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Demand economy

Independent video-on-demand services in North America might lack the marketing spend of the majors but they offer indie suppliers audience data and a route to bigger deals. Sean Davidson reports.

Busytown Mysteries

Four years is a long time. Back in 2008, oil still cost less than US$100 a barrel, George W Bush still lived in the White House and streaming broadcast-quality video into people’s homes – or laps or palms – was a tricky and expensive undertaking.

Which is why when kids’ video-on-demand service Ameba TV launched that fall, it was set up so subscribers would first download shows on to set-top boxes rather than streaming them, bit-by-bit, straight to their TV sets.

It seemed like a good idea at the time – the BitTorrent-powered boxes allow for fast downloads and good picture quality – though Ameba president Tony Havelka admits the market took a dim view of the hardware nonetheless. “We met some scepticism from some of the rights holders. They wondered how many of those things we would sell,” he recalls.

About a thousand, as it turned out, before the ground changed under the feet of the Canadian company and other VoD outfits. “There was a tipping point” towards late 2009, Havelka says, when streaming was suddenly cheap and Ameba was forced to rethink its plan – partnering with box maker Roku and in late 2011 with TV set maker LG in favour of streaming. Smart TVs, once dismissed as a dead-end, were suddenly a key ingredient of the company’s operations, though it continues to market set-top boxes.

Since linking up with LG, Winnipeg-based Ameba has expanded its reach to some seven million homes in Canada and the US. Another 25,000 have downloaded its Roku app, though Havelka won’t reveal how many paying subscribers are onboard. “It’s growing,” he says of the subscriber base. Ameba programmes include Busytown Mysteries, Roboroach and Dudley the Dragon. “Streaming really popped it right open.”

Unlike other new digital media offerings, which tend to come on strong only to fizzle out or prove themselves later, independent VoD services aimed at kids faced a hard march in their early years. This was down to ever-changing technologies and competition from heavyweight kids brands such as Disney, Cartoon Network, Nickelodeon and ascendant over-the-top services like Netflix and Hulu, all of which offer their own takes on VoD for two- to 12-year-olds. Netflix had some 23.6 million subscribers by last spring, around the same time that Hulu’s paid subscribers passed the one million mark.

Totally Spies

Harder still has been the tepid response from rights holders who would rather knock on the door of a known brand than roll the dice with lesser-known players like Ameba and US-based Kabillion, which carries titles including Wild Grinders, Bobby’s World and Totally Spies. Suppliers grouse that such services tie up rights while paying only pennies.

“There are a number of VoD and SVoD services that have launched over the past couple of years and they’re basically going out and aggregating whatever content they can find,” usually by striking revenue-sharing deals, notes Richard Goldsmith, executive VP of global distribution at The Jim Henson Company. “But because they have no acquisition or marketing budget, the content they’re able to aggregate is often bottom of the barrel.” (Goldsmith did not single out any particular service and it should be noted that Henson’s own Sid the Science Kid is carried by Ameba.)

On paper, the large and well-regarded Henson library – which includes Fraggle Rock as well as Sid the Science Kid – would be a good fit for long-tail, parent-approved services. But the US studio has shied away, preferring to stay close to iTunes and others, says Goldsmith.

“The future is Netflix,” he says, while also nodding to Comcast’s infant-aimed VoD service Baby Boost and BT Vision in the UK. “Major media players – whether Netflix, BT or Comcast – will be the drivers of on-demand services for kids because they have the marketing power, the distribution platforms and the financial resources to acquire content that’s actually the best in the world.”

Ira Levy

Others remain sceptical. “I wonder how well VoD services will do against traditional services like Cartoon Network, Disney and Nick,” says Ira Levy, executive producer of Toronto-based Breakthrough Entertainment (Jimmy Two Shoes, My Big Big Friend). “I assume they’ll bring independent content but there’s less and less of that around,” because of increasingly aggressive outreach from the established children’s brands, he notes.

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