12

DISTRIBUTION, MARKETING, LICENSING, AND MORE

It’s difficult enough to have to juggle everything from schedule to budget to talent, but the animation producer has the added challenge of doing all that while trying to answer these questions in the middle of the production process as well:

Who is the ideal distribution partner, if there isn’t one already in place?

What is the best exhibition roll-out strategy?

What kind of marketing plans should be devised to build brand awareness?

What are possible ancillary revenue streams?

What promotional opportunities are there?

These questions will have different answers depending upon many factors including the target audience, the release date, and talent attached. Although dedicating time and resources to some of these elements may seem like a distraction to reaching the end goal of having a finished feature film or television series, it is critical that a producer plan for and accommodate these efforts, as they are vital to a project’s financial success and its longevity in the marketplace. With that in mind, the following topics should be on the list of a producer’s “things to do” for launching his or her project in the public arena.

Distribution

First and foremost, a project requires that some form of distribution deal be in place prior to its completion. It is not always necessary to have this relationship structured from the onset; however, the sooner the better, as it is very important that the distributor feels invested in the project and therefore motivated to support its successful launch in the marketplace. By either hiring or partnering with a distributor, you can work together to craft a customized marketing plan and devise distribution strategies to hone in on your target audience.

When searching for distributors, a producer needs to make both domestic and international deals. Finding a U.S. distributor is typically the most critical relationship to put into place. It can be the key to completing the financing of a project. Foreign sales are also very important; depending on your production partners and content, these deals may be made first. For independent producers, presales in foreign territories are a pivotal source of revenue to potentially jump-start the production. Besides financial support, adding the expertise of a distributor into the mix early can help generate the type of awareness that will maximize the film’s box office return. Solid ticket sales in turn translate to how profitable a project can be based on potential ancillary revenue streams such as Blu-ray/DVD format; broadcasting on cable and network television; airing through pay-per-view (PPV) and video-on-demand (VOD); and viewing on current and future digital platforms.

The form of partnership and methodology of distribution vary widely based on the type of content and format of the project. If you are working on a feature film, having a distribution partner well-versed in animated film marketing lined up is almost always necessary in order to secure financial resources and support for the project’s completion through post-production. If it is a television project, anything beyond a pilot episode will likely need a broadcast partner in place for the same reasons. Shorts or webisode distribution may be sorted out later in the life of such a project, as there are more accessible, “viral” means of releasing such properties into the hands of the public. In the case of a project that is made up of multiple investors, one key stipulation may be that production funds will not be released until the producer can provide a signed agreement with an established distributor. Whatever the plan, a marketing and release strategy needs to be thought through with these partners. Overseeing that the strategizing is happening in a focused and innovative way is often the job of the producer and/or executives assigned to a project. Depending on the size of the distributor, there may be many projects they are focused on. It is the producer’s job to ensure that his or her project stands out in the crowd by keeping all key stakeholders enthusiastic about its potential.

Identifying the right distributor is key to a show’s success. It is the producer’s responsibility to make sure this partner is familiar with the type of content being produced and that they have a history of successfully marketing it. In order to determine whether they will take on a project, a distribution partner evaluates the risk involved with the property. They will build a financial model of a project, outlining estimated revenue streams and costs based on comps and other industry-based assessments. This information will be then used to run various scenarios based on projected low, medium, and high success rates for the project. The model involves considerations for revenue opportunities, both domestic and international, such as the theatrical release; nontheatrical releases (airlines, military bases, cruise ships); home entertainment (VOD/Blu-ray/DVD); television (network, paid TV, PPV, and syndication); digital dowload and merchandising. The model also looks at costs associated with releasing the project, such as marketing, and prints and advertising (also known as P&Amp;A, to be discussed later in this chapter). If these elements all work together to create a mutually beneficial financial relationship for both parties, then a deal can be made.

