How Multinational Corporations Thrive

As I mentioned in the last installment, the paradox of the TV business is that the increasing number of channels leads to a decrease in viewers for any one channel. Fewer viewers mean less income. There are strategies for getting around this problem and this installment will talk about how the multinationals – companies like Disney, Time-Warner, Viacom, etc. - deal with it.

One way large companies increase the amount of money they make is by vertical integration. A single company owns production, distribution and exhibition. Disney has the ability to create a show, distribute it and air it on TV. By buying from itself, Disney makes sure that money that it spends stays inside the company. Any profit generated by a show also stays within the company.

But how do Disney, Time-Warner or Viacom compensate for the shrinking size of their audience? They do it by putting their shows on more channels. All of these companies own more than one channel in North America. In addition, these multinationals own channels in other countries as well. There are Disney channels in Europe. There’s a Cartoon Network in South America. There are versions of Nickelodeon in several countries. If you can place your show on enough channels that you own, you can find an audience big enough to make a profit.

Animation travels better than live action. TV regularly takes shows from other countries and remakes them. All in the Family was based on a British TV series. Survivor now has different versions running in several countries. That’s not the case for Spongebob Squarepants. While he’s dubbed, the same episodes are shown all over the planet.

Economically, this model works great. From a creator’s or a viewer’s standpoint, it doesn’t work as well.

Large companies want to own things outright. If you pitch a show to a Disney or a Viacom and they’re interested, they’ll end up owning it. You’re free to try and negotiate your best financial deal, but the copyright will go to them. I don’t know Genndy Tartakovsky’s deal on Samurai Jack, but if Time-Warner decides that they want to team Samurai Jack up with Yogi Bear, there’s nothing that Tartakovsky can do about it. In the worst case scenario, a creator can be fired from his own show. This is what Nickelodeon did to John Kricfalusi on Ren and Stimpy.

The fact that shows appear on more than one channel effectively reduces the variety that the 500 channel universe was supposed to provide. What good are more channels if the bulk of them are running shows you can see elsewhere?

Another problem is that companies prefer to make shows from properties they already own. It’s easier to sell the audience something they’re familiar with than something new. I’m losing count of how many animated versions of Batman there are. I don’t doubt that as long as Time-Warner owns Batman, there will be new Batman cartoons. As good as they might be, the airtime taken up by Batman is airtime that won’t be available for something new. That limits the opportunities available to creators and limits the variety available to viewers.

But the multinationals aren’t the only ones producing TV animation. Next time, I’ll look at how smaller companies deal with the economics of TV.

Oh boy! I’m excited!
They go public on May 18th, but I just recieved an advance set of the long-delayed Disney Treasures: On The Front Lines, Tomorrowland, Mickey Mouse In Living Color Vol. 2 and The Chronological Donald.I’ll post a review of the wartime set as soon as I can, followed by my thoughts on the others - but I can tell you right now that they are amazing, and were well worth the wait.Oh, and Roy Disney’s signature is still on the packaging!

Anybody who thinks their life is pathetic will feel a lot better after reading this. Micah Ian Wright, a former writer for Nickelodeon’s ANGRY BEAVERS among other things, has been claiming for years that he was an Army Ranger-turned-peacenik, and has been writing politically-charged books and comics under this guise. On April 25, after years of masquerading as a military veteran, he revealed that he never served in the Army… and he only made this revelation because the WASHINGTON POST was planning to run an article exposing him as a fake and liar. I once met with him to talk about his Nickelodeon pilot, CONSTANT PAYNE, but we never discussed his miltary career so I can’t say I’ve ever been duped in person by this despicable character. But I do remember hearing him on local radio a while back discussing the Iraq war as if he were an Army veteran and it never occured to me that he might be making the whole thing up. Here are some links to catch up on the story: the Comic Book Resources article, the WASHINGTON POST story, Micah’s personal “apology”, and comments from other folks HERE, HERE and HERE. If this turns out anything like the NEW YORK TIMES/Jayson Blair scandal, Micah will probably score a generous book deal to write about how he managed to keep up this charade for so many years.

Hair HighWe plug a lot of Los Angeles screenings here, but we have a lot of east coast friends too - and I’ll do my best to post significant animation events in New York (and surrounding areas) when I hear about them.The folks at the Jacob Burns Film Center in Pleasantville, NY are continuing their animation programming with a Tribute To BETTY BOOP next week (May 12th) and an evening with BILL PLYMPTON (June 23rd), which will include a preview showing of his latest feature HAIR HIGH.I also hear that the Disney Wartime Cartoon Screening (next Tuesday in Glendale, CA at the Alex Theatre) will be happening in Washington DC later this month (more details to come). I’ll keep you posted.

