focus on promoting it there. We’re talking to traditional broadcasters about buying it. Again, that’s one of the tools that it’s already popular. There are a number of, I guess, we’d call them opinion leaders Kevin Smith and our old friend Hard Henson, who happens to be Canadian, well-known American show runner, watching it and tweeting about it. They both have tens of thousands of followers. When you start to figure out how do you build up critical mass of viewership outside your own territory, that was a bit of a surprise and that’s something we could have necessarily targeted.
We’re coming up to the end of my session here in a few minutes. There’s a few things that I just want to come back on this. Actually, I want to just go to the CMF document that was produced last week, which I thought was good and I’m looking forward to the second part of it. Again, they talk about marketing. When it comes down to this discoverability, a word we didn’t really use or didn’t know so long ago and is, apparently, not really that pronounceable in either official language. The things from the CMF study is they talk about marketing and they have a number of categories that they actually identified. Search and optimization. Okay, again, we all know about what that is. How it works technically is a hugely complicated thing. Of course, that also goes to algorithms. We’ve heard a huge amount about algorithms. If you’ve read anything about this, you realize how unbelievably complicated those things are becoming. This is really about predicting what you would like to watch with some element of randomness put in it.
Digital ad campaigns. Digital ad campaigns turned out to be hugely important in terms of generating audiences. It is one of the things we were doing, for example, with The Gaming Show we’re actually buying ads on YouTube. I was interested in buying ads or our content on YouTube because we split the revenue 45:55 with Google and we get 55 cents back on every dollar. Not to make too fine a point on it. Grassroots Campaigns, they mentioned that in their list targeting communities of interest. Then they talk about traditional marketing, prints and ads. I think there’s a big question about what the effectiveness of that is and how do you measure it?
Some of these other things you can actually measure with a much greater degree of precision. Then finally, the one thing that they didn’t mention, but which in our space is hugely important is how do you relate to YouTube stars? How those people who have become stars on YouTube are migrated into other kinds of media? As far as just to wrap this up and then if there’s any other questions, I’m happy to continue. I think my conclusion is that whatever you’re doing in terms of getting people to discover things, you have to work across and pretend to understand all platforms. I’m serious because I think there’s lots of people, including marketing professionals, who talk about those things without really knowing how some of it works. This is really all about the [nunez 00:56:41] of this world.
All you have to do is talk to a 15-year-old and find out what they’re doing on social media to be surprised. For those of you just getting on Facebook, there’s a bullet and it’s not really where kids are anymore. Then, I think, the last thing and I’ve said it before but I really do think that vertically integrated companies and I don’t mean it necessarily in the CRTC definition of VI, but I mean companies that are able to work across multiple platforms. We’re a vertically integrated company working across every possible kid platform and opportunity. I think that vertical integration really does matter in terms of being able to get audiences to find new program. That’s all I have to say. Sure
Speaker 38: A quick question for you. If all of these platforms that YouTube and Netflix became international, they were running into issues with the tax, credit or funding purposes needing to have a Canadian presence that interferes what these international companies want to do in Canada?
Steven: So far we have not, but there has been, I think, robust discussion around having, let’s say, non-traditional platforms trigger tax credits. I guess that’s … CMPA certainly is pushing for that and I think it’ll continue to be an interesting issue.
Speaker 38: [inaudible 00:58:30] in sense with the Family Channel then become less of priority, would you say, for the company?
Steven: Again, maybe I haven’t stressed that, but we think that traditional broadcasting will continue to be hugely important. Even though kids are watching another platforms and devices, there’s still massive viewership of traditional broadcast platforms and it remains the most popular destination and the one that generates the most money to put into new content. Sure?
Speaker 39: Apart from YouTube, how have programming, i.e adult programming, teen programming or the kids, how have they incorporated second screen viewing?
Speaker 39: Any of the shows that you’ve discussed, how have they incorporated second screen viewing?
Steven: I guess, the research that we’ve seen says that kids are watching multiple devices. Degrassi’s actually have been one of the leaders in terms of second screen programming. While you’re watching Degrassi, there’s a whole other world you can follow that’s Degrassi related. We’ve done a little bit of that on some of the other shows. Again, some of this is really age related. We’re targeting really 9 to 14-year-olds. That’s hugely important. It’s much less important for the younger viewers. Yes.
Speaker 40: Hi there. One of the things we do, we’re a radio station. We also run a YouTube channel that has around 15,000 subscribers. Just under 3 million views. [inaudible 01:00:21] about 2 years, we’ve got about 300 videos. Something you said for the Game Show was that you added some tags on the end with regards to recommendation. You went through that pretty quick. Can you just elaborate on that a little bit, on how that works?
Steven: That would be the part about pretending to know how all these things work. No. First of all, it’s easy to do on our own channels. It’s a little harder to do on all the UGC stuff, but you sound like you have your own channel.
Speaker 40: Yeah.
Steven: For us, and again, I don’t know how technically they were doing it, but basically they created it was like our own little banner that just went on the end of … and it happened that Johnny Test popped up there. It really just a little banner that we stick on the end of our own show.
Speaker 40: [crosstalk 01:01:07] videos.
Steven: Yeah, exactly. That’s all it is. Yes?
Speaker 41: I just see some English programmation or maybe Inspector Gadget [inaudible 01:01:21] with friends is in French. Do you accept some French series?
Steven: Absolutely we do. In fact, we have a pre-school channel [Telemachino 01:01:35] in Quebec as well.
Speaker 41: [inaudible 01:01:40]
Steven: Yes, absolutely. 2:39.
Anne-Marie: Any questions?
Speaker 42: I do have one. [inaudible 01:01:52] if a third party was programming on one of your channels [inaudible 01:01:59] revenue on the YouTube channel is the split. How do you spit then between the third party provider and you since that you’re coaliating that channel?
Steven: There are many, many channels. When it comes right down to it, you can tell exactly how many views and what revenue any particular title is generating. That’s part of the thing about our MegaData base and the YouTube interface. Actually, it’s quite fascinating to have a look at. For us, it’s searchable. We can have a look at any day, at how many views you’ve had. In fact, even with YouTube though you can check in on how many views and what kind of revenue your title has generated. That’s all become very user-friendly. I’d be interested to see what Amazon does. From what I can see, the music publishing business is actually going the same way.
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