There are a number of different types of distribution agreements. The most integrated relationship involves a partnership commencing during the development phase or in early preproduction. In this scenario, the distribution partner sets up the project in-house, provides almost all of the financial support, and has the right to final approval during production. On the opposite side of the spectrum, a project can find distribution under an acquisition deal, which means the producer delivers a finished project to its distribution partner for a negotiated price, with or without profit sharing. The distributor charges a fee for marketing and distribution costs. There is little or no profit sharing expected beyond the run of distribution term negotiated. In this case, the amount of money invested by the distributor is typically significantly less. Somewhere in between these two types of agreements is a deal called a negative pickup. In this type of relationship, the distributing partner may or may not have creative input into the project, depending on the size of their investment and the project’s status in production. The distributor may agree to give the producer an advance of his or her share of the projected profit, which can help a producer pay off his or her investors and production costs without having to wait for actual box office revenue and subsequent calculations to be made. In all deals, the producer needs to negotiate a predetermined number of territories, screens, or appropriate outlets, ensuring that the project is launched as widely as possible in the marketplace.

An extremely important factor to consider when putting a deal into place with a distribution partner is the ownership of rights. Larger studios and distribution companies tend to absorb major, if not all, rights to a project; smaller companies are generally willing to negotiate with filmmakers, ultimately allowing a producer to have more control over their work and the life of the project beyond the initial release of the film or launch of the show. Details such as “Who has the right to make sequels?” or “Who has the right to make new animated projects or seek other commercial opportunities with the characters?” are both important points to cover. Another scenario to consider is if a project does not test well in early focus groups or does not have a stellar opening weekend or premiere episode, the rights owner can decide to pull financial support for the project immediately, shelving it from further exposure or even completion. If the producer/filmmaker maintains the rights, he or she is more likely to want to keep seeking an audience, to pursue alternate routes of distribution and other opportunities for the project, and to not “give up” on it immediately.

Partnering with your distributor to choose a release date is incredibly important to a project’s success. Finding a date that allows the property to rise above its competitors is an art, especially in the feature film market. A film’s success is highly dependent on the weekend it opens. The opening weekend will give all involved an immediate insight into the property’s future revenue streams. As the marketplace in animation is becoming more and more crowded, picking a launch weekend that connects to the target audience’s viewing habits and ensures that there is little or no competition is key. An example of this is if the film is a big family movie, then the prime weekends to “own” are long holiday weekends. Often for any format, this date may be determined as the project gets greenlit, which ultimately becomes the driving force for dictating the pace of the production schedule. Most animated feature projects have their release date predetermined years in advance of their completion.

Prints and Advertising

It is important to determine how many and in what format the final masters are to be delivered to the buyer. For feature films, this cost can be significant, depending on the release strategy, and can greatly affect the post-production budget. With that said, these costs have begun to decrease over the last few years as digital releases have become more commonplace. Once digital distribution becomes the norm, these costs will become less and less critical for the producer to factor in.

When making a deal with a distributor, it is critical that a minimum amount of allowance for prints and advertising (P&A) be agreed upon up front. These monies will be key to developing a marketing strategy. The amount of funds devoted to P&A on a film has a direct influence on its initial brand awareness in the theatrical window. The distributor can determine the appropriate number of screens for the opening weekend based on the monies set aside for this purpose. For independent film projects, when making a deal with the distributor, the producer must typically be in a position to guarantee a specific dollar amount to be allocated for P&Amp;A or the distributor is not likely to consider the partnership.

The Impact of the Interweb

Evan Spiridellis, Co-Founder, JibJab

The web is an artist’s dream. For the first time in history, an individual cretor can produce and distribute his or her work to a worldwide audience without anyone telling him or her what to do or what to change. On the flip side, there is still not an established business model that easily enables a content producer to monetize his or her hard work. As a studio that creates content specifically for online audiences, the trick is finding the balance between giving it all away and compensating for the true costs of production—while hopefully turning a profit!