Three Ways to Make Money

I’ve worked in different kinds of television animation for my entire career. As a result, I’ve become something of a student of the television business. This is especially true since I’ve tried selling shows.

This is the first part of a series explaining how the TV business works. The economics affect what shows get on the air. For those of us who work in the business, it affects the jobs that are available.

Companies have to sell a product or service to make money. What does a TV channel sell? If the channel has any advertising on it, what it’s selling is the viewer: you. By tuning in, you are adding yourself to the crowd watching that channel and the channel turns around and sells the crowd to advertisers. This used to be a channel’s sole income.

This is nothing more than a high tech version of the travelling medicine show. In the 19th century, a horse drawn wagon would move from town to town. A singer or banjo player would stand on the back of the wagon and draw a crowd. Once the crowd was large enough, it was time for old Doc Potter to come out and sell his snake oil. Only one dollar a bottle; good for what ails you. In modern terms, TV programming is the banjo player. The crowd never pays for the banjo player directly; it pays indirectly when it buys snake oil.

Since the start of cable television, there are subscription fees. Some channels receive a portion of their money from your cable bill and still run commercials for additional income. Other channels exist solely by subscription. That’s the only case where TV programs are actually the products, as the customers are paying for them directly.

The final money stream is merchandising. It might be as basic as selling the show on DVD or it might mean creating completely new merchandise around a show: toys, lunchboxes, comic books, etc. Animation is a natural fit for merchandising.

No matter what the money stream, the object is to draw the biggest crowd possible. More people lead to more sales. Here, we’re faced with an important paradox. The number of channels has grown proportionally faster than the number of people watching. While we all have greater choice as to what we watch, each individual channel actually has fewer viewers. Every new channel that shows up on your TV makes the problem worse.

Next: Multinationals and how they deal with the paradox.

Harvey Deneroff, who runs the invaluable industry news site Deneroff.com, points out another recent article on Indian outsourcing from THE FINANCIAL EXPRESS. It’s a different studio, but essentially the same story as yesterday’s news item: Color Chips India Limited has signed production deals with BKN Kids (Germany) and Benj Production (France), and they’re looking to add 800 animators to their staff within the next 12 months.

These major hiring binges by Indian studios beg the question: Is the overseas animation industry truly experiencing such rapid growth or are these simply animation jobs being transferred from South Korea to the cheaper Indian studios? Are studios in other Asian countries in a slump because of this rise in Indian animation? I’m not familiar enough with the overseas animation industry to offer any valuable insights into the situation, but it strikes me as noteworthy that Indian studios are hiring animators by the hundreds.

The other issue is, of course, the quality of the animation. The vast majority of Indian animation I’ve seen over the past few years has been cringe-worthy, and it’ll be quite a few more years before their industry matures to the quality of some of the more animation-experienced Asian countries. Of course, by that time, shameless Western producers will have found other countries who will produce animation even cheaper than India, thus ensuring that TV animation will always look (for the most part) like sh*t. One other interesting bit worth noting is that Indian studios are now doing Flash animation as well. Eddie Mort and Lili Chin, creators of MUCHA LUCHA!, recently posted a PHOTO of their Indian animation crew at Jadoo.

“Our goal is to create quality animated films with compelling stories and strong characters and to continue Walt Disney’s legacy of hand drawn animation.” That was the business plan of Orlando-based Legacy Animation, a studio started by ex-Disney Feature (Florida) animators in January 2004. Now just a few months later, Legacy has shut down permanently. This was confirmed yesterday by one of the studio’s co-founders, Eddie Pittman, on the Animation Nation boards: “Legacy is in fact finished. I wish I could tell everyone more, but, for obvious reasons, I’m just not able to at this time.”

As long as I’m on a rant about POPEYE on DVD, allow me to shamelessly plug a brand new release from the friendly folks at VCI Entertainment. This is the same company that brought you the Fleischer Color Classics collection, Somewhere In Dreamland.The POPEYE ANNIVERSARY COLLECTORS EDITION dvd VCI is releasing on May 25th contains all 34 public domain Fleischer & Famous Paramount Popeye cartoons, with prints taken from 35mm elements - and re-instated original titles. This is the best Popeye collection on dvd we will see until Warner Bros. releases restored versions some day in the far off future. It’s $19.00 retail from VCI or $16.99 from Amazon.com