Since we started JibJab in 1999, we’ve gone through a few business models and have constantly been forced to be creative about potential business opportunities. From our first buzz-worthy piece, George W. Bush and Al Gore’s rap battle “Capitol Ill,” we established ourselves as a studio that produces short-form political satires for the Web. We call those two-minute shorts our tent-pole productions, and they are fairly epic for a small studio to pull off. They take the whole team to produce and they get a lot of thought, energy, and money poured into them. The benefit of producing these pieces is that we get a ton of press and exposure. We’ll typically get about four or five million views online in the first month after a release; our latest video landed us on CNN, Fox News, MSNBC, and in the New York Times, as well as a host of other media outlets. Even though we can justify the tent-poles as a marketing expense, the reality is that they do not generate any revenue.

What does create revenue and enables us to produce and control our content is our subscription-based business model. It was actually my brother Gregg’s brilliant idea to launch an e-card business after studying the impressive income generated by the major greeting card companies online. We looked at the medium and saw that audiences were paying for what was primarily subpar animated content and realized that our skills could easily be applied to that market. In the three years since we launched our e-card line, we have created more than 1,500 pieces of occasion-based videos and stills. There is always a free offering on the site, but for just $12 a year, people get unlimited access to our complete library. JibJab is now a 40-person company, which—between payroll and overhead—makes it a relatively expensive business to run. The beauty of our subscription business is that it has allowed us to walk away from a strict focus on advertising. This is the way most other online entertainment companies cover their costs, but as a creator, the problem with being dependent on advertising is that you essentially have two parties you need to please—the first is your audience and the second is the companies that pay you. If you want premium advertising on your site, you have to be very careful about what you say and how you say it. Creatively, this can be a huge limitation. On the flip side, if you don’t care who advertises on your site, then you run the risk of creating a really unattractive experience for your users. At JibJab, our primary goals have always been to make our audience laugh and to provide them with the highest-quality experience possible. To be true to our brand, our fans and our customers, we decided it was best to leave the ad money on the table and focus on our audience.

Figure 12-1 JibJab Logo (JibJab® is a trademark of JibJab Media Inc. in the United States and other countries).

It’s been 11 years since we started JibJab, and we’ve been through a few boom and bust periods, but the best part about producing and distributing our work online is the personal and professional satisfaction of creating great content and being able to share it with the world on our own terms. All that is courtesy of the amazing technology we call the Interweb!

Animation Festivals

With or without a distribution partner, a project might seek a life on the animation festival circuit. Screening a project in the festival circuit can create excitement around its content and build industry awareness. This form of exposure may lead to possible acquisition or partnership with a distributor, if such details are not already in place. Although there are certainly costs associated with accompanying a project around the globe to renowned festivals such as Annecy and Melbourne, such events offer valuable international exposure for talent or studios seeking future project co-production partnerships. There are also many notable North America–based events such as the Ottawa Animation Festival, KidScreen in New York, or the traveling Spike & Mike’s Sick & Twisted Festival of Animation.

Marketing

Be prepared to be avalanched by requests for artwork and other information from the ancillary groups, specifically marketing. The marketing of a project begins much before its release or airdate. When it comes to showcasing the final content, the strategy should be multifaceted and cross multiple platforms in order to cut through and stand out against the competition. In some scenarios, marketing funds can match or exceed production funds, so it behooves the producer to expend a good amount of effort and energy to ensure that the marketing campaigns have ample support from the production on all fronts.

A successful marketing plan is innovative and creative. It should have an overarching strategy that combines any licensing and ancillary revenue projects with a targeted publicity campaign. There are some basic elements that should be planned for, such as the creation of a teaser or trailer, the pitching of publicity campaigns, the development of an online presence, and the establishment of promotional partners.

Trailers/Teasers

Long before a project is finished, the need to create a teaser or trailer arises. To that end, it is wise to take a moment early in production to call out key shots or “rushes” that would be crucial to use in such a piece, prioritizing them and putting them on a fast track through the production pipeline. Although the production crew may have a good sense of what would be key shots, it is always recommended to have the project’s marketing consultant or studio’s marketing department involved in the selection process. Making a rough cut of the trailer using storyboards or rough animation can be a good way to preview the selections and make sure they play well together and are worth the “rush” treatment.

If the trailer is to be shown in a stereoscopic format, care should be taken to respect 3D viewing concerns when editing such material. For example, fast cutting—which is normal for trailer visual logic—does not play well in the stereoscopic format because it does not give the viewer’s eye time to adjust and follow the images with clarity.

Publicity

Hype, buzz, publicity—whatever you call it, it is an important part of building awareness and excitement for a project. The publicity campaign should be well thought out and should build on the momentum as a project gets closer to its release date. Depending on the size and scope of a project, it may require that a producer and director go on a road show to sell the content to audiences all over the world. There are other reasons, however, to consider starting a campaign early on in a project’s life. Having the industry talk about your project as it is ramping up production makes it a sought-after property to work on, which may attract more talented artists or voice actors to become a part of it. That participation, in turn, can provide ample fodder for release publicity efforts, announcing how the collaboration of the talented cast and crew has culminated in such a wonderful final result. Natural opportunities to pitch press/bloggers to mention your project come when key talent signs deals, studio/distribution relationships are established, and of course, upon release of the project. In order to get maximum coverage, the producer should acquire the services of an experienced animation industry publicist. The publicist will draw upon his or her well-established relationships with the media and utilize contacts to provide optimal exposure for the project.

To support publicity efforts, a project should have a fully developed press kit. A producer will need to be prepared to support the publicity team in pulling together the following types of materials:

•Images:

•Filmed Pieces (often referred to as the electronic press kit or EPK):

•Written materials:

Online Presence

With the importance and relevance of the Internet in today’s society, there are an unlimited number of ways to market an animated project using this valuable mode of communication. In the following sections, some of the key tools to consider are described.

Website

Creating a dedicated website is the first step the producer must take to introduce his or her project to the public. For relatively little investment, a site can be built to feature still images, video clips, and written materials such as a synopsis and character descriptions. More advanced sites may also offer downloadable items such as computer desktop wallpaper, icons, and other digital materials. Projects that target younger audiences may feature custom games and other activities such as digital art projects and educational programs to enhance the viewers’ experience and deepen their relationship with the project’s characters.

The information gathered by having site visitors register in order to access these activities can also be very helpful to a producer. Details such as the online visitors’ gender, age, and usage patterns can serve as guidelines regarding which aspect of the project creates the largest interest and for whom. This type of information is similar to that found via focus group research, but can be acquired in a far more casual and less expensive manner.

Social Media

Online social media can be a tremendous marketing tool for the producer. The most valuable opportunity that social media offers is the means for the awareness for your project to go “viral,” meaning that supporters start sharing their enthusiasm with others—a process in which the individual fan becomes the media, spreading the word even further, literally serving as a network of “grassroots promoters.”

You can create a presence for your project on numerous online communities with little or no cost involved. On social media sites, a producer can create fan pages for projects or characters within a project. Beginning early in development, he or she can make announcements about the status of the project, noting milestone achievements and sharing early artwork to create a buzz. Tracking the patterns of the visitors to the website and gauging their excitement and dialogue about development art and story ideas may actually serve as informal research that can help a project. For example, if fans respond strongly to one character, that character may deserve a bigger role in the project than a producer may have considered, or perhaps a particular story point may prove to be an intriguing angle for how to advertise the project.

Later in the life of a project, the pages can be used to invite fans to attend special events, watch TV appearances, or answer trivia questions about the show. Opportunities to create an interaction that makes the project that much more real and relatable are endless. As mentioned with regard to the dedicated website, social media sites collect and provide visitor’s demographic details to interested parties, which can also help a producer target other site users that seem like an appropriate match for a project by “suggesting” they visit your page(s), an approach comparable to a well-defined “direct mail” piece of advertising.

Promotional Partnerships

Establishing relationships with promotional partners is a great way to market a property. With that said, this type of arrangement is usually structured on bigger budgeted projects and is very competitive to get, as the investment of the promotional partner onto a project can be significant. A producer (or his or her marketing group) must pitch the project to potential partners long in advance of the completion of the project to garner their interest, find space on their promotional calendars, and generate any materials needed to support the relationship. When done well, these types of partnerships broaden the brand recognition and audience awareness of a project in a number of ways. A promotional partner may incorporate a project’s logo or characters onto product packaging, such as cereal boxes, school supplies, or even tubes of toothpaste. They may produce toys to be packaged with kids’ meals at major restaurant chains, with further exposure for the characters when they appear in television commercials advertising the kids’ meal special promotion. They may offer opportunities for producers to give away items (such as CDs, stickers, and postcards) through radio, television, or online contests, or perhaps they will allow costume characters to have a presence and interact with fans at live special events.

Licensing/Merchandising

Licensed products are ultimately helpful in providing an awareness for a property and ensuring its successful and ongoing presence in the marketplace. Items that can help bolster the case for making a particular feature or series include a potentially successful toy line, soundtrack, or an online game. And who doesn’t want to see their characters walking around in life-size costumes or on the T-shirts of young and old alike? When an animated project is a hit, there can be a substantial financial upside if it has been licensed and merchandized in a strategic and timely way.

Getting a license deal on a brand new property is very challenging. The market is very competitive; there are a tremendous number of compelling character-driven projects all trying to get noticed and picked up by licensees. If it is a feature film with the support of a large studio and promotional plan behind it, a project will have an easier time getting deals made. If a television series has a season or two behind it and has a strong audience following, then it will more than likely begin to get licensing deals as well.

There are several factors to consider about your project before trying to launch a line of consumer products. First, are the characters and storyline merchandisable? This characteristic should be a natural, inherent presence in the project. A good example of that is the Disney/Pixar film Cars. This film property offers a great story from the outset, with beloved characters that easily match the vehicle toy play pattern. The Cars consumer product campaign has since resulted in one of the most lucrative toy lines, finding successful connections with both children and older collectors.

Second, is there is an emotional connection between the audience and the story and characters? If the audience develops a vested interest in a character, they are more likely to want to “own” a piece of that property and to keep that connection alive; children are often drawn to plush toys, dolls, or other related items after seeing an animated film.

Third, is there is a vision of how to create a continuous stream of content that stems from the project and can move into a spinoff life of its own? Some storylines lend themselves to a broader world of exploration via gaming or mobile apps, keeping the property “evergreen” due to the ability for programmers to continually build and release new levels of play via the Internet. The creation of an online gaming world can give a property greater revenue potential because it can keep the brand fresh and alive for its fan base long after the initial launch. The world of apparel is another opportunity to extend the life and reach of animated characters. Some characters are popular season after season, year after year, appealing to a particular age group and gender such as the lineup of Disney princesses. The arena of publishing also offers diverse options for the expansion of a property across all types of films: the printed line could involve storybooks, coloring/ activity books, novelty books, screenplay and “art of” books, as well as e-books of any of these genres.

To launch the search for licensee relationships, the producer or studio must pitch the characters and storyline to potential partners far in advance. Something to consider is that toy prototypes generally need to be produced at least one to two years before the release of a project. For this purpose, the toy company involved will require access to the project’s designs and story information. Typically, most of these costs come out of the marketing budget. However, if it is determined prior to the start of production that the project will cover them, this should be budgeted. If the amount of material required is extensive, the producer may need to budget for a point person to produce materials (such as a style guide) and to coordinate the conveyance of artwork or film footage as necessary. Alternatively, an asset management system can be set up which enables multiple vendors to securely access content from the project specifically approved for their purposes. Whatever the scenario, this needs to be discussed and included within the production plan and outlined in the assumptions as to where the costs will be covered.

When it comes to creating merchandise, a producer needs to work closely with licensees. The development of all of these items takes time, effort, and most important, accurate art materials from the production in order to properly represent the property. Consumer product development needs to work on a path parallel with that of production. As a general rule, project presentations should happen 18 to 24 months in advance of release, with well-designed and enticing material to get partners excited about the property and eager to show to potential licensees. Around 18 months out, licensing deals get signed and product development begins, and that is when it is essential for the style guide to be accessible. Artwork from the project such as characters, backgrounds and logo are instrumental in inspiring products. Twelve months prior to release, properties are typically pitched to retailers by licensees and, if applicable, to the studio’s consumer products department. If there is a studio partner on the project, it is often the case that the studio will do a general property presentation and then the licensees will pitch their individual products to sell into particular departments.

The three entities behind the products—studio, licensee, and retailer—must work together to find the right balance of quality and breadth of items in the product line. They must also focus on quantity of items manufactured with thoughtful planning so that the property is neither over-exposed nor quickly sold out. The licensing agreements should clearly define the specific items, terms of creation, and territories of distribution so that everyone agrees upon how, when, and where what product will become available. Furthermore, up-front discussions should coordinate marketing plans by all three stakeholders, making sure that studio ad campaigns, licensee packaging and displays, store placement, and circular print advertising all work together to present a clear and well-timed roll-out for the property.

Other Items to Consider

Soundtrack

The release of a soundtrack may be a long, complicated, but ultimately fantastic marketing and revenue-generating element of a project, especially if the talent attached is a star vocalist, a famous rock band or composer. In the case of a soundtrack, it is the producer’s role to ensure that all of the legal paperwork and contractual agreements are in place. He or she must also support the creation of artwork for the album cover as well as the delivery of the final music tracks in order to produce the album. There is great potential value attached to a soundtrack, beyond the obvious retail sales revenue opportunities: an album or single release may provide a reason to set up special promotional concerts as well as various publicity appearances by the talent. Another possible plus is that the music may garner extra attention for a project in the awards circuits.

Spin-Offs and Sequels

Future planning for most projects requires a “wait and see” mandate, depending on how they fare in their intended outlet, but it is always a good idea to think ahead to other possible extensions of the property. Prime examples of properties branching out include how Beauty and the Beast or The Lion King translated from the big screen to the Broadway stage; or how The Simpsons (Figure 12-2) made the leap from television series to feature film; or how Star Wars: The Clone Wars (Figure 12-3) spun out of the live action Star Wars to become an animated movie and television series. A producer should have his or her sights set on other ways to expand the story and characters in a project. Keeping track of character or story ideas that were considered during the original development stages but did not make it to the final project may provide inspiration for other takes on your concept, because there is often a lot more creative brainstorming during the making of an animated project than can ever be possibly worked into a single episode or film.

Happily Ever After

The potential widespread appeal and longevity of an animated project is significant. Take into account a basic industry fact: even though family entertainment is the smallest segment of the market, it consistently generates the biggest revenues. Another key point to consider is that animated projects have a much longer life span than live action projects due to their cross-generational appeal in addition to the younger demographic’s repeat viewing pattern. Plus, successful animated characters are highly merchandisable and sought after by licensees around the world. All of this can happen for a property as long as the story is solid, the characters are compelling, the style of animation is unique, and the project is well positioned in the marketplace.

Figure 12-2 The Simpsons (The Simpsons © & ™ 2011 Twentieth Century Fox Television. All Rights Reserved).

Figure 12-3 Star Wars: The Clone Wars (Courtesy of Lucasfilm Ltd. Star Wars: The Clone Wars ™ & © 2011 Lucasfilm Ltd. All Rights Reserved. Used under authorization. Unauthorized duplication is a violation of applicable law).

As an animation producer, there is a lot to juggle, but the potential upside—from creative satisfaction to financial reward— is invaluable. The journey is a winding one with many ups and downs, filled with all sorts of expected and unexpected obstacles to overcome. Through each challenge, learn from your mistakes—these are gifts that help you grow as a producer. No matter how big or small, celebrate each of your successes with your team as the process is a collaborative one. And no matter what you do, have fun along the way. There is no more creative, dynamic, or exciting business to be a part of than the animation industry.

Enjoy and good luck with your endeavors!